December 29, 2005

A Natural Gas OPEC?

Peak Energy Blogspot
01-Apr-2005

The concept of a natural gas OPEC is becoming less far-fetched. On Apr. 25-27, a little-known, four-year-old organization called the Gas Exporting Countries Forum will meet in Port of Spain, Trinidad and Tobago. Although the organization says it wants to promote cooperation with gas-consuming nations and "does not seek to control...pricing and supply," in past meetings members have discussed mutual efforts to capture a bigger share of the wealth generated by their own natural resources. That's exactly the line of inquiry that led to the formation of the Organization of Petroleum Exporting Countries 45 years ago.

Natural gas meets one key requirement for price-fixing: a high degree of market concentration. In the last quarter of 2004 members of the forum accounted for 53% of the natural gas imported by the industrialized nations belonging to the Organization for Economic Cooperation & Development. That's in line with the 52% share of OECD oil imports that OPEC provided in the quarter, according to the International Energy Agency. The Trinidadian hosts list the countries invited as forum members as Algeria, Bolivia, Brunei, Egypt, Indonesia, Iran, Libya, Malaysia, Nigeria, Oman, Qatar, Russia, Trinidad, United Arab Emirates, and Venezuela. Many are OPEC members and thus know a thing or two about price-fixing. Norway, Argentina, and Equatorial Guinea have been invited to observe.

Posted by Arthur Caldicott on December 29, 2005

December 16, 2005

Cancelled: Surrey & Vancouver Island
VITR&VIC Town Hall Meetings

BCTC-VITR & Sea Breeze-VIC Revised Hearing Schedule: Hearing now set for Mon, 06-Feb-2006

Tsawwassen meeting date changed to Jan 14 at 9:00 am to accommodate a large number of registrants

Wed, 21-Dec-2005
Intervenor Evidence with respect to the VIC Application

Fri, 06-Jan-2006
Hul'qumi'num Treaty Group rebuttal evidence

Sat, 07-Jan-2006
Town Hall Meeting (Salt Spring)

Mon, 09-Dec-2005
BCUC and Participant Information Requests to Intervenors with respect to the VIC Application

Sat, 14-Jan-2006
Town Hall Meeting (Tsawwassen)

Mon, 23-Jan-2006
Intervenor Responses to Information Requests with respect to the VIC Application

Thu, 26-Jan-2006
Staff Issue Hearing Issues List

Mon, 30-Jan-2006
Opening Oral Submissions

Wed, 01-Feb-2006
Proponent Consolidation of Hearing Issues List

Fri, 03-Feb-2006
Panel issues Hearing Issues List

Mon, 06-Feb-2006
Public Hearing commences

A-45 BCUC letter re BCTC VITR & Sea Breeze-VIC.pdf

Posted by Arthur Caldicott on December 16, 2005

December 15, 2005

Clean-Energy Frenzy in Washington State

As the Northwest struggles with soaring fuel and electricity prices, corporate executives and entrepreneurs are joining politicians and activists to develop cleaner, smarter, and self-reliant energy sources.

by George Howland Jr.
Seattle Weekly
December 14 - 20, 2005

Gov. Christine Gregoire is touring the state with a farmer who grows mustard seed used to make biodiesel. U.S. Sen. Maria Cantwell, D-Wash., is demanding that oil executives testify under oath about record profits. First District U.S. Rep. Jay Inslee's crusade for a clean-energy future has been embraced by the leadership of the Democratic Party as a central message for the 2006 elections. After a lengthy study of the cheapest way to generate electricity, Puget Sound Energy, the state's largest private utility, has bought two huge wind farms. Moses Lake Republican state Rep. Janea Holmquist is pushing a law to require the use of up to 10 percent biofuels to run vehicles in the state. Shell Oil has invested in a company building a cellulosic ethanol plant in Idaho. The Northwest Energy Coalition, an environmental group, is planning a voters' initiative to mandate use of clean energy by Washington utilities, because while public support for a policy is strong, legislators won't pass such a law.

Welcome to America's first energy crisis of the 21st century. Northwest politicians and activists are responding to the soaring prices of gas and oil by attacking the status quo, while corporate executives and entrepreneurs are embracing alternatives previously relegated to the fringe.

The latest energy crisis is due to a number of factors. The disastrous invasion of Iraq, of course, has highlighted the military and political costs of dependence on oil from the Middle East. Says Inslee, a Bainbridge Island Democrat: "We are addicted to oil from that region. That's unhealthy for our own security." Hurricanes Katrina and Rita disrupted oil and gas supplies, driving prices higher, and created opportunities for profiteering by big energy companies. "There is no valid reason our gas prices went up after Katrina," claims Democratic Gov. Gregoire. Scientific consensus has developed more strongly around the relationships among global warming, the burning of fossil fuels, and climatic changes. "We are a coastal state fighting desperately against global warming," says the governor.

In the short term, all of this protest and recognition of problems isn't going to do anything to change the high cost of energy or dependence on foreign oil. "Americans will spend over $200 billion more on energy this year than they did last year," says Cantwell, a member of the Senate energy committee. Washington consumers have seen the price of a gallon of regular gas soar from $2.09 to $2.91 in September and drop back to $2.33 last week, according to the American Automobile Association. The Northwest Energy Coalition estimates that the average Washington household will pay $700 more to heat their home this winter than last year.

Even if remedies are not immediate, clean-energy activists and sympathetic politicians hope to use public concern over high energy costs to promote alternatives to fossil fuels. At the federal level, Washington leaders like Inslee and Cantwell are unlikely to make much progress. "Congress is still in the thrall of the oil and gas industries," says Inslee.

At the state level, however, real progress has already occurred, and more is likely. This is no accident. It's the result of activists, politicians, and entrepreneurs working together to build a clean-energy future. Take the Apollo Alliance, named after President Kennedy's initiative to put a man on the moon. It's a broad coalition of environmentalists, organized labor, business executives, civil rights leaders, and politicians, and both Cantwell and Inslee are on the national advisory board. Gregoire is one of nine governors who have endorsed Apollo's call for energy independence within a decade by investing in $300 billion worth of clean-energy infrastructure. The alliance is promoting three areas of benefit that will flow from the clean-energy initiative. The first is energy independence, a goal endorsed by a broad political spectrum, from neoconservatives to greens. The idea is that if the United States can produce its own energy instead of relying on imported fuel, there will be geopolitical benefits, too. Energy independence would free us from the need for imperial wars in the Middle East. Second, clean energy addresses the planet's environmental crisis. It reduces pollution of air, land, and water. It reduces the climate-changing impacts caused by the burning of fossil fuels. Third, the alliance believes, such an undertaking would create 2 million to 3 million new, high-paying, permanent jobs.

That's a long way from where we are today. The nightly news brings flesh-and-blood reminders of the cost of our reliance on Middle East oil. Our national government is a pipeline of corporate welfare for environment-besmirching oil and gas companies. At the state level, Washington has a tiny clean-energy industry. Tony Usabelli, director of the Energy Policy Division at the state Department of Community Trade and Economic Development (CTED), says his department will soon release a report on the clean-energy sector, which employs only around 3,000 to 4,000 people and has annual sales of a mere $900 million. While Usabelli notes that the industry has grown from $750 million in sales in the past five years, "The numbers are smaller than I would have expected."

The sexy star of the industry is biodiesel. Although there is only one biodiesel refinery in the state, which employs 12 people, and no biodiesel crops are grown commercially in Washington, biodiesel has captured the media's, the public's, and the politicians' imaginations.

The rising star of the clean-energy industry is wind electricity generation, which is primed for major growth due to a convergence of technological improvement, federal subsidy, and the rapid escalation in price of its chief competitor, natural gas­powered generation.

The largest player in the clean-energy industry is efficiency­energy conservation. Energy efficiency companies employing technologies like compact fluorescent lightbulbs are the sector's largest employers and save far more energy­in effect, generate far more­than any "renewable" energy source except hydroelectricity generation. Renewable energy is that which comes from resources like water, wind, and crops. They cannot be exhausted. Oil and coal, on the other hand, are finite.

Biofuels, wind, and energy efficiency are worth exploring in detail, because they are emerging in the Northwest and illustrate where we are and how far we have to go before we can realize Apollo's vision.

What is happening on the shores of the Duwamish River in Seattle is either the start of an industrial revolution or the answer to a Trivial Pursuit question in 10 years. In a 7,000-square-foot warehouse next to a cement plant, Seattle Biodiesel has opened the state's first biodiesel refinery.

Biodiesel is made from vegetable oil and can be used in most car and truck diesel engines. Currently, Washington consumes around 1 billion gallons of conventional diesel fuel and 1.5 million to 2 million gallons of biodiesel annually, according to Usabelli of the state Energy Policy Division. Biodiesel has many advantages over its petrochemical cousin, conventional gasoline, explains Patrick Mazza, a researcher at Climate Solutions, an environmental group focused on the Pacific Northwest and Vancouver, B.C. Biodiesel is relatively simple to make and can be manufactured without creating significant toxic by-products. In vehicle engines, biodiesel burns cleaner than petrochemical diesel. "It offers really dramatic reductions in air toxicity," says Mazza. The one problematic emission from biodiesel-fueled vehicles is nitrogen oxide, which is not an air pollution concern in Washington but is in California and has kept the fuel from taking off commercially in the Golden State.

Biodiesel can be used alone or blended with conventional diesel. The latter is recommended if the temperature drops below freezing.

Since the fuel is made from vegetable oil, it can be produced domestically. While biodiesel can be made from waste vegetable oil and produced in a garage, the industry is not one of anticapitalist ecotopians. The fuel's source is produced by agribusiness cooperatives in the Midwest that grow soybeans conventionally and have banded together to build refineries to supply a new market. The National Biodiesel Board, an industry group, says last year 25 million gallons of biodiesel were sold in the U.S., up from 500,000 gallons five years ago.

Biodiesel's big disadvantage is that it costs more to buy than conventional diesel. Last week, at Laurelhurst Oil, a University District gas station, conventional diesel was selling for $2.79 per gallon, while biodiesel cost $3.17.

Seattle Biodiesel CEO Martin Tobias says his company's refinery can make 5 million gallons of biodiesel a year. Seattle Biodiesel started selling the product in May and, in the first six months, sold more than 360,000 gallons. The company started two years ago when commercial airline pilot John Plaza, now the company's president, mortgaged his home, sold his boats and cars, and borrowed against his 401(k) plan to get the alternative fuels venture up and running. Software entrepreneur Tobias, a former Microsoftie and founder of the streaming media company Loudeye, officially became the company's CEO in May. Seattle Biodiesel brings soybean oil from Iowa by rail. In huge tanks that have been recycled from the old Rainier Brewery on Interstate 5, the soybean oil is refined to a purer state.

Tobias says his company cannot fill all the orders it gets. Seattle Biodiesel hopes to have a second refinery up and running by the middle of next year. Tobias says the industry does not need a separate distribution infrastructure, because traditional tanker trucks can haul biodiesel and conventional diesel tanks can be easily converted to pump biodiesel at service stations. The National Biodiesel Board lists 29 service stations where biodiesel is currently available in Washington, all but one in the Puget Sound region.

Washington politicians are giddy about biodiesel. It's easy to see why. Gov. Gregoire quotes John Steinbeck: "The bank is more than men; it is a monster." Says the governor, "Replace bank with foreign oil." She sees biodiesel as an opportunity to tear down the Cascade Curtain and unite the red and blue parts of the state. "This is an opportunity for us to work together as a state," she says enthusiastically. Washington has the agricultural potential east of the mountains to grow oil-seed crops. Mustard seed and canola seed (aka rapeseed) are the most frequently mentioned. Oil-seed crops can be grown in rotation with others­wheat, for instance­throughout Eastern Washington. Western Washington consumers, with their liberal politics and environmental values, represent a great market for the product­even if it's more expensive.

Right now, it doesn't make economic sense, however, for Washington farmers to grow oil-seed crops, because the market won't pay enough to make it worthwhile.

On Jan. 9, the Legislature will convene for its annual session, and biofuels for vehicles are going to receive some kind of boost. "We need to seize the crisis as an opportunity," says Gregoire. "Maybe this time we can come together and seize a common agenda. If we wait another legislative session, the crisis may be gone and apathy will set in." Republicans and Democrats agree there will be a host of tax breaks for everything connected to biodiesel, but some legislators want to go further.

House Capital Budget Committee Chair Hans Dunshee, D-Snohomish, wants to use state money to build the big, expensive crushers that convert oil-seed crops into oil. Since the state constitution prohibits direct payments to private industry, Dunshee says the money would likely go to an Eastern Washington port district or some other governmental entity. "Canola will get grown," Dunshee predicts. "It will get crushed." He says farmers in the central Washington area of Odessa, in Lincoln County, have been working with Seattle Biodiesel and are the group that has most fully developed a business plan. "The economics are still iffy," Dunshee admits. But, "It's better than a stadium."

The most controversial idea is to require that a certain percentage of the state's gasoline and diesel supplies be biofuels by a certain date. Seattle Biodiesel CEO Tobias says these so-called fuel standards are the most important thing government can do for the biofuels industry. "If the government does these renewable fuel standards, that gives the investors a long-term reason to invest in these industries," he says. Last year, the Minnesota Legislature passed a law that requires gasoline there to be 20 percent ethanol by 2013. In Washington, Democratic and Republican lawmakers will push mandatory standards for both biodiesel and ethanol.

While the Democrats are extremely supportive of the idea and have plenty of votes in the House to pass such legislation, Republicans in the Senate are not as enthusiastic. Senate Minority Leader Bill Finkbeiner, R-Kirkland, who announced last month he is stepping down from his post, cautioned that his caucus doesn't like to see a lot of interference with free-market capitalism. Finkbeiner says, "I don't want to be knee-jerk against it, but if you just set an arbitrary standard, you haven't really done the job." Since the Democrats only control the Senate by three votes, and two conservative Democrats frequently vote with Republicans, fuel standards are not a sure thing. It should help that GOP legislators from Moses Lake­Holmquist and Sen. Joyce Mulliken­are in favor of standards. Oil-company lobbyists, however, have already been calling lawmakers to express their unhappiness. "We oppose mandates," says Frank Holmes of the Western States Petroleum Association.

Of course, diesel is not the dominant fuel in Washington or anywhere else. "Our biggest use of energy is petroleum­4.7 billion gallons of gasoline in Washington's cars and trucks," says state economic development official Usabelli.

The current "green" candidate that can be blended with gasoline is cellulosic ethanol. Currently, corn-based ethanol dominates the market, but it is considered inferior because it takes more energy to make than it provides. Cellulosic ethanol uses agricultural waste like wheat straw to create ethanol and uses less energy to boot. Iogen, a Canadian company, with one of its investors, Shell Oil, wants to build the first American cellulosic ethanol plant in Idaho. The industry has potential but no reality.

While the Legislature has gone gaga over biofuels, members express no such enthusiasm for boosting renewable clean electricity. This is both good and bad news. It's good because it means that the clean-electricity industry is already doing well, so well that even key Democratic legislators, like House energy committee Chair Jeff Morris, D- Anacortes, are not convinced more needs to be done. It's bad news because "dirty" electricity from coal burning might see its market share rise in the Northwest because clean electricity isn't getting enough help.

The most dramatic evidence of clean electricity's strength is the enthusiasm of Puget Sound Energy (PSE), the state's largest electric utility with 1.2 million customers in eight counties. State regulators require utilities to extensively study what the lowest-cost alternative is for their future energy needs. PSE began energy acquisition planning in 2004, received 100 proposals from energy developers, and found that the best two projects were wind farms: Hopkins Ridge Wind Project in southeastern Washington's Columbia County and Wild Horse Wind Power Project in central Washington's Kittitas County.

In those breezy parts of the state, huge wind-driven blades­on towers up to 200 feet tall­drive generators. Windmills are clean, quiet, ugly, and take up a lot of space. For instance, Wild Horse is being built on 9,200 acres of open rangeland, 11 miles east of Ellensburg.

PSE's two new wind farms will boost wind's tiny share of the state electricity market considerably. Washington uses around 10,500 average megawatts (aMW) of electricity annually. Hydroelectricity accounts for 66.6 percent of Washington usage, coal is next at 17.7 percent, natural gas is third at 9.8 percent, and nuclear power accounts for 4.6 percent. Wind is a mere 0.4 percent, or 42 aMW annually. PSE's wind farms will add 114 aMW to the mix.

Wind energy has become economically viable for a number of reasons. First, newer wind turbines are more efficient. Second, the cost of the most popular new source of electricity in Washington in recent years­natural-gas-fired turbines­has skyrocketed. Natural gas prices have increased from between $2 and $3 per million British thermal units (Btu) in 2004 to $8.50 per million Btu this year, and the price is expected to rise to $10 per million Btu next year. Finally, the federal government provides a subsidy to operators of wind farms that brings the cost down from between $40 and $50 per megawatt hour (MWh) to $32.

All of this has convinced the Northwest Power Planning Council (NWPPC), a regional planning entity created by the federal government, that wind can produce 100 new aMW per year over the next 20 years in Washington, Oregon, Montana, and Idaho. The NWPPC estimates that the region's use of electricity will grow by around 360 aMW per year, so wind will become a major player. Like biofuels, wind is not an anticorporate ecotopian industry. The major U.S. supplier of wind turbines is General Electric; they bought the business from Enron.

Also like biofuels, wind has competition from a cheap fossil-fuel alternative: coal. Environmentalists want to keep wind growing and limit coal's development by enacting a renewable energy portfolio­essentially, the equivalent of fuel standards for electricity. Activists and legislators agree that mandatory goals for clean electricity will not pass the Legislature. Environmentalists, led by the Northwest Energy Coalition, have pushed the measure in Olympia for the past three sessions and have been unsuccessful. Democratic state House energy committee Chair Morris doesn't support the idea. He says the proposal he has seen would require that 20 percent of new energy be from renewable sources. "The folks who are acquiring resources are already acquiring 60 percent renewable resources," says Morris. So there's no need for a renewable energy portfolio, he argues.

Northwest Energy Coalition spokesperson Marc Krasnowsky says Morris is focusing on the positive steps taken by Puget Sound Energy in his analysis of the energy market. Not all utilities are behaving so well, says Krasnowsky. "Utilities in the Northwest have the potential of adding 2,000 megawatts of new coal in the next five to 20 years," he says. A renewable energy portfolio, Krasnowsky argues, would discourage the development of that industry. He agrees with Morris, however, that the measure cannot pass the Legislature. Instead, Northwest Energy Coalition is planning to put an initiative requiring a renewable energy portfolio on the ballot in 2006. Notes Senate Water, Energy, and Environment Committee Chair Erik Poulsen, D­West Seattle, who supports a renewable energy portfolio: "Olympia has shown itself to be resistant to a renewable energy standard for years. The environmental community has a better chance of convincing the public."

But Democrats think they have a winning issue in clean energy in general. Cantwell, who is facing a tough re-election fight against former Safeco Insurance executive Mike McGavick, has begun putting a clean-energy logo on her press releases. She has led the Senate fight against drilling in the Arctic National Wildlife Refuge in Alaska. She championed legislation that would have outlawed "gas-price gouging." Inslee says, "In November '06, energy will be one of the fundamental choices of the American people, because the Democrats are making it so. When the Democrats stand for optimism, we win. I've been arguing this for two and a half years!" Inslee says the leadership of the Democratic Party has finally figured out that clean energy is an issue with which they can win. Whether a clean-energy ballot measure will help boost wind remains to be seen.

Labor leaders in Washington have also signed on with the clean-energy push. Wind energy, however, is not a huge job generator. There are good jobs during the construction of the wind farms, but once the farms are up and running, they do not require a large workforce.

But there are jobs that emerge from wind in surprising places. Down in South Seattle's Georgetown neighborhood, the Gear Works is the best local illustration. The 49-year-old, 110-employee, family-owned business is a throwback. The Gear Works is housed in a pair of wonderful warehouses that were designed by the business' late founder, Ingwald Ramberg. A huge trellis with a rambling wisteria vine covers the three-story southern wall of the main warehouse, and there is a homemade fountain out front. Inside, original posters from Seattle's 1962 World's Fair complement the '60s feel of the architecture. While the place feels frozen in time culturally, Ingwald's son, Roland Ramberg, the firm's president, has made sure the business is on the cutting edge in equipment and pursuit of new markets. The Gear Works makes and repairs industrial gears for everything from draw bridges to race cars to wind turbines. Ten years ago, Ramberg says, the Gear Works did no work on wind turbines. Now it is 20 percent of the business. "We are not only repairing them but building new gear boxes," Ramberg says. "They keep putting up thousands of new machines every year. Those are future customers going up. They are making them more reliable, but sooner or later, they are going to need work," Ramberg says of the turbines. Most of his wind business is from California wind farms, but as the Pacific Northwest's wind sector expands, Ramberg should get plenty more business from nearer by. Ramberg says that's one of the reasons he has built a 20,000-square-foot test-and-repair facility with help from a grant from the U.S. Department of Energy's National Renewal Energy Laboratories. "When your wind turbine starts crapping out, we want to be the place you think of," says Ramberg. Even at the Gear Works, however, wind finds itself in competition with coal. Ramberg points out that 25 percent of his business involves conveyer belts for coal mines in China. Until coal is made to pay for harm from its emissions, wind will keep playing catch-up.

The state's largest industry for clean energy is invisible. That's because the energy- efficiency industry saves energy rather than generates it. In the 1970s, energy efficiency was known as conservation. Northwest Energy Coalition's Krasnowsky explains the reason for the name change: "Conservation creates an image of huddling under a blanket in the dark."

Whatever it's called, saving energy is the first choice of private utilities, environmentalists, and public-policy experts when it comes to dealing with an energy crisis. The Northwest has been very successful at employing energy-efficiency strategies over the past 20 years. Tom Eckman, the Northwest Power Planning Council's manager of conservation resources, says that from 1982 through 2002 the region met 40 percent of the need for new electricity. That's 2,500 aMW of energy savings. "You don't see that built," says Eckman. "It's one lightbulb, one piece of insulation, and one showerhead at a time." The NWPPC estimates that the Northwest will find new energy savings equivalent to 2,500 more aMW over the next 20 years. The biggest saver? "Changing the lightbulb," says Eckman­replacing incandescent lightbulbs with compact fluorescent ones.

In industrial plants and office buildings, the latest technology for heating, ventilation, and air conditioning (HVAC), motor drives, conveyers, and pumps is providing precise computer control over everything from lighting to room temperature. "The direct digital control in commercial buildings is a real improvement in terms of creature comfort and energy efficiency," says Eckman. He notes that there is another technological revolution right around the corner as computer controls go wireless, reducing the cost of installing new systems by eliminating the need for stringing cables.

New digital controls are on display on the 37th floor of One Union Square, a 650,000-square-foot, 20-year-old office building in downtown Seattle. "I get so excited when I see this stuff," says Rick Mock, the director of facilities for Washington Real Estate Holdings, which manages One Union Square. As he shows me a computer screen displaying the "chiller system" with graphic and numeric elements, I can understand about one-tenth of what Mock is telling me. But there is no mistaking his enthusiasm. Mock's fascination with the latest gadgets and his zeal to improve the building's energy usage have translated into savings of $450,000 a year in electricity. Mock arrived at One Union Square in 1999 and noticed immediately that he received a lot of complaints from tenants about being too hot or too cold. He began to evaluate the building's HVAC and lighting systems and started to advocate for a major overhaul. "This building was a runaway train," he says. "We had to do something." After working with Seattle City Light and other managers at Washington Real Estate Holdings, the company undertook a $3.5 million renovation of HVAC and lighting. City Light kicked in $750,000 of the overall cost, reducing the time for the project to pay for itself to six years. "It's a neat initiative from a monetary standpoint and from the environmental standpoint," says Tim Holt, vice president at Washington Real Estate Holdings. As an added benefit, tenants are happier now. Mock fields far fewer complaints about temperature.

McKinstry, a 35-year-old, 650-person mechanical contracting company, did the work at One Union Square. Highly respected in the field, McKinstry is an example of a large energy-services firm that has a mature business in energy efficiency but does not rely on that sector alone. Stan Price, executive director of the Northwest Energy Efficiency Council, an 80-company trade group, says the industry includes Fortune 500 companies like Johnson Controls and Siemens as well as small specialty shops and midsized energy firms. Price has watched the industry expand and contract over the past 25 years as energy prices have risen and fallen. "We are in a marketplace more driven by energy prices than we would like," says Price. He predicts there will be no problem meeting the increased demand that the latest round of energy price spikes will engender. Price believes that the lion's share of employment and sales in the state's clean-energy sector are in energy efficiency. Yet he acknowledges that energy efficiency doesn't get the same kind of buzz that surrounds less-significant industries like biofuels. "It's a bit of a sleeper," he says.

Politicians are not clamoring with new proposals to encourage energy efficiency. Last year, the Legislature did pass the nation's first "green building" standards for new construction of public facilities. Mandating new energy efficiency for private construction would be a welcome innovation, but no legislative champion has emerged. Many utilities, though, both public and private, offer grant programs to encourage conservation. Washington state Apollo Alliance coordinator Rich Feldman would like to see Gov. Gregoire launch an ambitious $100 million, zero-interest loan program for retrofitting public buildings with the latest energy- efficiency equipment. The improvements would pay for themselves with the savings, he claims. So far, Gregoire has not adopted the proposal, but she hasn't rejected it, either.

The task facing clean-energy advocates is daunting. The industrial and political challenges ahead are huge. But if we need any flesh-and-blood reminder of how disastrous our nation's current energy policy is, just turn on the nightly news and be reminded of the cost of our reliance on Middle East oil. While a clean-energy future seems a challenge, it's unimaginable that a dirty, blood-soaked energy future will be possible to bear.

http://www.seattleweekly.com/

Posted by Arthur Caldicott on December 15, 2005

Dec 15 - Last day to register for VITR & VIC Town Hall Meetings

The BC Utilities Commission (BCUC) is conducting a consolidated review of two cable projects being proposed to bring mainland power to Vancouver Island. Part of the proceeding includes four "Town Hall Meetings" in communities on the routes of the proposed transmission lines. These are Surrey, Tsawwassen, Salt Spring Island and Duncan, on Vancouver Island.

Presenters must pre-register with the Commission Counsel. The registration deadline is Thursday, 15 December, 2005.

THAT'S TODAY!

To register, contact Mr. Gordon Fulton, Commission Counsel by email at gfulton@boughton.ca or by telephone at (604) 687-6789.

Other important things to know:

- Presentations are limited to ten minutes.
- A presentation projector will be provided if you wish to use a computer.
- If fewer than six presenters register for any specific town hall meeting, that meeting may be cancelled.
- Intervenors who choose to present at a town hall meeting will not be permitted to make a further presentation during the oral hearing.

More information and guidelines about these specific town hall meetings is available in three documents issued by the BCUC.

A-39 Notice of Town Hall Meetings
http://tinyurl.com/dfnag
A-41 What can I expect at the Town Hall Meetings and Oral Public Hearing?
http://tinyurl.com/bqwua
A-44 More rules about Town Hall Meetings
http://tinyurl.com/d64ca

BCTC-VITR & Sea Breeze-VIC Hearing Schedule

Action Date
Mon, 19-Dec-2005 BCUC and Participant Information Requests to Intervenors with respect to the VIC Application

Fri, 06-Jan-2006 Intervenor Responses to Information Requests with respect to the VIC Application

Fri, 06-Jan-2006 Hul'qumi'num Treaty Group may file rebuttal evidence to BC Hydro/BCTC evidence relevant to consultation and accommodation

Sat, 07-Jan-2006 Town Hall Meeting (Salt Spring)

Tue, 10-Jan-2006 Town Hall Meeting (Tsawassen)

Thu, 12-Jan-2006 Staff issue Hearing Issues List

Sat, 14-Jan-2006 Town Hall Meeting (Vancouver Island - Duncan)

Mon, 16-Jan-2006 Opening Oral Submissions

Wed, 18-Jan-2006 Proponent Consolidation of Hearing Issues List

Thu, 19-Jan-2006 Town Hall Meeting (Surrey)

Fri, 20-Jan-2006 Panel issues Hearing Issues List

Mon, 23-Jan-2006 Public Hearing commences

The BCTC-VITR and Sea Breeze-VIC cable projects are being reviewed in a consolidated hearing by the BC Utilities Commission.

BCTC-VITR: BC Transmission Corp. - Vancouver Island Transmission Reinforcement, 230 kV AC cable from Delta to Duncan
http://www.bcuc.com/ApplicationView.aspx?ApplicationId=78

Sea Breeze-VIC: Sea Breeze Pacific Regional Transmission System Inc. - Vancouver Island Cable, 300 kV HVDC Light cable from Surrey to Victoria
http://www.bcuc.com/ApplicationView.aspx?ApplicationId=90

Posted by Arthur Caldicott on December 15, 2005

December 14, 2005

Victoria, Hydro drag heels on alternative energy

By Don Whiteley
Vancouver Sun
14-Dec-2005

The provincial government's abrupt decision a week ago to send BC Hydro back to the drawing board on its 20-year Integrated Electricity Plan (IEP) is one more indication that this province is suffering from a severe case of constipation when it comes to future electric power needs.

The move comes only a couple of months after Hydro itself abruptly withdrew its application to build a natural gas-fired power generating station at Duke Point on Vancouver Island. Given today's natural gas spot price of $14 per thousand cubic feet, perhaps that's a blessing in disguise. But at the time, it was a serious slap in the face to the province's independent power producers.

Further to that decision, Hydro's call for additional power supply from independent producers, originally scheduled for the fall, is now going to happen in the new year. Hydro just posted the terms of the call on its website last week.

And there's growing evidence that B.C. is falling well behind almost every other jurisdiction in the country -- if not in North America -- when it comes to promoting the use of alternative energy supplies such as wind or tidal power. While other provinces are installing wind turbines, B.C. is still putting roadblocks in the way.

All this is coming when it is now clearly recognized that the province can't meet its energy needs through conservation alone, and as Hydro's reliance on external power sources -- it now imports more than 10 per cent annually -- continues to grow. Less than a month ago, the B.C. Progress Board chastised the province for twiddling its thumbs on this issue for the past 20 years.

Depending on whom you speak to, the fault lies either in Victoria through a provincial government that won't issue clear directions, or at Hydro where the utility has not yet built a good financial case for its marquee Site C dam project.

David Austin, speaking for the Independent Power Producers of British Columbia, thinks the Site C project is the reason Victoria balked at the IEP. In a letter to Hydro, Austin states: "If BC Hydro generating resources are to be included in some way as part of the IEP, then at a minimum, BC Hydro should have prepared and made public for scrutiny the corresponding financial models. The IPPBC has repeatedly asked for BC Hydro's Site C financial model and none has been received. As a result, the IPPBC has absolutely no confidence in the price information that BC Hydro has provided to date with respect to Site C."

Guy Dauncey, president of the B.C. Sustainable Energy Association, sees the main problem as a planning "vacuum" in Victoria, where electricity policy-making has been abandoned in favour of letting the B.C. Utilities Commission call the shots.

"There's a very clear policy vacuum," says Dauncey. "Last year we missed the opportunity to have a major wind-assembly plant built in B.C. -- probably Squamish -- because of the policy vacuum. They were looking for a place at the end of a rail line to put a wind-assembly plant. They wanted B.C. to put 1,000 megawatts of wind power into the grid to show there's a local market."

Dauncey's association produced a recent report that document's the potential for alternative energy potential in the province.

"Wind, solar, tidal, geothermal and other technologies, combined with energy savings from efficiency measures, would produce 84,000 gigawatt hours a year," his report states. "This is 50 per cent more than BC Hydro's current total generation, and enough power for 8.4 million homes."

In an interview, Dauncey said no jurisdiction in North America is better situated for the advancement of "green" technologies: "We are the most favourably placed jurisdiction in the whole of North American for having 100 per cent green power."

But while Alberta, Manitoba, Quebec, New Brunswick and Prince Edward Island are in the forefront of developing wind power, B.C. has yet to build its first commercial projects, although two have been approved -- Sea Breeze Power Corp. for a project on northern Vancouver Island, and Nai Kun Wind for a project on Haida Gwaii

Sea Breeze has approval to build a 450-megawatt wind farm, but hasn't been able to reach an agreement yet with BC Hydro to buy the power.

Instead, the company last month applied to the National Energy Board for permission to build a 550-mw undersea power cable from Victoria to Port Angeles so it can sell power into the U.S. market.

Tidal power has huge potential too, with three companies on Vancouver Island in various stages of development, one only months away from a pilot project at Race Rocks designed to prove the concept. But there is unhappiness in this area, too.

"That's our Niagara Falls," says Michael Maser, communications director at Blue Energy Canada Ltd. "But we're not pumping a single kilowatt of tidal energy in this province. That's staggering."

Blue Energy hopes to tap tidal power with a project in Johnstone Strait north of Campbell River.

Dauncey concurs, pointing out that the United Kingdom is pouring millions of pounds into the development of tidal energy in recognition of its value as an emerging technology.

"Tidal is the firmest of the non-firms because you can predict it, and you know exactly when it's coming in," he said "At the moment, we're losing the race. Britain is jumping ahead and throwing money at tidal energy."

All these developments lead to serious concerns that neither Hydro nor the province are moving quickly enough, nor are they prepared to provide sufficient catalysts to get alternative energy projects moving.

A provincial Task Force on Alternative Energy was recently struck and is expected to issue a report in the new year, while at the same time the Ministry of Energy Mines and Petroleum Resources is revising its overall energy policy.

Other jurisdictions are building things.

don_whiteley@telus.net

Posted by Arthur Caldicott on December 14, 2005

December 13, 2005

Government yanks BC Hydro's chain

Political squeamishness sinks Hydro's plans to talk about electricity
Vaughn Palmer, Vancouver Sun, 08-Dec-2005
Government concern about Site C dam stalls power plan
Scott Simpson, Vancouver Sun, 08-Dec-2005
Hydro's a political animal once again
Paul Willcocks, Times Colonist, 09-Dec-2005
Cabinet says it needs time to review Hydro energy plan
Scott Simpson, Vancouver Sun, 09-Dec-2005
We need bright lights to develop hydro projects
Editorial, Vancouver Sun, 10-Dec-2005
Victoria finally notices Hydro's bumbling
Brian Lewis, The Province, 11-Dec-2005
Hydro needed to have its plug pulled
Les Leyne, Times Colonist, 13-Dec-2005



Political squeamishness sinks Hydro's plans to talk about electricity

By Vaughn Palmer
Vancouver Sun
08-Dec-2005

VICTORIA - The B.C. Liberals have intervened directly in the management of BC Hydro, forcing the giant utility to pull the plug on a major announcement about the development of electrical power.

The announcement, set for today at 10 a.m., would have seen the release of Hydro's long-in-the-works integrated electricity plan.

CEO Bob Elton, flanked by business leaders, was scheduled to "reveal B.C.'s path to energy self-sufficiency for the next 20 years" as well as "outline the future of the highly debated Site C dam."

But even as the media advisory for those coming attractions circulated in provincial newsrooms, the Liberals were at work derailing it.

Though the plan had been in the works for months and the announcement for weeks, the politicians only got wind of the details Tuesday afternoon.

They didn't like what they'd heard, especially regarding Site C. Hydro was proposing to move to full-blown public consultations on the enormous and controversial third hydroelectric dam on the Peace River.

The public wasn't ready for this discussion. Heck, the politicians weren't ready, and some of them hoped to see the dam built in their lifetimes. Given the lack of extensive groundwork, the debate would surely be dominated by the critics. The premature launch could eliminate any chance to develop public support, and doom the project once and for all. In the space of a couple of hours, the Liberals decided to order Hydro to back off.

Though the decision was ultimately driven by Premier Gordon Campbell, it fell to Energy Minister Richard Neufeld to deliver the message.

It must have been tough for him. Neufeld has represented the Peace River region for more than a decade and has long advocated building a dam at Site C.

But the experience must have been far more bruising for Elton. The Hydro CEO had reason to think he'd gone about this in the right way.

Preliminary consultations with stakeholders and the public throughout the fall. Extensive planning. No big secret about Site C being one of the options.

Hydro even tried to keep the premier's office in the loop. But a briefing at the senior official level did not result in a briefing for the politicians on where this thing was headed -- until it was too late for them to do anything but slam on the brakes.

That, in turn, translated into a second media advisory from Hydro, sent out Wednesday afternoon.

"As you know, we intended to release our integrated electricity plan on Thursday," it said. "In consultation with government, we have now decided to postpone this release."

The "in consultation with government" was a nice euphemism. As opposed to "after having our chain yanked by Victoria" or "because the politicians weren't ready for a public debate on this issue now or maybe ever."

Hydro phrased it differently in a memo that went out to a committee of stakeholders who'd been invited to participate in a conference call before the release of the plan. "We apologize for the short notice but we will be cancelling the call," it said. "At the present time we are still engaged in an internal review process and in consultations with the shareholder."

The shareholder being me and thee, since Hydro is publicly owned. But in this instance we are represented, like it or not, by the politicians.

Cryptic as it was, the brief notice left no doubt that the electricity plan has been overtaken by a political agenda.

"Both government and BC Hydro have a strong desire to ensure the plan is fully reviewed in the context of government's energy policies," it said. "This will be accomplished in the coming months."

That raises a concern about the fate of a process that has, up to now, been monitored the B.C. Utilities Commission.

"We will bring forward the integrated energy plan in the new year, as required by the utilities commission," vowed Hydro, even as its scrubbed today's release.

But the whole point of delegating the planning process to the commission, is that the BCUC functions as an independent regulatory body.

The Liberals repeated that theme ad nauseam during the recent debate over a U.S. firm's purchase of Terasen gas.

The government wasn't going to step in and block or even delay the takeover. The decision was up to the utilities commission, which would render a verdict ("Yes," as it turned out) without political interference.

The Liberals said the same thing about Hydro. Decisions would be governed by the province's energy needs, by markets for power, and the public interest.

"The days of political interference are over," -- the Liberals said it again and again.

Perhaps Bob Elton and his team at BC Hydro believed them. Which must have made this week an important learning experience for all concerned.

vpalmer@direct.ca

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Government concern about Site C dam stalls power plan

By Scott Simpson
Vancouver Sun
08-Dec-2005


BC Hydro's ambitious 20-year plan for a multibillion-dollar makeover of British Columbia's electricity system hit a major snag Thursday when the provincial government ordered Hydro to back off out of concern about the controversial Site C dam project.

Hydro officials had little to say. Bob Elton, Hydro president and CEO, issued a brief statement by e-mail that the plan, which was to be unveiled today, would be delayed until an unspecified date next year.

Hydro's "Integrated Energy Plan" was expected to include a mix of small, private sector hydroelectric projects, electricity conservation initiatives, upgrades to large government-owned facilities -- and a decision to proceed with the controversial Site C dam on the Peace River near Fort St. John.

It was not immediately clear if the province's concerns were attributable to soft cost estimates for Site C -- which would cost taxpayers a minimum $3.5 billion -- or strong opposition from first nations in northeast B.C., or a conflict with independent power producers who were promised in 2002 that all new power projects in British Columbia would be developed by the private sector.

"In consultation with government, we have now decided to postpone this release and will be doing further work to ensure that this plan meets the needs of ratepayers," Elton said.

Earlier this week, some B.C. Liberal MLAs told Vancouver Sun political columnist Vaughn Palmer that they had concerns about Hydro's ability to shepherd the controversial Site C hydroelectric project -- the cornerstone of the new plan -- through to completion.

NDP energy critic Corky Evans said the province's 11th-hour involvement casts a shadow across more than a year's worth of community consultation and preparatory work by BC Hydro.

"What I find really bizarre is that it flies in the face of the Liberal mantra, maintained all through the public debate about the sale of Terasen Gas and the controversy about the [CN] railroad and all kinds of stuff, that it was not their intention to manipulate public processes or commissions or Crown corporations," Evans said.

Energy Minister Richard Neufeld was tied up in a series of meetings and could not be reached for comment.

Hydro goes through a similar planning exercise very two years, submitting details to the B.C. Utilities Commission as per its regulatory requirements.

However, this year's version of the plan was considered to be its most ambitious effort in more than a decade, in light of British Columbia's growing dependence on imported electricity to supplement a provincial resource that has not grown significantly in volume since the Revelstoke Dam was built in the early 1980s.

Earlier this month, Treaty 8 first nations in northeastern B.C. advised Hydro that they "adamantly" oppose Site C.

The construction of two earlier dams on the Peace, the W.A.C. Bennett and Peace Canyon dams, led to flooding of millions of acres of traditional hunting and fishing territory for the bands.

A BC Hydro summary of a meeting with the aboriginals reported that they "made it clear that they are adamantly against the development of Site C."

ssimpson@png.canwest.com

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Hydro's a political animal once again

By Paul Willcocks
Times Colonist (Victoria)
09-Dec-2005

The Liberals' big commitment to keep politicians' hands off Crown corporations like B.C. Hydro is fading fast.

B.C. Hydro's brightest and best have been labouring away on a long-term energy plan, with the Site C dam as the centrepiece. This week was supposed to be the big unveiling.

Hydro CEO Bob Elton announced a press conference where he would be flanked by business types, and vice-presidents were fanning out to meet with the media. And then 20 hours before the big announcement, the politicians pulled the plug.

"In consultation with government, we have now decided to postpone this release and will be doing further work to ensure that this plan meets the needs of ratepayers," Elton said in a terse news release.

Hydro's future also needs to be "fully reviewed in the context of government's energy policies."

The order was not well-received in Hydro. The 20-year Integrated Energy Plan has been more than a year in the making, with a high-profile advisory committee, public meetings and lots of consultants and studies. It was to be the definitive look at energy needs for the next two decades, and the best way to meet them.

The B.C. Utilities Commission was set to review it.

Something has gone seriously wrong when the politicians step in at the last minute, stepping all over Hydro's board and management. Energy Minister Richard Neufeld said the government wanted more time to review the plan, which was presented to Liberal MLAs at a caucus meeting this week.

The Crown corporation just got a little ahead of itself, he said. But Neufeld didn't rule out changes before the plan goes to the utilities' commission.

The explanation leaves a few questions. The government has known for a year that the plan was going to the utilities commission this month, and for days that the announcement was scheduled for this week. There were no big surprises in the document, as energy ministry officials have been involved with the process all along.

So the last-minute cancellation suggests someone -- the caucus, the premier's office -- got nervous.

There's lots to get nervous about. Hydro's assessment of energy needs and the solutions it backs will have huge implications for the provincial economy.

If it underestimates demand, B.C. will need to buy more expensive power from the U.S. If Hydro overestimates, the corporation will build power plants it doesn't need. Both would cost consumers money. If it makes the wrong choices on issues like big coal-fired plants vs. small hydro projects, the province's economy is affected.

Hydro's preferred plan is likely based on building the Site C dam across the Peace River near Fort St. John, as well as energy conservation measures and additional power from private producers.

Site C makes a lot of people nervous. The $3.5-billion project was already scuttled by opponents once, in 1991.

Independent power producers don't like the proposal, because they want to supply the electricity. First Nations have issues about lost hunting land when thousands of acres are flooded. And the accuracy of Hydro's cost projections have come under fire.

The Liberals have made much of the need to let Crown corporations operate without political interference, never missing a chance to talk about the $460 million lost thanks to the NDP's half-baked fast ferries project. But there's been increasing recognition that leaving Crown corporations to their own devices carries its own risks and missed opportunities.

The B.C. Progress Board, a business panel appointed by the premier, weighed in last month with a report saying government, not B.C. Hydro, should be setting energy policy.

"B.C. Hydro is seen by many concerned parties to heavily outweigh the ministry in staff and resources, which puts the government in the position of not being able to provide adequate oversight and direction," said the panel, chaired by Victoria newspaper mogul David Black.

The last-minute scuttling of the launch of B.C. Hydro's energy plan suggests the government has come to the same conclusion, and is reining in the Crown corporation.

Footnote: Things will get complicated quickly if the government wants significant changes to the plan. Hydro is supposed to present it to the utilities commission within the next three months. Any major reworking could make it tough to meet the deadline -- especially if B.C. Hydro's co-operation is less than enthusiastic.

willcocks@ultranet.ca

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Cabinet says it needs time to review Hydro energy plan

By Scott Simpson
Vancouver Sun
09-Dec-2005

British Columbia's increasing dependence on imported electricity was behind the provincial government's decision to order a halt to BC Hydro's plans for a multi-billion dollar system makeover, Energy Minister Richard Neufeld said Thursday.

Neufeld says the government cancelled Hydro's announcement of an Integrated Energy Plan because of a general concern that the B.C. Liberals haven't had enough time to mull all the implications of Hydro's plans.

He says Hydro has done laudable work in preparing the plan, which is supposed to outline a 20-year effort to restore British Columbia to a position of independence from U.S. electricity suppliers who now serve about 12 per cent of B.C.'s annual electricity consumption.

But he added that cabinet was not willing to green-light the plan on the basis of a 30-minute briefing on Tuesday afternoon by senior Hydro officials.

Neufeld noted that Hydro had spent "well over a year" preparing its plan, "but we didn't see it in its complete form until late Tuesday afternoon."

A proposal to build a major new dam at the Site C location on the Peace River near Fort St John, at a cost of at least $3.5 billion, was expected to be a major component of the new Hydro plan.

That project is expected to attract opposition, particularly among first nations and non-aboriginal residents of northeast B.C. who say the region already contributes more than its share of power to the provincial electricity grid.

Opponents of Hydro's plan for a gas-fired electricity generating plant at Duke Point on Vancouver Island helped kill that project, at a cost to taxpayers of $125 million.

Neufeld said cabinet believes it is important for all B.C. residents to fully appreciate the pros and cons of all proposed new major projects so that they can make an informed choice about how the province should proceed to lessen its dependence on import power.

He said the government does not want to begin to address the situation without the public first understanding what's at stake -- and does not believe most residents are aware of the problem or the government's desire for energy self-sufficiency.

"We are facing some significant challenges and I don't think that on the basis of a half hour presentation by the crown [corporation] that provides almost all the electricity in the province, that you just run with it. I think that's a recipe for some real disaster," Neufeld said.

"I don't think I want to be tied to imports for 12 per cent of our energy like we are this year. I think to be perfectly honest that's nuts because it holds us ransom -- maybe not today but at some point in time.

"We buy most of it from south of the border, and when they get to the point where they are consuming all of that electricity themselves and perhaps they haven't built any new generation, they're not going to sell to us."

Hydro had informed the media earlier this week that it would announce the plan on Thursday, but instead issued a brief statement on Wednesday to say that the announcement was cancelled.

Hydro did not elaborate.

Neufeld said he regards Hydro's plan as one of four contributing reports that will guide cabinet deliberations about a possible revision of its 2002 energy plan -- and added that cabinet is still awaiting two of those reports, one on B.C.'s alternative energy options and the other from the province's competition council.

ssimpson@png.canwest.com

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We need bright lights to develop hydro projects

Editorial
Vancouver Sun
10-Dec-2005

The Liberal government and B.C. Hydro have stumbled badly in the development of a crucial plan to maintain an ample supply of electricity for the next 20 years.

At the last minute this week, the government ordered Hydro to cancel the unveiling of its Integrated Energy Plan, which has been under development for more than a year.

The government's intervention is disturbing at a number of levels. First, it flies in the face of the Liberals laudable promise to end political interference in Crown corporations.

If government officials have no confidence in the executive and board of directors of B.C. Hydro, they should replace the board with one in which they can have confidence. By undercutting the board, the government has further damaged Hydro's reputation as a stable partner for private sector investors in energy projects.

Hydro's credibility in that regard was already in some doubt following its astounding decision last year to pull the plug on the Duke Point project, leaving its private partner in the lurch and its customers with a bill of $125 million for which they will get nothing in return.

Just as importantly, this debacle comes on the heels of another report last month from the B.C. Progress Board that pointed out the urgent need for developing new electrical production capacity to protect our standard of living.

In the past, we've been been pretty smug about our energy resources, especially our hydro dams. But no significant new capacity has been added in the past two decades while our population has grown by a third.

B.C. still makes money by exporting power during peak demand periods in the U.S. and importing it when spot rates are lower. But we are now in a slow squeeze, with the imported portion of our electricity supply growing more costly every year. More urgently, as is happening in Ontario, any dependency on external power generation can lead not only to inconvenience and expense for consumers, but also sabotage the economy.

After a record-hot summer tested the limits of supply in Ontario, the president of Canadian Manufacturers and Exporters Association warned that firms will simply move elsewhere if they can no longer be assured of a reliable and affordable supply of electricity.

One controversial component of the new B.C. Hydro plan was to have been an examination of the possibility of building a major dam at Site C on the Peace River near Fort St. John. Energy Minister Richard Neufeld says cabinet wants the public to have a better understanding of the looming electricity shortfall before the government starts discussing major new projects so it will understand what's at stake.

Fair enough, but more than 18 months have already passed since Hydro started talking about Site C and Neufeld has been energy minister for almost five years. How much time does he need?

The dams that produce our clean, cheap electricity now were built by leaders who could see not only what British Columbia was, but what it could be.

We need that kind of leadership again today, before the lights go out.

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Victoria finally notices Hydro's bumbling

By Brian Lewis
The Province
11-Dec-2005

Somewhere deep within the B.C. Legislature's stone walls last week a light bulb suddenly burst into brightness, thus illuminating a growing problem this province has with electricity and B.C. Hydro.

Word is that the "somewhere" was the premier's office, where it suddenly dawned on the backroom that its policy of letting Crown corporations like B.C. Hydro run their own show is flawed.

A policy of no political interference is laudable given what the NDP did with Fast Ferries, but the Liberals' response also holds risks, as we're now seeing with Hydro.

Here's the background: Since the mid-1980s B.C.'s abundant domestic electricity surplus steadily declined to the point where in 2000 we became deficient and now must import about 12 per cent of our electricity to meet domestic demand.

This means that one in eight houses on your block runs on higher-cost electricity imports. The last major domestic power generation project came on-stream in 1984.

The problem began under the NDP, who used Hydro as a cash cow, siphoning off mega-dollars for other flights of fancy instead of upgrading and expanding the B.C. electricity grid to keep pace with growing demand.

But the Liberals have failed too, by allowing the province's largest Crown corporation too much independence without offsetting accountability.

As the recent Premier's Progress Board report on B.C.'s energy future noted: "B.C. Hydro is seen to set its own policies on electricity supply or responding to matters of public interest, such as the Energy Plan, in its own time and manner . . ."

Consequently, Hydro's track record on increasing power supply has been dismal indeed. Witness the now-shelved Duke Point/Vancouver Island natural gas pipeline fiasco that cost ratepayers $120 million.

Late last week Hydro was supposed to release its much-touted Integrated Electricity Plan, a 20-year blueprint for bringing B.C. back into a surplus electricity position, which the utility had been working on for a year.

Less than 24 hours before this plan was to be unveiled with all the pomp and circumstance of a B.C. budget, it was unexpectedly killed by Victoria.

The official explanation was that a review of the government's existing Energy Plan is awaiting a number of reports so that all of them, including the IEP from Hydro, can be studied together.

The energy ministry also said it didn't have enough time to study Hydro's plan before its scheduled release last Thursday.

Believing the latter explanation is akin to believing in the Tooth Fairy, since energy ministry officials have been involved in the IEP all along.

The real reason for pulling the plug, I'm told, rests with the 20-year-plan's central plank -- the Site C hydro-electric project.

Simply put, if Victoria allowed Hydro to proceed with this Peace River project as outlined in its IEP, there's a high risk that it would become another Fast Ferries fiasco -- only one with much higher cost consequences for taxpayers.

The problem is that Hydro's cost-estimates for Site C are not only all over the map, they're incomplete, sources say.

Last May, the utility was touting Site C at a construction cost of $2.26 billion with electricity costs of about $48 per megawatt hour. Last week it was talking about a $3.5 billion capital cost with electricity costs of $43 per megawatt hour. A higher capital cost with a lower cost for the electricity?

Nor have many other costs including transmission-line upgrades to the Lower Mainland, inflation or First Nations treaty costs, been included in the costing, sources say.

Realistically, they add, electricity costs in the $60-$70 per megawatt hour range are more likely.

Add up all these deficiencies and no wonder the premier pulled the plug. Even with transparent costing, Site C is going to be a very tough sell politically.

In the meantime, as B.C. power planning stumbles and bumbles along, the need to import electricity increases and that means much higher electricity bills are in store for everyone.

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

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Hydro needed to have its plug pulled

By Les Leyne
Times Colonist (Victoria)
13-Dec-2005

Full marks to the provincial cabinet for embarrassing B.C. Hydro by putting a last-minute hold on the utility's grand release of its 20-year-plan.

They should have done it sooner.

The Liberal move has provoked some alarm about political interference in the highly technical field of electricity supply. But if there's one area where a dash of political meddling would go well right now, it's in the area of energy policy.

B.C. Hydro has a huge reservoir of technical expertise and a headquarters full of experts who know what they're talking about. There's no doubt the integrated electricity plan they've been working on for more than a year will be a comprehensive document.

But writing a good plan is one thing. Executing a plan is another. And that's where B.C. Hydro has been falling down lately, and that's why the politicians stepped in.

It would be very surprising if they actually interfered in the plan itself during the delay period imposed on the release, which could last six months.

What they're planning to meddle in is the communication plan leading up to the execution of the long-range vision.

And looking at Hydro's record of executing plans and building things over the last while, it's clear they badly need some help on that front.

There's no clear record of whether it was that or something else on the government's mind. But something prompted them last week to blow a very abrupt whistle on Hydro's long-awaited release of the plan.

At the last minute, Hydro CEO Bob Elton said that after "consultation with government," it was all postponed until spring.

"Further work" is needed to ensure the plan meets the needs of ratepayers, said a statement put out in his name.

Behind the scenes, it's been reported that the Liberal cabinet looked at the plan's recommendation to proceed with another big-league dam on the Peace River and decided that a lot more prep work has to be done before that socially complicated project can proceed.

That's essentially what the Progress Board report said the week previously. It urged that B.C. become self-sufficient in electricity -- a luxury lost about five years ago. And it recommended the government step up and start, well ... interfering.

"It is the role of the B.C. government to speak for the public in this regard, and it is the role of B.C. Hydro to follow the direction of government."

But the report said exactly the opposite is the norm: Hydro has the government out-gunned in any energy discussions, and sets its own policy "in its own time and manner."

Elton's statement last week after the rug was pulled out from under him tried to smooth everything over, saying both government and Hydro have a strong desire to ensure the plan is fully reviewed in the context of the government's energy policies.

You'd think that's exactly what they've been spending the last year doing, but apparently the master plan was a big surprise full of new revelations to the provincial cabinet. It's obvious there's a gulf now between the government and Hydro. It's not about whether to build that multi-billion dollar dam, though.

It's about how.

First Nations and other residents in the area have to be brought on side, much firmer cost estimates have to be established and the need for the power has to be explained to people before the bulldozers move in.

In the back of the politicians' minds is Hydro's track record when it comes to embarking on major projects. The problem is that they don't have one any more. The days of the utility's mega-projects are far behind us. Hydro has made incremental increases to its generating capacity, but it hasn't made a major addition to the energy supply since 1984.

And even when it comes to building smaller projects, like the Vancouver Island Generating Project, the utility got bogged down in a wild-goose chase up and down the Island that cost 10 years and $120 million before it fizzled out last summer with nothing to show for it.

If an outfit like that showed up at the door with a 20-year plan for the province's energy future, you'd want to think twice about it, too.

The danger in some minds is that -- now that the ice is broken -- the politicians will take to this new policy of intervening and start throwing their weight around on technical questions, as well.

That's the habit previous New Democrat governments fell into, and let's just say it doesn't work out.

Cabinet is expecting two more substantial reports on energy, one on alternative energy prospects and one from the competition council.

They need to digest those early next year, get a better idea from Hydro on how to pitch the Site C Peace project as doable, make some informed guesses and then get out of the way.

But there's no harm so far in jerking B.C. Hydro's chain.

leyne@island.net

Also of interest: Leyne's 24-Nov-2005 column, "Who's got the power with our power?" (link)

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Posted by Arthur Caldicott on December 13, 2005

December 10, 2005

United Nations Climate Change Conference
Montreal, November 28-December 9, 2005

Guy Dauncey of the BC Sustainable Energy Association (www.bcsea.org) has been at the conference, and his blogs from Montreal are a rewarding read. You can find them all at www.bcsea.org.

Here is his last blog and summary of proceedings:

Saturday, December 10th

Well, it is all over, and the story is: SUCCESS!

The last two days have been full of ups and downs, which I have tried to follow and interpret (and occasionally mis-interpret) through a mixture of conversations and following the latest media interpretations via Google News (a recent discovery: if you set up a personal Google News page http://news.google.ca/, you can personalize it to send you only the news stories that carry a particular phrase, such as ‘climate change’ or ‘flying giraffes’. Very handy).

The final deal, which was gaveled down by Stephane Dion at 6.17am this Saturday morning, is (1) that the Kyoto nations have agreed to start discussions to draft a new long-range plan to combat climate change, to start in 2012 when Kyoto expires; and (2) that the larger group of world nations, including the USA, China and India, which signed the 1992 Convention but which have not ratified Kyoto, will hold an open-ended dialogue to discuss ways to reduce greenhouse gas emissions, but with the specific inclusion of a clause that the Americans demanded insisting that the dialogue for these nations not include any talk about new commitments. The world’s delegates cheered when the deal was finally done.

The NGO community is jubilant, full of hugs and tears. The deal is done, and the world can get down to work to tackle the really big task: implementing the actions, as well as the words. In addition to those two agreements listed above, there were also successful conclusions to a lot of side-agreements regarding the detailed implementation of the existing Kyoto Protocol. The best news coverage I’ve seen so far is from Peter Gorrie, in the Toronto Star (link)

My Google News indicator says there are 1,533 related news stories, which tells you how busy the world’s media is with this issue. The Reuters story is also good. (link)

But there was also a second, really significant outcome from the talks. A new informal world standard has emerged for a 30% reduction in emissions by 2020, and an 80% reduction by 2050. The new C20 group of major world cities (including London) has signed onto this goal, as has the European Parliament. This was also the goal set by the youth delegation, which has received a LOT of attention. California has adopted the 80% by 2050 goal, and President Chirac has said that France and the other developed nations should strive for a 75% reduction by 2050.

Personally, given what I know of the science, I don’t think this is good enough: I believe we should aim for an 80% reduction by 2025, but for what’s politically achievable right now, that places me in cloud cuckoo land. I’ll still hold to that goal, while trumpeting the 30% by 2020 and 80% by 2050 goals as fantastic.

These are not legally binding goals, of course; but they set the tenor of the direction in which we should be heading. What’s great about them is that the small numbers, such as a 6% reduction, allow people to think that we can continue with business as usual, while just fiddling with a few details. An 80% reduction calls for a complete rethink of the way we use energy, travel, and live, and opens the door to a future designed entirely along the lines of green sustainability (unless it’s done with nuclear, which is still in play).

Friday was full of excitement, as it seemed as if everything might come off the rails, at some points. Six months ago, when we knew that COP-11 would happen in Montreal, Elizabeth May of the Sierra Club invited various high-level people to attend, with the hope and intention that it would involve the mainstream American media and others, and awaken the USA to what was happening. The Sierra Club’s strategy worked brilliantly, not only because there has been a very strong presence from US city mayors, California State, and other leaders, who have made it quite clear that they are behind Kyoto, and more (195 US cities have now signed onto the full Kyoto goals), but also because Elizabeth’s trump card came up good when Bill Clinton decided just 3 days ago that yes, he would attend.

This threw everyone into an excited tizzy, and when the big moment arrived, around 2pm on Friday, everyone went into the big plenary room, where all of the chairs had to be turned round, so that Clinton would not speak under the formal UNFCCC logo. Then we all had to leave the room while it was ‘swept’ (not for litter, but for aliens from Mars), and then we all trooped back in, and Clinton immediately received a big standing ovation, before he’d even opened his mouth.

In his speech, he showed his normal flair with numbers, examples, policies and practices (it is just impossible to imagine George W giving a similar kind of speech), and really emphasized the economic benefits of greenhouse gas reduction, saying that the opponents of Kyoto were ‘flat wrong’ when they said that it would kill jobs and destroy the economy, which is one the US government’s main excuses for not signing on. (see here for a full report).

When he said that ‘"We know from every passing year we get more and more objective data that if we had a serious, disciplined effort to apply on a large scale existing clean energy and energy conservation technologies that we could meet and surpass the Kyoto targets easily in a way that would strengthen, not weaken, our economies’, he received spontaneous cheers and full applause (in which I was a very vocal participant). This is really important, since if we can persuade people on the economic arguments, the remaining few ‘skeptic’ doubts on the science arguments suddenly don’t matter.

The US delegation was really miffed at Clinton showing up and stealing the show, and they subsequently walked out of the negotiations, threatening to veto the whole thing. All that they were being asked to do under the existing text for the 1992 Parties to COP was agree to a dialogue, but no, even that was too much. The NGO community held a contest, as to what better word might please them, such as a ‘thingy’. Someone suggested ‘lunch at the ranch’, but the US delegates weren’t up for lunch with anyone, unless it was on their terms.

However, their walk-out did not play well in the US media, and after having a call to the White House, they came back into the play, and finally agreed to participate in the dialogue as long as it did not discuss commitments. As one NGO leader put it, in the stand-off over the planet’s future, the US blinked first. They caved in to the almost unanimous global pressure from all the other countries, and as a result, we now have a twin-track process which allows us to chart our way into a safer, more sustainable world.

On a personal level, Thursday was a wild day for me, and very rewarding. I was invited to speak to the youth delegation, which got them very pumped, and then I did a 15’ web-cast for the UNFCCC about the BCSEA, and a ’12 Step Process to make BC 100% free of Fossil Fuels’. This went down really well, and I had a big crowd listening at the end.

This lead to a meeting with the South African Minister of the Environment (who is trying to fight off the pressure to go nuclear), and with David Walsh, the Environment Critic for the opposition Liberal Party in the Alberta Legislature (who is trying to get a voice of sanity into Alberta politics), a radio interview for a German station and a film interview for a future film on activism and climate change. I ended up in conversations from 3:30pm till 10pm that night; and enjoying every moment of it.

Friday was equally busy, as I shared in presenting a seminar on Green Heat with Bill Eggertson in the morning, which was poorly attended, but successful nonetheless. And there have been many other highlights, such as listening to the City of London’s presentation by their Deputy Mayor Nicky Gavron. But that’s going to have to wait till I do a final wrap-up blog, since now I’ve got to get my skates on, and get organized for my flight back to Victoria.

So over and out!
Guy

Read Guy's other blogs from Montreal at www.bcsea.org

Posted by Arthur Caldicott on December 10, 2005

UN talks set road map for Kyoto beyond 2012

By David Fogarty and Mary Milliken
Reuters
10-Dec-2005

MONTREAL (Reuters) - Environment ministers agreed on Saturday to a road map to extend the Kyoto Protocol climate pact beyond 2012, breaking two weeks of deadlock at UN talks aimed at curbing global warming.

Ministers also agreed to launch new, open-ended world talks on ways to fight climate change that will include Kyoto outsiders such as the United States and developing nations. Washington had long resisted taking part in the talks.

"This is a watershed in the fight against climate change," European Environment Commissioner Stavros Dimas told reporters of the accords after talks that dragged on till nearly dawn. The conference was attended by 10,000 delegates.

"There is still a harsh road in front of us," Dimas said about the long-term drive to cut emissions of carbon dioxide and other gases released by burning fossil fuels and blamed for heating the atmosphere and oceans.

Environment activists cheered, hugged and some even cried after the delegates passed what they hailed as historic decisions to brake catastrophic changes ranging from desertification to rising sea levels.

"There were many potential points at this meeting when the world could have given up due to the tactics of the Bush administration and others but it did not," said Jennifer Morgan, climate change expert at the WWF conservation group.

The United States, the world's largest emitter of greenhouse gases, pulled out of Kyoto in 2001, saying a fixation on emissions targets would harm economic growth, a view challenged on Friday in Montreal by former U.S. President Bill Clinton.

WATERED DOWN

Washington agreed to join the open-ended dialogue only after Canada and the European Union watered down the text and spelled out that it would not lead to formal negotiations or commitments or the type of emissions caps enshrined in Kyoto.

"The text that was adopted recognises the diversity of approaches," said U.S. climate negotiator Harlan Watson.

Washington favours voluntary measures and big investments in technology like hydrogen or carbon storage. Other countries are seeking to engage Washington for the long haul, hoping President George W. Bush's successor will be less sceptical of UN-led action on the environment.

The Montreal talks followed a twin track -- one pursuing negotiations to advance Kyoto and the other under the broader UN Framework Convention on Climate Convention, Kyoto's parent treaty ratified by Washington.

"We are delighted," said Margaret Beckett, environment secretary for Britain, head of the rotating European Union presidency.

Stephane Dion, Canada's environment minister and chair of the Montreal talks, was relieved. "Finally, we have achieved what many claimed was unattainable," he told delegates at the final session.

"Facing the worst ecological threat to humanity, you have said: the world is united, and together, step by step, we will win this fight," he said.

The Kyoto decision urges rich nations to decide, as early as possible, new commitments for the period starting in 2013 so that there is a seamless transition when the current phase ends in 2012. Beckett said that this would reassure traders in carbon dioxide markets.

Under Kyoto, about 40 industrialised nations have to cut their emissions by an average of 5.2 percent below 1990 levels by 2008-2012.

But developing countries, such as China and India, have no targets under Kyoto and say that rich industrial states -- having fuelled their economies with coal, oil and gas since the Industrial Revolution -- have to take the lead in cutting emissions.

The agreement on a Kyoto renewal road map gives members seven years to negotiate and ratify accords by the time the first phase ends in 2012. Most countries agree that deeper cuts will be needed to avoid climate chaos in coming decades.

Global warming is widely blamed on a build-up of gases from burning fossil fuels in power plants, cars and factories.

With the talks over, a huge sigh of relief swept through the vast conference hall after a 20-hour session that left delegates exhausted and a little emotional. Some environmentalists said the Montreal talks would have profound consequences for humanity.

"At 6.17 this morning, (Dion) brought down the gavel on a set of agreements that may well save the planet," said Elizabeth May of the Sierra Club of Canada.

© Reuters 2005. All Rights Reserved.

Posted by Arthur Caldicott on December 10, 2005

Conference reaches climate deal

U.S. agrees to watered-down declaration

PETER GORRIE
TORONTO STAR
Dec. 10, 2005. 08:25 AM


MONTREAL -- Weary delegates, politicians and lobby group members cheered early this morning as the United Nations climate change conference finally passed its last two major decisions after two days and nights of gruelling talks.
The main negotiating logjam broke around midnight, when the United States agreed to a watered-down declaration that all 189 countries at the conference will start an open-ended “dialogue” aimed at finding new ways to cut greenhouse gas emissions.

That move, in turn, allowed the passage of a crucial separate deal, under which Canada and 39 other industrialized nations bound by emissions-cut targets under the Kyoto Protocol will begin to negotiate deeper cuts for after the Protocol’s first phase expires in 2012.

The U.S. had objected to several increasingly weak versions of the dialogue agreement during the two week conference, and walked out of the talks Thursday night.

But under intense pressure from most other countries represented here, it finally relented, signing on to a final version after yet more revisions.

Environmental groups were enthusiastic about the conference’s outcome. “This is a set of agreements that may well save the planet,” said Elizabeth May, executive director of the Sierra Club of Canada.

They were equally pleased by the last-minute American compromise.

“The Bush administration blinked. The world should remember that,” said Bill Hare, policy director with Greenpeace International.

“They miscalculated and underestimated the will of countries to move forward in combatting climate change,”said Jennifer Morgan of WWF, formerly the World Wildlife Fund.

Environment Minister Stéphane Dion, the conference president, was obviously elated when he banged his gavel to signal the passage of the decisions.

The UN meeting has produced a “Montreal Action Plan” that “will guide us as we tackle climate change on many fronts.”

He denied the U.S. had caved in. Paula Dobriansky, the head of the American delegation, “acted in good faith,” he said. Despite disagreements: “she never told me she would not work with me.”

Under one agreement, the countries with mandatory emissions targets are to immediately start talks on deeper cuts. They are instructed to get the work finished in time so any new caps will take effect as soon as the first phase ends.

The dialogue deal calls for workshops to hold non-binding discussions, with no deadline.

Although vague, Dion said they would come up with innovative measures to combat climate change.

“Now, national governments will have the forum to exchange experiences and analyze strategic approaches, and to free our imaginations,” he said.

Posted by Arthur Caldicott on December 10, 2005

Clinton steals show at U.N. climate talks

Reuters
Sat Dec 10, 2005

MONTREAL (Reuters) - Former U.S. President Bill Clinton told U.N. climate talks in Canada on Friday that the Bush administration was "flat wrong" to reject the Kyoto accord and said cutting greenhouse gases was good for business and the planet.

In an impassioned speech to hundreds of delegates and nongovernmental groups, Clinton rejected a major tenet of the Bush administration's argument for pulling out of the Kyoto Protocol emissions pact in 2001.

Clinton, whose administration negotiated Kyoto in 1997 but never submitted it to a sceptical Senate for ratification, said the belief that Kyoto would hurt the economies of developed nations was "flat wrong."

"We know from every passing year we get more and more objective data that if we had a serious, disciplined effort to apply on a large scale existing clean energy and energy conservation technologies that we could meet and surpass the Kyoto targets easily in a way that would strengthen, not weaken, our economies," he said.

Under Kyoto, some 40 industrialised nations agreed to cut emissions in 2008-12 by over 5 percent from 1990 levels, but Bush says mandatory cuts on emissions from fossil fuels would hamper growth and job creation.

Clinton said a serious commitment to a clean energy future was the solution and this would lead to jobs growth, just like the tech boom of the 1990s fuelled an employment boom.

"We can create jobs out of wind energy, solar energy, out of biofuels, out of hybrid engines," he said.

Stricter efficiency standards for building and appliances would also boost jobs.

"In America, there's no telling how many jobs we could create if we just made the decision that in the rebuilding of New Orleans it would become America's first green city," he said.

Talks in Montreal are trying to take the Kyoto Protocol forward after its first phase ends in 2012 but the discussions have dragged in part because of U.S. objections to any binding commitments on emissions of carbon dioxide and other greenhouse gases.

Many delegations say efforts to curb global warming will be futile unless the United States, responsible for about a quarter of the world's greenhouse emissions, fully participates.

Clinton's speech drew applause and cheers from the audience.

"I don't know if it will have an impact (on the meeting), but I liked what he said. He's talking to the committed here," said Grant McVicar, a member of host Canada's delegation.

Many scientists say rising levels of carbon dioxide from burning fossil fuels will lead to rising seas, melting of glaciers and ice caps and more extreme weather events, including storms like Hurricane Katrina that devastated New Orleans.

© Reuters 2005. All Rights Reserved.

Posted by Arthur Caldicott on December 10, 2005

December 09, 2005

GSXCCC Annual General Meeting

6 November 2005

GSX Concerned Citizens Coalition
4th Annual General Meeting!

DATE: Saturday, 10 December 2005

TIME: 5:00 p.m. to whenever

PLACE: Pixie Hall, 3550 Watson Avenue, Cobble Hill
(across the road from Cobble Hill Farmer’s Institute Hall)

The GSX Concerned Citizens Coalition is holding its fourth AGM, potluck feast and social evening. We want all members and guests to join us, bringing food and drink, and an interest in Vancouver Island’s electricity future.

You are invited and encouraged to attend and:
• Celebrate the demise of the Duke Point Power Plant and the effective end of BC Hydro’s on-Island gas-fired electricity strategy;
• Help determine a New Direction for GSXCCC;
• Elect new directors (members only);
• Renew your membership (or join; assuming we go forward);
• Enjoy a great potluck feast with fun people.

Agenda & Order of Business:
(Non-members are welcome; only members will receive voting cards.)
5:00 – Meet, greet and renew memberships;
5:30 – AGM called to order;
• Financial Report by Phil Marchant, Treasurer (There is no auditor.);
• President’s report on GSX and Duke Point;
• Arthur Caldicott’s report on Vancouver Island Transmission Reinforcement Project and other GSXCCC activities;
• Nominate and elect directors;
• Resolution on next steps.
6:50 – Potluck Feast.

Support your hard-working directors or just come to eat.

Election of Directors:

GSXCCC has eleven directors and space on the Board for twelve. Elections are for two-year periods, staggered.

Incumbent & Position: Status: Going-Forward Position
Tom Hackney, President continuing as Director
Steve Miller, Vice-Pres. continuing as V-P
Arthur Caldicott, Secretary continuing as Secretary
candidate for President & Sec
Phil Marchant, Treasurer candidate for re-election
Don Skerik, Director continuing as Director
Kevin Maher, Director continuing as Director
Mairi McLennan, Director candidate for re-election
Dodie Miller, Director candidate for re-election
Peter Ronald, Director resigning
Tony Fisher, Director continuing as Director
John Hill, Director continuing as Director
? (this could be you!) vacancy Director

Five Directors are due to be elected or re-elected. Their terms are for two years. Directors may be nominated from the floor or may be put forward prior to the meeting (call Tom Hackney (250) 381-4463 or email thackney@island.net). Include evidence that the candidate accepts nomination. Candidates must be members in good standing.

Resolution on the Number of Directors:

The AGM may find it convenient to set the number of Directors at some number less than twelve. Five is the minimum allowable.

Resolved that: The number of Directors for the GSXCCC is ___.

New Direction for the GSXCCC:

Resolved that: The GSXCCC continue to intervene in regulatory proceedings and to take other actions as necessary to continue to promote sound energy policies and practices for Vancouver Island and BC.

Posted by Arthur Caldicott on December 09, 2005

Sea Breeze Files For First Power Line

Nickle's Energy Analects
8 December 2005

The National Energy Board (NEB) reports it has received an application for the construction of a 150-kilovolt, high-voltage, direct-current, international power line (IPL) connecting Vancouver Island and Washington.

The NEB said the proposal from a subsidiary of Sea Breeze Power Corp. would extend a transmission line for 47 kilometres from View Royal, British Columbia, near Victoria, southward across the Strait of Juan de Fuca to Port Angeles, Washington.

About 12 kilometres of the line would be onshore, with the remainder to extend underwater across the strait, the NEB said in noting the Sea Breeze subsidiary also proposes to construct a converter station near existing substations on Vancouver Island.

The proponent would like to start construction in November 2006, the NEB said in noting it would establish procedures for the public hearing process in early 2006.

The NEB said it anticipates conducting at least one public information session on its processes for the filing.

Sea Breeze has proposed two IPL -- the one connecting to Port Angeles from Victoria and another connecting Vancouver to Fairmount, Washington, which could be available for service as soon as 2008.

The interconnecting utilities for two IPL, which have been under development since October 2003, would be British Columbia Transmission Corporation (BCTC) in B.C. and Bonneville Power Administration (BPA) in Washington.

Sea Breeze made its first interconnection filings to the BCTC and BPA in June 2004.

The NEB authorizes IPL projects on behalf of the federal government.

The NEB application was filed by Sea Breeze Victoria Converter Corporation, which was established by Sea Breeze Pacific Juan de Fuca Cable, LP.

The partnership is owned equally by Vancouver-based Sea Breeze and Boundless Energy NW, Inc. of York Harbor, Maine.

NEB news release, 07-Dec-2005

Application submitted to NEB

Posted by Arthur Caldicott on December 09, 2005

Higher Global Output Forecast As Peak Oil Debate Continues

By Mike Byfield
Nickle's Daily Oil Bulletin
8 December 2005

The debate over global petroleum potential continues to bubble, with Cambridge Energy Research Associates, Inc. asserting yesterday that daily capacity will rise as high as 108 million bbls by 2015 from 87 million today. Several decades from now, CERA said, production will move into an "undulating plateau" rather than plunge drastically.

Robert Esser, CERA's director of global oil and gas resources, made that forecast to the U.S. Congress, addressing a hearing to examine peak oil theory which is being conducted by the Energy and Air Quality Subcommittee of the House of Representatives. Esser's forecast is based on a new field by field analysis of global reserves. [Esser's full testimony is here.]

Regarding Saudi Arabia's pivotal reserves, Ross Smith Energy Group has assessed Twilight in the Desert: The Coming Saudi Oil Shock and The World Economy, a best-seller by Houston banker Matthew Simmons. The Calgary consulting group concluded that Twilight incorrectly "posits a crisis where none exists" due to the author's misinterpretation of engineering studies.

Simmons, whose book is now being translated into Chinese, Japanese and Korean, is not backing off. Instead, he claimed that Saudi Aramco insiders have privately expressed relief to him in recent weeks that the worrisome possibility of a production collapse in that country has been publicly aired. [view Simmons' presentation of "Twilight in the Desert" to the Hudson Institute here.]

Like Ross Smith, CERA disagreed with Simmons. Esser testified, "While there has been much debate about Saudi Arabia's ability to expand production capacity, we see no comprehensive justification of claims that production is about to `fall off a cliff.' We anticipate an expansion of crude and condensate capacity from 11.1 million bbls per day in 2005 to as much as 13.2 million by 2015."

"We see no evidence to suggest a [global production] peak before 2020," Esser stated, "nor do we see a transparent and technically sound analysis from another source that justifies belief in an imminent peak."

For the period 1995-2003, CERA said world production was replaced by a ratio of 4:3 due to exploration plus upgrades of previous discoveries. That analysis was based on field figures compiled by its parent firm IHS Inc.

CERA pegged global production for that period at 236 billion bbls. On the supply side, exploration success reportedly added 144 billion bbls and field upgrades accounted for 175 billion bbls, for a total of 319 billion bbls.

Esser said that much confusion has been created by the U.S. Securities and Exchange Commission, whose reporting regulations still reflect technology current in 1970. For example, SEC regulations do not permit American producers to include Canadian oilsands properties in their reserve figures.

CERA acknowledged that non-traditional sources will continue their dramatic rise, constituting 35% of global production capacity in 2015 compared to 10% in 1990. Its report indicates that reliance on OPEC sources will increase only slightly by that time.

Included in the expanded supply figure is an increase of heavy oil capacity in Canada and Venezuela to 4.9 million bbls per day by 2015 from 1.8 million this year. NGL capacity is projected to reach 23 million bbls per day from 14 million.

Esser warned that the more serious threats to global supply come from above-ground factors such as warfare, political turmoil, and inadequate development of a skilled workforce and petroleum infrastructure.

In stark contrast to CERA's optimism, Simmons told the DOB that by 2020 global production is likely to be approximately 60 million bbls per day, creating massive strains in a world economy that is currently headed toward daily demand of 120 million bbls.

His firm, Simmons & Company International, has 126 employees in Houston and Aberdeen, billing itself as the largest investment bank dedicated to the oilfield service sector. The banker noted that improvements in oilfield productivity in recent decades have come entirely from service firms.

"Petroleum producers must be optimists by the nature of their business," Simmons commented. "They are masters of expounding the best possible case in the most conservative-sounding vocabulary. In their eyes, I'm just a banker and a rig guy who doesn't know what he's talking about."

Even so, Simmons said, he publicly predicted in 1995 that North Sea oil production would peak between 1998 and 2000. "At that time, a roll call of the world's best producers forecast that the North Sea would peak in 2010 at eight million bbls per day. In reality, the North Sea peaked at almost 6.1 million bbls in 1999."

The banker commented that North Sea output will dip to about 3.5 million bbls during next summer's workover period, and that the summer low has become the annual production average within a year or two in recent times.

In a similar vein, Simmons pointed to Oman's giant Yibal oilfield, which declined from a peak of 250,000 bbls per day in 1997 to less than 40,000 bbls currently. "The field watered out," he recalled. "Yet just months before the production collapse began, Shell's best technicians had made plans to increase Yibal's production by 30%."

The Houston entrepreneur said his critics wrongly state that his book predicts an imminent collapse of Saudi production. "Twilight explains why a Saudi drop could occur unexpectedly, we can't know exactly when but it might be soon, and the decline could be relatively rapid when it hits, like Oman and the North Sea."

Fundamentally, the author said, no one can rely on the Saudi Arabia's production forecasts until the kingdom releases data on a field by field basis, which its government has consistently refused to do.

Simmons is not yet a believer in oilsands, coal liquefaction and most other non-conventional resource plays. "With alternative sources, be careful that you don't put more energy in than you get out," he advised, postulating that Alberta oilsands operators should weigh the use of nuclear power to preserve natural gas.

The banker suggested that higher oil prices will force profound transportation changes. "Long-distance trucking will be drastically curtailed in favor of trains and ships." In his calculation, ocean freighters are 30 times more energy-efficient than trucks, while a single Mississippi tug can move barge-borne tonnage equal to about 350 semi-trailer truckloads.

The banker believes that rising transport costs will mean that most food will be grown much nearer to consumers, that far more goods will be manufactured locally and that a massive work shift will occur from central offices to computer-networked home offices in order to reduce commuting expense.

"Wages for home-based workers will be based on productivity more than time, and as a result we'll see a huge surge in productivity," the Texan financier prophesied.

Jim Jarrell, president of Ross Smith, said his firm's clients are investors who were alarmed by Simmons' intensively publicized forecasts. The Calgary consultancy's reservoir specialists reviewed Twilight's analysis of Saudi output, which was based on about 235 technical papers published by the Society of Petroleum Engineers (SPE).

Ross Smith contradicted Simmons' claim that Saudi Aramco's reporting data is exceptionally skimpy, commenting that the state oil company's "practice of assigning reserves appears to be as conservative as any we have seen among North American companies."

Jarrell said Twilight's interpretation of SPE engineering studies is professionally unorthodox, at times technically uninformed and inaccurate in terms of its conclusions.

For example, Ross Smith pointed to the best-seller's heavy reliance on a 1979 U.S. Senate subcommittee paper which predicted an irreversible decline in the giant Saudi Ghawar field due to water breakthrough and decreasing pressure. In reality, the Calgary consultant said, Ghawar's water cut peaked at 37% in 1999 and no such production decline has occurred.

While Twilight expressed concern that Saudi exploration has yielded few new oilfields for decades, the Ross Smith study countered that little Saudi wildcat drilling has occurred because the existing fields remain so ample and healthy.

http://www.nickles.com/brn.html

CERA's Robert Esser's full testimony to the Energy and Air Quality Subcommittee of the House of Representatives, is here.

Matthew Simmons' presentation of "Twilight in the Desert" to the Hudson Institute is here.

Posted by Arthur Caldicott on December 09, 2005

December 08, 2005

Government concern about Site C dam stalls power plan

By Scott Simpson
Vancouver Sun
08-Dec-2005


BC Hydro's ambitious 20-year plan for a multibillion-dollar makeover of British Columbia's electricity system hit a major snag Thursday when the provincial government ordered Hydro to back off out of concern about the controversial Site C dam project.

Hydro officials had little to say. Bob Elton, Hydro president and CEO, issued a brief statement by e-mail that the plan, which was to be unveiled today, would be delayed until an unspecified date next year.

Hydro's "Integrated Energy Plan" was expected to include a mix of small, private sector hydroelectric projects, electricity conservation initiatives, upgrades to large government-owned facilities -- and a decision to proceed with the controversial Site C dam on the Peace River near Fort St. John.

It was not immediately clear if the province's concerns were attributable to soft cost estimates for Site C -- which would cost taxpayers a minimum $3.5 billion -- or strong opposition from first nations in northeast B.C., or a conflict with independent power producers who were promised in 2002 that all new power projects in British Columbia would be developed by the private sector.

"In consultation with government, we have now decided to postpone this release and will be doing further work to ensure that this plan meets the needs of ratepayers," Elton said.

Earlier this week, some B.C. Liberal MLAs told Vancouver Sun political columnist Vaughn Palmer that they had concerns about Hydro's ability to shepherd the controversial Site C hydroelectric project -- the cornerstone of the new plan -- through to completion.

NDP energy critic Corky Evans said the province's 11th-hour involvement casts a shadow across more than a year's worth of community consultation and preparatory work by BC Hydro.

"What I find really bizarre is that it flies in the face of the Liberal mantra, maintained all through the public debate about the sale of Terasen Gas and the controversy about the [CN] railroad and all kinds of stuff, that it was not their intention to manipulate public processes or commissions or Crown corporations," Evans said.

Energy Minister Richard Neufeld was tied up in a series of meetings and could not be reached for comment.

Hydro goes through a similar planning exercise very two years, submitting details to the B.C. Utilities Commission as per its regulatory requirements.

However, this year's version of the plan was considered to be its most ambitious effort in more than a decade, in light of British Columbia's growing dependence on imported electricity to supplement a provincial resource that has not grown significantly in volume since the Revelstoke Dam was built in the early 1980s.

Earlier this month, Treaty 8 first nations in northeastern B.C. advised Hydro that they "adamantly" oppose Site C.

The construction of two earlier dams on the Peace, the W.A.C. Bennett and Peace Canyon dams, led to flooding of millions of acres of traditional hunting and fishing territory for the bands.

A BC Hydro summary of a meeting with the aboriginals reported that they "made it clear that they are adamantly against the development of Site C."

ssimpson@png.canwest.com

Posted by Arthur Caldicott on December 08, 2005

Power for the people

By Dan Potts
Joint Industry Electricity Steering Committee
Vancouver Sun
08-Dec-2005


British Columbia now consumes more electricity than it produces. Blessed for decades with a surplus of electricity, we must now rely on others beyond our borders for a growing portion of our electricity needs.

It is an uneasy situation.

Several jurisdictions in North America, such as California and recently Ontario, have experienced serious problems because of their reliance on volatile external power markets for their electric power. There is no reason for that to happen here in B.C.

We have many resource options to choose from to meet our future needs -- thermal plants fired by natural gas, wood waste, or coal; wind; run-of-the-river hydro; Site C large hydro, and others. The challenge will be in making the right choices and at what cost.

BC Hydro has actively promoted conservation through its Power Smart program for several years and will continue to do so. But even with this aggressive program, consumption is expected to grow, particularly in light of the improved performance of B.C.'s economy.

In 2005, B.C. imported 6,896 giga-watt hours (GWh) of electricity to meet domestic needs, 12 per cent of our consumption and enough to supply over 650,000 homes. Without new generation, by 2020 we will be short on in-province generation by 14,000 GWh and forced to import a full 25 per cent of our energy needs.

BC Hydro is projecting that the Burrard Thermal Generation facility will supply up to 6,000 GWh per year. However, Burrard Thermal is inefficient by current standards, and with the high cost of natural gas is no longer a source of reasonable cost energy for the BC Hydro system.

While the facility still has a role to play as an emergency back-up for the Hydro system, using Burrard to produce 6,000 GWh a year would increase BC Hydro's total energy costs by at least $300 million per year compared to the historic costs of buying that amount of power from import markets.

Bringing on new sources of supply can take years of planning, engineering, and construction. We need to get on with the job if we are to continue to maintain the valuable competitive and employment advantage of low cost, reliable electric power that British Columbians currently enjoy.

Keeping the cost of the new electricity as low as possible is critically important to B.C.'s future. Ultimately it will be the ratepayers -- BC Hydro customers -- who pay for the new facilities. If the choices we make today result in expensive electricity, consumers will be unhappy, industrial and commercial manufacturers will be less competitive and ultimately B.C.'s economy will be negatively affected, having an impact on everyone.

To meet current and future demand, BC Hydro needs to develop an aggressive plan to acquire new, low-cost electricity and to consider all possible options.

The huge shortfall we are facing will require a mix of resources, both large and small. Site C alone can potentially deliver 4,000 GWh, but even if we had approval now it could take up to 10 years to build.

Coal is B.C.'s most abundant energy source and new technology makes generating electricity from a large coal-fired generating plant environmentally sound, predictable and reasonably low-cost.

While run-of-the-river hydro and wind may have a valuable place in BC Hydro's portfolio, they are typically small and dependent on weather conditions.

We have no particular preference for any one generating technology; in fact new electricity supply should come from a balanced range of options. Our only concern is that the process to determine those new sources of electricity not be biased in favour of expensive, less reliable options.

Regardless of the approach, developing new electricity sources and the necessary transmission capacity to distribute it will involve debate and controversy.

While we all may have our favorite approach, it is clear that for BC Hydro to fulfil its commitment to serve the province, low-cost electricity resources must be developed, and soon. To be successful in this effort, BC Hydro will need support from every level of government and the community.

Dan Potts is executive director of the Joint Industry Electricity Steering Committee, which represents the major industrial users of purchased electric power in B.C.

Posted by Arthur Caldicott on December 08, 2005

BC Hydro issues F2006 Call for Power ... at last

BC Hydro issued the Fiscal 2006 (F2006) Open Call for Power (“CFT” or “Call”) on December 8, 2005.

BC Hydro is targeting to procure in this Call:

(a) 2500 GWh/year from Large Projects
(greater than 10 MW capacity)

approximately 2,500 GWh/year of firm electrical energy, of which approximately 900 GWh/year is available commencing on or before 1 November 2009, and approximately 1,600 GWh/year is available commencing on or before 1 November 2010, and associated non-firm electrical energy, from Projects, each having a Plant Capacity of 10 MW or more (“Large Projects”), built, owned and operated by independent power producers, and

(b) 200 GWh/year from a portfolio of Small Projects
(greater than 0.05 MW, less than 10 MW capacity)

(b) approximately 200 GWh/year (based on a portfolio of approximately 50 MW of aggregate Plant Capacity at a 50% capacity factor) of electrical energy from Projects, each having a Plant Capacity of greater than 0.05 MW, but less than 10 MW (“Small Projects”), to be available on or before 1 November 2010, built, owned and operated by independent power producers.

Full F2006 description here.

Key dates in the CFT schedule are as follows:

08-Dec-2005 -- Issuance of CFT
06-Jan-2006 -- Bidder registration deadline
20-Jan-2006 -- Bidders' workshops
07-Apr-2006 -- Tender submission deadline
11-Aug-2006 -- EPAs delivered to successful bidders
28-Aug-2006 -- Executed EPAs and performance security posted
TBD ------------ EPAs filed with BCUC

Full schedule here.

To monitor ongoing updates with the F2006 Call, visit this webpage:
www.bchydro.com/f2006call

Posted by Arthur Caldicott on December 08, 2005

December 04, 2005

A 'Great Pipeline Race' in Canada

By Doug Struck
Washington Post
04-Dec-2005

FORT SIMPSON, A wind prickly with ice bit at Jonas Antoine, the gray-haired native elder. The sting brought a broad grin to his face. "I feel like a wolf in this weather, ready to hunt," he said, leaning against the driving chill.

The cold thrill of sneaking toward a keen-eared moose or snaring a lynx calls him, but Antoine spends days in a stuffy gymnasium, debating with chiefs and elders the looming invader from the north: a huge pipeline from the Arctic that all agree would irrevocably change this land.

Soaring energy prices and profits have revived plans for two massive pipelines -- the biggest private construction projects in North America -- to bring natural gas hundreds of miles south from the frozen Arctic Ocean, through vast untouched forests and under wild rivers, to the United States.

The plans would flood isolated areas of Alaska and Canada with thousands of construction workers, pump billions of dollars into poor native economies, and bring the roar of heavy cranes and bulldozers to pristine areas where it is now quiet enough to hear the hoots of snowy owls and the rustle of pine boughs.

The projects are crucial to keep up with the growing thirst for energy in the United States, say oil company officials and energy analysts. Supporters and opponents agree that the projects would affect Canada's sparsely populated north on a scale larger than the Alaska oil pipeline in the 1970s, and unleash a rush of new exploration and drilling.

"Every square inch is going to be opened to diamonds, sapphires, gold, oil and gas," Michael Miltenberger, the Northwest Territories minister of natural resources, said in an interview in the territories' capital of Yellowknife. "There's an insatiable demand. And the critical first step is the pipeline."

There are daunting obstacles before any construction begins: The two pipeline projects are in competition for workers and capital -- only one can be built at a time. Native groups in Canada have not yet given access rights; environmentalists fret over caribou and the permafrost; and the pipeline companies face a mountain of regulatory red tape and promised lawsuits.

But the huge profits in the energy business, and the unquenchable demand for energy in the United States, have given the projects an impetus that may make one -- or both -- projects unstoppable.

"The time and events are right. It would be very hard to turn your back on this kind of supply," Miltenberger said.

Of the two lines, the Alaska Gas Pipeline is the behemoth. Its most likely route would stretch 1,700 miles from Alaska's Prudhoe Bay to Canada's Alberta province. The line would cost $20 billion and take a decade to build, but the project has picked up momentum under the whip of Alaska Gov. Frank H. Murkowski (R) and $18 billion in loan guarantees approved last year by Congress.

The second line, the Mackenzie Valley Pipeline, would start 250 miles east of the Alaska line, on Canada's portion of the Beaufort Sea. It would snake 800 miles through forests of spruce and pine along the Mackenzie River -- one of the world's longest with no bridge or dam. This all-Canada route would cost $6 billion and is predicted to take three years to complete once construction begins.

Both projects have been pipe dreams for three decades. Drillers who flocked to the cold deserts of Alaska's North Slope after oil was discovered in 1968 also found vast deposits of natural gas. But there has been no way to move the gas to markets; it cannot flow in the oil pipeline. Oil producers proposed both the Alaska and Mackenzie gas pipelines in the 1970s, but the plans died under the weight of rising construction costs, dropping natural gas prices and -- in Canada -- opposition from native groups.

That has changed. Natural gas prices are now at all-time highs, greatly enhancing the lure of profits. Every energy forecast shows a yawning gap between supply and the rising demand. More natives of the north now see economic opportunity in the pipelines, and their necessity is reluctantly being conceded by even environmental groups.

"The economics are right. Everyone needs this supply to come on line," said John Duncan, a member of the Canadian Parliament and the Conservative Party's expert on natural resources. "The real question is which is going to be built first."

Industry analysts say the projects would require so much capital, steel and skilled labor that it would be impractical to build both at the same time. The projects have been jostling for position, sparking what former Alberta energy minister Murray Smith has called "the great pipeline race." Oil company officials would prefer the shorter Mackenzie line to go through first, but delays have jeopardized that possibility.

Four reserves of Indians -- known as First Nations here -- are involved in negotiations to permit the Mackenzie line to cross their land. The four oil companies behind the project have agreed to give First Nations a one-third share of the line, and the federal government in July offered $425 million for native social programs as an incentive. But the bands are split over the proposal.

Antoine, 64, is a member of the Deh Cho, a band of about 4,000 members on land centered at Fort Simpson, a quiet town on an island accessible by ferry in the summer and by a road carved on the river ice in the winter.

He grew up hunting caribou and moose, snaring rabbits and cutting holes in the ice to fish in the winter. He remembers a hard life, remembers being hungry when the game disappeared. But he is wary of the coming pipeline, and the change it will bring.

"You can still have freedom to roam here. You can travel for 100 miles without running into any other tracks, camping wherever you want, drinking out of any stream," he said of the Deh Cho lands.

Herb Norwegian, the blunt chief of the Deh Cho, said his people see no reason why they should not get what they want from oil companies making huge profits. He has asked for fees, royalties and jobs, but his fundamental demand is of the government, which has yet to settle Deh Cho land claims.

"If the pipeline is going to pass through our land, the government has to treat us like the landlords," Norwegian said.

Not all agree with him. Harry Deneron, 63, a member of the Deh Cho group of chiefs, said change already has come, and the First Nations people should benefit.

"Our people will be the first to complain if their hot-water heater goes up," he said with a laugh. "We should accept the pipeline, with conditions. We have to compromise. This has gone on too long."

Either project would march a small army of construction workers into the north for several years. They would carve roads, haul steel, dig a trench through the permafrost and bury the pipeline before departing. The Alaska Pipeline project alone would be more than double the size of the 800-mile-long trans-Alaska oil pipeline finished in 1977, which took 21,000 construction workers three years to build.

Towns along the pipeline routes grimly expect the construction to bring inflation, drugs and crime along with the economic boost for their rural economies. In Yellowknife, two new diamond mines have sent rents soaring and brought cocaine to the streets. Last month, the town experienced its first drive-by shooting.

"We know things are not going to work perfectly. They never do," said Bill Braden, a member of the territorial assembly in Yellowknife. "But the pipeline would give the communities and people of the Mackenzie Valley and Delta hope for the future. Right now, if I was a teenager, I wouldn't see a whole lot of reason to stay in the area."

The bigger footprint, after the construction crews have left, will be in opening the mineral-rich area to further exploration and development.

Mostly for that reason, some environmentalists favor the Alaska Pipeline, which follows the route of the existing oil pipeline and Alaska Highway.

"We think it's the lesser environmental evil," said Stephen Hazell, a director of the Sierra Club of Canada. Environmental groups have largely bowed to the inevitability of at least one of the projects.

"Natural gas is clearly better than coal or oil," said Peter Ewins, a director of the World Wildlife Fund of Canada. "In principle, we are not opposed, if the development is done in a properly planned and well-balanced way."

The natural gas from either line would be fed into a grid of pipelines in Alberta that connects the United States and Canada into a largely seamless single market. Oil company officials say the soaring demand is in the United States, and that is where the gas would go.

But some environmentalists suspect that the Mackenzie pipeline, in particular, would feed the huge oil-sands project in Alberta. There, natural gas is used to cook strip-mined tar sludge into recoverable oil, a process environmentalists say is energy-inefficient and increases global warming.

"If we were convinced the gas was going to be used in people's homes to replace coal-fired energy, we would be much more sanguine about it," said Hazell.

Despite its much larger size, the Alaska Gas Pipeline could move more quickly. The oil pipeline and highway along the proposed route already have cleared the way with access rights, aboriginal land claims and environmental reviews. Since the 1970s, the TransCanada pipeline company has held rights to one route in Canada, and has laid groundwork on the Alaskan side as well.

"The gas market in North America really quite desperately needs this gas," TransCanada Chief Executive Hal Kvisle, said by phone from Calgary. "We think it would be quite foolish not to use" the company's access rights to speed up the project.

Speed is what Alaska's Gov. Murkowski wants. He has made it a personal goal to find a way to get Alaska natural gas to market, foreseeing a second wave of the riches that poured into the state with the oil pipeline. All Alaskans still receive a yearly dividend check from the oil pipeline royalties.

"We are approaching an historic moment -- moving from 30 years of trying, to the reality of a gas line," the governor told reporters recently. He has proposed a novel sharing of ownership in which Alaska would have a 20 percent stake in the line.

"We're going to do it right this time," the governor said by phone from Anchorage after emerging from negotiations with the Prudhoe Bay producers Exxon-Mobil and BP. He already agreed to terms in October with a third company, ConocoPhillips. "The country needs the gas," he said. "This is the time."

Posted by Arthur Caldicott on December 04, 2005

B.C. will need more electricity

Editorial
Times Colonist (Victoria)
04-Dec-2005

Over the past five years, B.C. has gone from being an exporter of electricity to being a net importer. Unless we build one or more new power plants in the near future, the province will face a major shortfall of electricity in the decade ahead.

These are some of the conclusions from a critique of provincial energy policy, tabled recently by the B.C. Progress Board. The board was appointed by Premier Gordon Campbell to look for ways of accelerating economic growth: Its members are drawn from business and the academic community.

The reasons for this emerging crisis are simple enough: The last major addition to our generating capacity came in 1984. Since then our population has climbed 40 per cent, and projections suggest this growth rate will continue. Over the next decade, B.C. is expected to add the equivalent of a city the size of Kamloops every year.

As the report points out, B.C. has been coasting on cheap hydro-electric power from dams built on the Peace and Columbia rivers in the 1960s and '70s. That has created an illusion of security that makes the public and politicians unwilling to confront the need for action.

Moreover it's unlikely the deficiency can be made up by purchasing cheap surplus electricity from neighbouring jurisdictions, as B.C. Hydro has been doing in recent years.

At the same time our energy needs are increasing, world-wide demand is forecast to surge, due in part to the rapid pace of industrialization in China and India. We will be forced, therefore, to pay a much higher premium for imported power in coming years, or to live with brown-outs, or quite possibly to suffer both.

The authors warn that Ontario and California followed a similar path. Political leaders left public utilities to make the argument for additional power capacity, and in both cases, energy producers failed to convince a skeptical public.

In California, the effective outcome was a 20-year moratorium on new plant construction, which coincides with B.C.'s record almost exactly. Both jurisdictions went on to experience repeated brownouts, extending in California to rolling blackouts and a political firestorm that eventually saw the state governor dismissed in a recall vote.

What distinguishes this critique from similar reports is its willingness to confront the elephant in the room -- B.C. Hydro. The authors allege, in respectful but clear language, that government has lost control of the utility.

"B.C. Hydro is seen by many concerned parties to heavily outweigh the ministry (of Energy, Mines and Petroleum Resources) in staff and resources.... As a consequence, B.C. Hydro is seen as setting its own policies ... or responding to matters of public interest, such as the government's Energy Plan, in its own time and manner."

A case in point was the recent decision to abandon work on the new Duke Point power plant in Nanaimo, after the B.C. Court of Appeal granted opponents the right to a hearing. The Crown corporation walked away from $120 million already spent on the project, leaving the community and business partners in the lurch.

Not only did the decision catch ministers off guard, the fall-back strategy -- an upgrade of existing power lines from the mainland -- contradicted the corporation's earlier statements about the urgent need for new generating capacity on Vancouver Island. Of course that only added to the general atmosphere of complacency about electricity supply.

What's at stake is more than a political tussle over who controls energy policy, cabinet or the board of B.C. Hydro. The report makes a convincing case that unless government and the corporation speak with one voice, and do so consistently, there's little chance new installations will proceed.

In fact the challenge is quite daunting. Many of the environmental impacts that accompanied power-plant construction in bygone years would never be tolerated today. When the Peace and Columbia dams were built, aboriginal communities were flooded without prior consultation or compensation. Opposition to new gas-fired generating stations in the Lower Mainland is intense.

A prolonged spate of brownouts would no doubt soften public resistance. But given the extensive lead-time required to bring new capacity on line, well before we get to that point the damage will be done.

Convincing voters a crisis exists before its effects have been felt is never easy. While the Progress Board suggests a number of ways to bridge the gap, such as more energy-efficient building standards and price policies that reward conservation, the bottom line is clear.

Our province can, and should, be self-sufficient in electricity. But unless the cabinet takes B.C. Hydro in hand, and both present a convincing case to consumers, the government's promise of a "golden decade" ahead may fall by the wayside.

Posted by Arthur Caldicott on December 04, 2005

December 01, 2005

BC Hydro reports huge surge in profits

By Derrick Penner
Vancouver Sun
01-Dec-2005

BC Hydro recorded net income of $189 million in its second quarter, compared with $11 million for the same period a year ago, a huge profit jump driven by increased customer demand and electricity trading activity, the company said Wednesday.

Alister Cowan, BC Hydro's chief financial officer, said higher customer loads and trading, coupled with lower financing and amortization costs, were offset by lower revenue while the Crown corporation awaits approval by the B.C. Utilities Commission of a 7.23-per-cent rate increase.

BC Hydro added 24,808 new residential customers and saw an increase in commercial and industrial sales to post $1.26 billion in domestic revenue for the company's six months ending Sept. 30, and saw $765 million in net electricity trading revenue, $468 million more than a year ago.

Company spokesman David Conway said BC Hydro's board of directors is expected to decide by next week whether the controversial Site C Dam will be included as a preferred energy option in its integrated electricity plan.

The Crown corporation conducted a series of public consultations throughout the province earlier this year on the integrated electricity plan, which outlines how BC Hydro plans to meet the province's electricity needs over the next 20 years.

depenner@png.canwest.com

Posted by Arthur Caldicott on December 01, 2005

Oil Free Coast

Just say no to offshore drilling in B.C.
Rick Stiebel, Goldstream News Gazette, 30-Nov-2005
Oil Free Coast Alliance to government: heed public opinion
Matthew Gauk, Martlet (University of Victoria), 01-Dec-2005




Just say no to offshore drilling in B.C.

By Rick Stiebel
Goldstream News Gazette
Nov 30 2005


Rick Stiebel/News Gazette
WCWC Victoria campaign director Ken Wu, right, hands a pamphlet to volunteer/supporter Cindy Robinson during a rally at Esquimalt-Juan de Fuca MP Keith Martin's constituency office Wednesday.

That's the position the Western Canada Wilderness Committee reinforced during a rally at Esquimalt-Juan de Fuca MP Dr. Keith Martin's office last week.

"We're not protesting the federal Liberals because they haven't done anything to show us they are lifting the moratorium (on drilling for gas and oil off the coast of B.C.)," said WCWC Victoria campaign director Ken Wu. "But we're encouraging them to publicly comment on keeping it in place before the next election."

Wu cited the potential for oil spills, substantial greenhouse gas emissions and impact on marine life from seismic testing blasts as major concerns.

Wu also pointed out that offshore drilling in Newfoundland is conducted 300 kilometres off the coast, but it could be as close as 20 kilometres from shore if it goes ahead near the sensitive coastlines of the Queen Charlotte Islands.

"It's the one-year anniversary of public input into the process," Wu said. "Seventy-five per cent of people want the moratorium maintained. Now the government needs to move on maintaining it."

Martin, who was in Ottawa when the rally took place at his Langford office, said he's glad the WCWC came out, and that he's discussed the situation with the organization in the past.

"It's up to scientists to assess the potential for damage to the environment," Martin said in an interview with the News Gazette. "The question is can it be done in an environmentally safe manner. If that's the case, we have a responsibility to the people of B.C. to do it in an environmentally safe way."

Martin believes the oil and gas resources need to be utilized, providing scientists give it the green light because of the jobs the work will create and the benefits to the economy.

Long-time WCWC supporter and volunteer Cindy Robinson said it's important to keep the moratorium in place to protect marine life.

"It's already under stress from human activities," said Robinson. "We shouldn't go down a path that creates destruction through oil spills and seismic activity from blasting."

Federal NDP candidates Randall Garrison,(Esquimalt-Juan de Fuca), Jennifer Burgis, (Saanich-Gulf Islands) and Denise Savoie (Victoria) issued a news release the day of the rally demanding the government keep the moratorium in place.

rstiebel@vinewsgroup.com

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Oil Free Coast Alliance to government: heed public opinion

by Matthew Gauk
Martlet (University of Victoria)
01-Dec-2005


Aaron McMillan photo:
Protesters opposed to offshore drilling display their disapproval Nov. 22 in front of UVicís McPherson library. The event was organized by the Western Canada Wilderness Committee.

Dozens of UVic students spelled out “Oil Free Coast” in front of the McPherson Library Nov. 22 to protest the possibility of offshore oil drilling in B.C.

The media event was a run-up to the National Day of Action on Nov. 23, organized by the Oil Free Coast Alliance. The Alliance, which includes the Western Canadian Wilderness Committee (WCWC) and the David Suzuki Foundation, aims to increase public awareness of potential oil and gas development off the coast of British Columbia.

A federal government moratorium on offshore drilling was put in place in 1971 by Pierre Trudeau at the behest of David Anderson, then Esquimalt-Saanich MP. The moratorium still stands, but some environmental groups are becoming concerned that the federal government, under pressure from the B.C. government, might start taking steps toward oil and gas exploration. “I think the federal government is just sitting on the fence,” said WCWC Victoria campaign director Ken Wu. “We would like some stronger statements that they will maintain the moratorium or, better yet, just have a legislative ban against offshore oil and gas development.”

The National Day of Action came a year after the release of the “Priddle Report,” a public input process instigated by the federal government to gauge public opinion on offshore drilling. The report found that three-quarters of British Columbians surveyed were opposed to oil and gas development.

“We’ve given them a year to consider the results of the public input process, so now we want them to commit,” said Wu. “We think they should be obligated to adhere to the results of their own public input process.”

The biggest concern among those opposed to offshore oil and gas development is the potential environmental impact. Exploration alone, which often involves seismic testing, can cause harm to whales, fish and crabs, according to some studies.

“It basically deafens whales,” said Wu. “It can kill the beaked whales; it can drive whales away from their feeding and migration areas, including Orcas and Gray Whales.”

The drilling would also threaten the seabird colonies and sea-sponge reefs that make the Queen Charlotte Basin a global treasure, says Jay Ritchlin, the marine campaign strategist for the David Suzuki Foundation.

He fears that small daily leakages and spills of drilling fluids would all go out into the ocean and have an immediate impact within a kilometre of the drill.

While large numbers of animals might not be wiped out from daily leakage, Ritchlin says, it could have a negative influence on developing salmon eggs, and the reproduction of herring, otters, and seabirds.

“It’s a really chronic issue that you don’t see,” said Ritchlin. “More and more we’re finding out that the residues from the oil itself have long-term impacts at lower levels.”

Wu and Ritchlin agree that the hypothetical fallout wouldn’t be limited to the environment. While both acknowledge that an offshore oil and gas industry would bring some economic benefit to the province, they point out that there would be pitfalls as well.

“Fishing still employs 16,000 people on the coast, and fish catches are reduced as a result of the destruction of marine larvae,” said Wu. “Fish are driven away from huge areas of their feeding and migration routes. This has been shown around the world.” Wu also cites possible damage to the $500 million a year worldwide whale-watching industry.

In the 2003 Throne Speech, the provincial government stated that they wanted to have an offshore oil and gas industry up and running by 2010. Since then, the province has created an Offshore Oil and Gas Team to foster the industry. One of their biggest selling points is the creation of jobs to service this industry. “My opinion is that B.C. takes all the risk, and probably most of the economic activity will accrue to large international firms who are already in the global oil market,” said Ritchlin.

The National Day of Action saw rallies at 24 locations in 19 Canadian cities. Volunteers leafleted and petitioned passers-by.

“There’s a federal election coming up,” said Wu. “So of all times where [politicians] need to get in line with public opinion, it’s now.”

TOP

Posted by Arthur Caldicott on December 01, 2005

November 30, 2005

Coal-fired power generation worth a look by BC Hydro

Coal-fired power generation worth a look by BC Hydro
Don Whiteley, Vancouver Sun, 30-Nov-2005
Too good to be true
Arthur Caldicott, GSX Concerned Citizens Coalition, 30-Nov-2005




Coal-fired power generation worth a look by BC Hydro

Don Whiteley
Vancouver Sun
Wednesday, November 30, 2005

The B.C. Progress Board's report on the province's energy future was critical of both the provincial government and BC Hydro for allowing the province to become a net importer of electricity, after decades of money-generating surpluses available for export.

"We do need to do something," the report said. "We haven't done anything significant to increase our electricity supply for 20 years ... the least we can do is to take the opportunity to responsibly meet our own energy requirements."

Hydro will soon file its latest Integrated Electricity Plan with the B.C. Utilities Commission. Along with commitments to pursue conservation and green energy, the power utility is expected to put the Site C Dam proposal forward as its recommended big future supply project.

I wonder if they are missing the boat here. A number of recent developments suggest that B.C. should fully explore coal-fired power generation as the big-ticket item, instead of another hydro-electric dam.

Coal-fired power generation is only a couple of points below nuclear energy on this province's irrational hysteria index, largely due to coal's reputation as a dirty fuel and its contribution to global warming through CO2 emissions.

But the coal industry is well on the way toward solving that problem. The Canadian Clean Power Coalition (CCPC), an association of coal-fired generating companies and utilities, has completed the first phase of what will ultimately be a pilot plant to test commercial feasibility of what could be an emissions-free coal-fired generating plant.

"The fundamental principle underlying the goals of the CCPC was to identify a process that would produce electricity from coal in some fashion and that would also provide a relatively pure stream of CO2 that could be captured, further processed as necessary, and subsequently used or stored," says a report on the first phase of the project.

The goal is to get all the pollutants out of the emissions, except CO2, which could then be captured and stored.

And on that score, the U.S. Department of Energy announced just a week ago the completion of a successful pilot project using CO2 for enhanced oil recovery in southern Saskatchewan. The Weyburn Project took five million tons of CO2 extracted from a coal gasification plant in Montana, and used it to breathe life back into a moribund oil reservoir.

"The success of the Weyburn Project could have incredible implications for reducing CO2 emissions and increasing America's oil production," said U.S. Energy Secretary Samuel W. Bodman in a press release. "Just by applying this technique to the oil fields of Western Canada we would see billions of additional barrels of oil and a reduction in CO2 emissions equivalent to pulling more than 200 million cars off the road for a year."

Mark Jaccard, a professor of resource and environmental management at SFU, has just published a book called Sustainable Fossil Fuels: An Unusual Suspect in the Quest for Clean and Enduring Energy, in which he writes extensively about this project and its potential to help with global warming. [The Sun's Don Cayo gave the Jaccard book a three-part infomercial, available at www.sqwalk.com/blog/000540.html]

"I should emphasize that when we talk about clean coal technology, I mean clean -- nothing," Jaccard said in an interview. While the Weyburn project used CO2 from a coal gasification project, the gas can just as readily be captured from a generating station that burns the coal. He explained that CO2 injection to enhance oil recovery will provide just the kind of economic jump-start that clean coal technologies need.

CO2 injection to enhance oil recovery is not new -- it has been underway for nearly 30 years. The technique was out of favour when oil prices were low, but with crude oil expected to remain well above $40 US a barrel for the foreseeable future, the economics look good.

Another piece to the puzzle, from a B.C. perspective, is that North America's biggest supplier and distributor of CO2 for enhanced oil recovery is Kinder Morgan, the company that just completed its purchase of Terasen.

In the press release announcing completion of the acquisition, Kinder Morgan said it will "conduct a comprehensive feasibility analysis of CO2-related opportunities in Canada utilizing this expertise for the purpose of identifying and pursuing viable projects."

B.C. has huge coal reserves in almost every part of the province. More than 25 years ago, BC Hydro was considering a coal-fired generating plant at Hat Creek, but emissions technology was in its infancy at that stage and the impact was anything but zero.

Hydro spokesperson Elisha Moreno said the company turned its Hat Creek coal licences back to the provincial government more than a year ago, and is not pursuing any coal-fired power generation at the moment.

"Someone can make a proposal," she said, referring to Hydro's commitment to purchase energy from independent power producers.

"We'd look at it on costs. We still have our 50-per-cent clean criteria to meet. Obviously coal challenges that. The resource is there, but the challenge is public perception."

But if Hydro is willing to consider spending $3.5 billion on its own account to build a new hydro dam on the Peace River, why wouldn't it consider the same kind of investment in other technologies -- and not just coal?

don_whiteley@telus.net

© The Vancouver Sun 2005

TOP



Too good to be true

Arthur Caldicott
GSX Concerned Citizens Coalition
30-Nov-2005

Loren Duncan of Glenora, referring to this Don Whiteley article, comments:

Why is this concept, technology, not applicable to natural gas fired plants?
And if it is...why not?
At first take it seems to be too good to be true...as close to perpetual motion
as we are likely to get...
Anyway, just curious...
Cheers, Loren


Natural gas WAS attractive, as a generation fuel source, because it WAS cheap, plentiful and burned much cleaner than coal, which was similarly cheap and plentiful.

Once carbon dioxide emissions became an issue, natural gas was even more attractive, with approximately a third the greenhouse gas emissions for comparable electrical output.

Then natural gas became not so plentiful and the price went up and up and up and all those proposed natural gas plants were shelved, everywhere except in Nanaimo, since BC Hydro seemed to be the last place in North America to notice price and supply trends with gas that were becoming evident to others five years ago.

With the increase in gas prices, the interest in coal-fired generation regenerated, so to speak.

But of course, the reputation of coal as a dirty fuel source hindered its acceptability, and other jurisdictions, like Ontario, found themselves in conflicting situations - on the one hand, initiatives to phase-out of coal generation because of its emissions ran smack into the relatively cheap cost of the fuel and our insatiable demand for electricity.

The industry met this with branding, with marketing, and with technology: the word "coal" was no longer uttered by coal people, without the word "clean" prefixed to it.

"Clean coal" has indeed taken on a life, but there's a big cost to it. Building a plant that implements "clean coal" technologies that result in emissions from coal combustion, equivalent to emissions from a state-of-the-art natural gas plant, may guts the competitive edge that cheaper coal has as a fuel.

Capturing greenhouse gases and disposing of them in some way that is more acceptable than simply spewing them into the atmosphere, is another issue. What works with coal, works with natural gas. But a little contemplation of what these guys are proposing - capture the GHGs at the generation source, move them to depleted oil fields to be pumped back into the ground to extract more oil - isn't a simple or inexpensive task. It hasn't been done on any scale yet. It's all new. The capture technologies cost a whack of dough. The infrastructure to get the GHGs back to the oil fields (pipe, rail, truck) doesn't exist and/or needs extensive investment. The sequestration integrity of the exercise is largely unknown.

The US led Weyburn project cited in the article, is all experimental. It has no economic underpinnings. So all this talk about carbon sequestration is so much talk. And experiment. I'm not aware of any company anywhere that is proposing a production coal-fired generation facility that incorporates carbon sequestration - at least nothing on an industrial scale, that does not rely on huge subsidies. Your comment about too good to be true, and perpetual motion is wonderfully apt.

FutureGen is a US-government led proposal, that may result in an emissions-free coal-fired generation plant. But it's all drawing board and lofty vision right now, seeking participation by other countries, blah, blah.
http://www.fossil.energy.gov/programs/powersystems/futuregen/

Interesting, too, is coal's ultimate solution to what to do with all the carbon dioxide. It's the same answer the nuclear industry has to the same problem with wastes. Bury it somewhere. Ocean, underground reservoirs. Outa sight. Another great ecological legacy for our kids.

In a roundabout return to your question, why isn't this carbon dioxide method applicable to natural gas plants? Well, it is, but no-one cares very much because a) natural gas is so expensive that no-one is much interested in developing any plants right now, b) natural gas isn't imbued with the same "dirty" reputation that needs to be overcome for this renewed interest in coal to move from unacceptable to acceptable.

Much of the talk about cleaning up coal is just talk - proponents of real projects are not including carbon sequestration in their proposals. Here in BC, proposals for coal-fired generation are likely to crop up again with BC Hydro's F2006 Open Call for Power, which may be open for bids in December. Any proposals are likely to be nickle-and-dime operations, small plants, probably "mine-mouth" plants (where they propose burning unmarketable "waste coals" which cost them nothing and don't have to be shipped anywhere), with only as much emission control technology to meet the BC government emissions guidelines. Anything better than that will cost too much, and may push the project out of competition.

A quick final word about the BC government guidelines for coal plants. The Liberals came to power in 2001 beholden to big coal mining companies and donors like Teck Cominco, Fording, etc. The Energy Plan issued in 2002 promised regulations that would enable coal generation to get going in BC. The Coal-fired Power Boiler Emission Guidelines were issued in 2003, setting limits for three substances - nitrogen oxides (NOX), sulphur dioxides and particulates. The limits were disgusting - among the most lenient limits in the regulated world. Mercury, a powerful toxic in even the smallest quantities, and a predictable emission from coal generation, was not regulated at all.

In August 2005, the new Ministry of Environment revised the 2003 document, and actually came close to a set of limits that is close to those of other jurisdictions. Not only that, they included mercury.
Coal-fired Power Boiler Emission Guidelines

This would seem like a good thing, something the government would laud itself for. But the government has been pretty quiet about these new limits. Why?

The answer may be that the government is quietly setting the stage for coal-fired projects, but wants to remove the charge of "dirtiest plants in North America" from the list of criticisms these projects will be subject to.

Back to your comment about perpetual motion, isn't that the illusion of fossil fuels? When all the fundamental economic and ecological costs of fossil fuels are accounted for, the net outcome is ...

TOP

Posted by Arthur Caldicott on November 30, 2005

November 24, 2005

Sustainable Fossil Fuels, by Marc Jaccard
Unusual suspect in the quest for clean, enduring energy

Oil, natural gas unlikely to be replaced soon by other power sources
Don Cayo, Vancouver Sun, 22-Nov-2005
SFU professor flies in face of Chicken Littles of fossil fuels
Don Cayo, Vancouver Sun, 23-Nov-2005
A troubling scenario awaits if we keep on our current energy-use path
Don Cayo, Vancouver Sun, 24-Nov-2005




Oil, natural gas unlikely to be replaced soon by other power sources, book says

By Don Cayo
Vancouver Sun
22-Nov-2005

It's not the dinosaur you may have thought. A new book by SFU professor Mark Jaccard argues that the future of fossil fuels is still bright, as there are few practical energy alternatives that could meet global needs within the foreseeable future.

Can the world assure sustainable energy for the century ahead by turning its back on oil, gas and coal? Can we conserve enough of the massive amounts of fuel we squander, and create most of what we really need from renewables like sun, wind and water, or from clean-burning hydrogen, or even nuclear fission or fusion?

Not likely, says Mark Jaccard, a professor of resource and environmental management at Simon Fraser University.

Until now, Jaccard has spent most of his high-profile career touting those very options. But after a lot of research and reflection he has changed his mind. These "usual suspects" aren't the best bet for the next 100 years, he writes in a new book that's sure to raise hackles among his many colleagues to whom oil is an anathema.

Jaccard argues in Sustainable Fossil Fuel: The Unusual Suspect in the Quest for Clean and Enduring Energy that, as the title suggests, the best path for the future is a variation of the one the world is already on. Oil, although increasingly from unconventional sources, will continue to play a big role, while the use of natural gas and coal will more than double.

What about the well-known drawbacks of fossil fuels -- that their supply diminishes over time, and that they pollute the air? And what's wrong with renewables, and, especially, with hugely cutting back on energy use to take pressure off its supply?

In Jaccard's analysis the world won't run out of oil, gas and coal for a long, long time. The key questions hinge on know-how (How much of the vast resources can we figure out how to tap into?) and price (How much are we willing to pay?). And the same two factors -- technology and economics -- will determine how cleanly we can burn future fossil fuels.

These same questions apply, of course, to conservation, to renewables like biomass, wind and water, and to the inexhaustible potential of hydrogen and nuclear.

Jaccard examines these options at length. He finds each of them not entirely wanting, but limited in their ability to displace fossil fuels.

He notes that the rich world has already gained a lot from using energy more efficiently. "Energy intensity" -- the amount of economic value derived from each unit of fuel -- has soared since the 1950s.

And a lot more saving is possible. Not only is a lot of energy squandered in uses of questionable value, but up to 5/6ths of a fuel's potential is lost in the inefficient conversion of primary energy sources into convenient secondary forms.

Yet, he says, the world won't see the boon that conservationists predict if only we do a better job of mending our wasteful ways. It is not just a matter of technical issues, he argues, but behavioural ones as well.

For one thing, when energy efficiency increases, so does the tendency to use it for new or bigger things. Witness the growth in the size of vehicles and the distances that North Americans drive them following a sharp, but temporary, retraction as a result of the oil shocks of the 1970s. Similarly, the advent of things like energy-efficient fridges tempts consumers to buy a separate one to chill the beer or cool the wine, and so on.

This rebound effect helps explain "the explosion of new energy-using services, including outdoor patio heaters, spas, extra-large sport utility vehicles, decorative natural gas fireplaces, coffee mug heaters, desk-top water coolers, in-home entertainment systems, indoor and outdoor decorative lighting and ... the back-massage chair, to name just a few." And, "More efficient vehicles may make people willing to live further from where they work."

Nor do people always adopt new ideas just because they're available. He cites his own experience with high-priced, energy-efficient light bulbs that are now tucked away in a drawer, as they are in thousands of homes, because they don't fit many lamp sockets and his wife doesn't like the light they cast.

Then there's the matter of a couple of billion poor people on the planet -- people destined in the scenarios that he cites to become much more prosperous over the next century. One of the first things they can be expected to do is stop their inefficient burning of wood or charcoal for cooking and heating, and turn rapidly to modern energy sources. So even if the rich world succeeds in massively reducing its own energy use, the savings will be overwhelmed by increased use in developing countries.

Nuclear's potential faces challenges such as investor antsiness and a long lead time to get it on line, he says. And it's currently so far behind fossil fuels that, given the 33-year lifespan of most plants, as many as five a week would have to be brought online for it to dominate by the year 2100.

That pace of building is unimaginable, given political and economic realities. Because of the horrific potential of an accident or terrorist incident, no matter how highly unlikely those may be, people in developed countries strongly oppose the building of more reactors. And in poorer countries where the urgently desired benefits might persuade people to accept the risk, the rich countries that have the technology don't want to share it for fear it will be used to proliferate nuclear arms.

Strikes against hydrogen, a secondary fuel, include the massive amounts of primary energy needed to create it, and the cost and complexity of establishing a distribution network for the hard-to-store fuel.

Storage is also an issue for most renewables -- wind, water, and sunlight. Because these sources can produce power only intermittently, they must either be relegated to a role as fairly small supplementary sources, or else huge and expensive storage capabilities will have to be built. All three, but especially wind and water, need specific sites that usually aren't found near the places where power is consumed. As the best sites are developed, more marginal -- and more expensive -- ones will have to be found.

Modern biomass energy production -- the efficient burning or conversion of wood or farm waste, as opposed to the dirty and wasteful open fires or crude stoves that proliferate in the developing world -- is relatively cheap, as long as it's small-scale and able to use waste. But if it reaches the point where raw fuel has to be grown just for that purpose, it'll require huge tracts of land that won't be available for other uses. And, as with the other renewables, it'll cost more and more as the best sites for fuel production are taken and marginal ones are pressed into use.

Jaccard still sees a growing role for conservation and all of the renewable technologies. But he sees no chance they'll come close to displacing hydrocarbons as the prime energy source.

dcayo@obg.canwest.com

Tomorrow: Why oil, gas and coal are the best bet for a clean, sustainable energy future. (link)

- - -

Sustainable Fossil Fuels: The Unusual Suspect in the Quest for Clean and Enduring Energy

by Mark Jaccard,

Simon Fraser University

The book's first printing will be available Nov. 27 by direct order only from Cambridge University Press, 100 Brook Hill Drive, West Nyack, NY 10994.

Toll-free 800-872-7423.
Fax 914-937-4712.
http://us.cambridge.org

It will be available in bookstores in Canada Jan. 1, 2006. Paperback: $33.95. Hardcover: $94.95

First in a three-part series (Part 2, Part 3)

© The Vancouver Sun 2005

TOP



SFU professor flies in face of Chicken Littles of fossil fuels

By Don Cayo
Vancouver Sun
23-Nov-2005

Second in a three-part series (Part 1, Part 3)

The message from most sustainable-energy advocates is that the world is about to run out of fossil fuels.

Some of them seem to believe that this will happen none too soon -- that we burn so much of it so carelessly that we're poisoning the planet.

And then there's Mark Jaccard, a professor of resource and environmental management at Simon Fraser University who has earned his spurs many times over as a sustainable-energy advocate. His about-to-be-released book, Sustainable Fossil Fuel: The Unusual Suspect in the Quest for Clean and Enduring Energy, argues that oil, gas and coal will -- and deserve to -- remain the dominate energy supply at least until the end of this century.

Why? Because there's easily enough of all three to last the next 100 years, and far beyond. Because they will remain the fuels of choice for a great many uses not only in the rich world, where they already dominate, but also in poor countries where billions now rely on smoky, inefficient wood or charcoal fires for cooking and heating. And because it's both possible and affordable to use fossil fuels cleanly, with minimal harm to the environment.

That's not to say Jaccard endorses the status quo. Indeed, he says the world is on an unsustainable course -- one that, if unchecked, will see energy use grow 324 per cent by 2100, with coal consumption expanding 6.5 times to provide almost half the primary energy.

His preferred scenario, which will require judicious planning and policies if it's to come about, is also hydrocarbon intensive. It foresees increased energy use of 280 per cent, and the near-doubling of the role of fossil fuels, mostly coal.

Where will it come from? And how can it be used cleanly?

Jaccard differentiates sharply between fossil fuel reserves -- the amount that we know where and how to access and that we can afford to get out of the ground -- and fossil fuel resources. The latter is what's there, no matter whether we have the affordable technology to get it today.

Those two estimates are far apart. Coal resources are seven trillion tonnes, or 9.5 times the figure for coal reserves. The conventional oil resource pool is twice as large as the reserves; the unconventional oil resource is four times larger; and the natural gas resource, both conventional and not, is three times larger.

"If current consumption trends and fossil fuel reserves both remained static," Jaccard writes, "oil reserves would not be exhausted until the latter half of this century, natural gas reserves would last into the next century, and coal reserves would last 200 years.

"When the focus shifts to resources, at static consumption levels oil would last 200 years, natural gas 500 and coal 2,000."

However, given growth predictions based on current trends, "then the oil resource would last under 150 years, natural gas under 300 and coal under 400."

But Jaccard's test of sustainability isn't just a matter of supply. It also involves economics and ecology -- the impact of the world's energy use must be reasonably benign for the people and the planet.

So key questions are, do we know how, and can we afford, to tap into more of the resource than is generally assumed? Another is, can we use the fuels we get cleanly, with minimal harm to human health and the environment?

Jaccard's answer to all is yes.

He acknowledges that geologists may be right to note that the world is using up conventional oil resources faster than most people realize. But the economist in him observes that this need not be the catastrophe that's often portrayed. Scarcity is bound to raise prices. But higher prices will spur innovation, innovation will increase supply, and new supplies will moderate the price -- an economic cycle we've seen time and again.

Thus, although recovering unconventional oil is unquestionably more costly than tapping into conventional reserves, it will become ever-cheaper as new technologies are perfected and scaled up.

He points out, for example, that the cost of North Sea oil, once a cutting-edge technology, has plunged from $35 a barrel in the late 1970s to $15 today. And he forecasts that similar kinds of savings are in the cards not only for unconventional oil recovery, but also for natural gas and coal. And the eventual prices are not likely to be much higher than we pay today -- with, of course, a continuation of the periodic short-term fluctuations that feed the cries of Chicken Littles.

The key to using fossil fuels cleanly, he says, will hinge on how they are used.

A huge point often overlooked in rich countries is the immense and beneficial impact that will occur as billions of the world's poor switch from the worst-possible use of biomass -- unhealthy and wasteful open fires or poor-quality stoves -- to cleaner and much more efficient modern fuels. That's a priority for every population as their incomes improve, Jaccard says, and it will hugely lessen outdoor pollution and dramatically improve indoor air quality, which contributes to as many as a million deaths a year.

And, just as importantly, both modern biomass and fossil fuels will be increasingly used to create ultra-clean forms of secondary energy -- electricity and hydrogen -- to heat our homes and offices, power our vehicles, and much more. The technology exists to do this with little pollution from the primary fuels, and it, too, will become more cost-effective over time.

dcayo@png.canwest.com

THURSDAY: What will it take to ensure that we are on a sustainable energy path? (link)

TOP



A troubling scenario awaits if we keep on our current energy-use path



By Don Cayo
Vancouver Sun
Thursday, November 24, 2005


If the world stays on the energy-use path it's on, it will be in trouble by 2100, if not before, says Mark Jaccard, a professor of resource and environmental management at SFU.

"There is considerable evidence that our current energy system is on an unsustainable path," he writes in an about-to-be-released book, Sustainable Fossil Fuels: The Unusual Suspect in the Quest for Clean and Enduring Energy. Problems include emissions that undermine human health, cause acid rain and world-wide climate change; risks from radiation leaks or petroleum spills; and vast tracts of land and water despoiled by large-scale projects. As things are going now, he sees these problems only getting worse.

On the plus side, however, Jaccard foresees a big drop by 2100 in how much energy it takes to generate each dollar of GDP. But a quadrupling of per capita wealth -- also a plus, though a challenging one -- and a 75-per-cent increase in population will still strain energy supplies beyond what can be sustained.

Specifically, he sees the current path leading to a doubling of the biomass, mainly wood, used in scores of poor countries for cooking and heating fires that pollute the air and endanger human health. He sees a 17-fold increase, but still too little, in "modern biomass," including farm waste, converted into clean, green energy sources. Hydro development will focus too much on big, land-drowning projects and too little on small benign ones, and it will fall well short of its potential role in a more optimal mix of energy sources. Wind, solar and geothermal will similarly grow substantially, but not enough, and wave and tidal power will go nowhere without policy-driven help.

His preferred scenario, which he says would be sustainable, is based on several subtle shifts that, over the next 100 years, add up to big results.

It includes a 33-per-cent reduction in traditional biomass, and a 26-fold increase in modern biomass, which would produce far cleaner and more efficient results from the same amount of raw material needed to fuel the current-path scenario. He sees 5.5 times more power coming from hydro, but most of the increase from small projects that do little or no environmental harm. He sees good policy bringing about 33 per cent more wind power, and twice as much solar and geothermal power as would otherwise evolve. And he sees tides and waves tapped to provide about two per cent of the energy needed by this richer and more productive world.

Use of fossil fuels would nearly double under his preferred scenario, but they'd slip from 83 per cent dominance today to 57 per cent in 2100 (as opposed to 66 per cent under the current-trends scenario).

What will change more dramatically is what is done with much of that fossil fuel. Jaccard sees the greatest growth for coal, which is plentiful and widely available around the world. But he sees it used in zero-gasification processes that will be able to produce electricity at comparable cost to other new sources, and hydrogen at lower cost than almost anything else. And electricity and hydrogen will come to play a huge role as secondary energy sources, including fueling much of the transportation of people and goods -- a market now totally dominated by oil.

What needs to be done to get off the path that isn't unsustainable and onto one that is?

Jaccard calls for a mix of approaches in national strategies. Voluntary programs spurred by education, though unlikely to do the whole job, could have a role, as could prescriptive approaches and financial disincentives like a tax on pollution.

But he relies most heavily on market-oriented solutions -- especially emissions caps with tradeable permits, and niche market regulations.

He gets into a detailed discussion of how caps could start out fairly high, requiring only modest reductions in overall emissions, and be strengthened over time to accomplish big gains fairly painlessly.

The niche market regulations, a new concept not yet in use anywhere, would foster projects, large and small, to capture and permanently store carbon by-products of combustion, and it would spread the cost among all producers of carbon emissions.

Internationally, Jaccard sees difficulty, if not impossibility, getting agreements for prescriptive approaches such as the Kyoto Accord, which is said to be merely a first step and is not stringent enough to actually reverse the build-up of greenhouse gases. He reviews a list of alternative proposals such as international trading of emissions permits, equity provisions that ensure compliance but provide a financial break to developing countries, an international carbon tax, various mechanisms for technology transfer from the developed world to the poor, and even bi-lateral emission-reduction agreements between countries like the U.S. and China.

Without really settling on or rejecting any of these, he remains optimistic.

"Energy policy at the global level might never seem as logical and coherent as some would wish, but this is no reason to despair," he writes. "The realities of this level simply require creative thinking, a willingness to compromise, and an ability to seize opportunities as they arise.

"Rising incomes in developing countries provide such opportunities because of the enormous energy investments that will occur over the coming decades. Likewise, if current high oil prices are sustained, the energy market will attract substantial investment in developed countries.

"These two developments create an unprecedented opportunity to shape the character of the future global energy system . . . that we can't afford to miss."

dcayo@png.canwest.com

- - -

Sustainable Fossil Fuels: The Unusual Suspect in the Quest for Clean and Enduring Energy

by Mark Jaccard, Simon Fraser University

The book's first printing will be available Nov. 27 by direct order only from Cambridge University Press, 100 Brook Hill Drive, West Nyack, NY 10994.

Toll-free 800-872-7423.
Fax 914-937-4712.
http://us.cambridge.org

It will be available in bookstores in Canada Jan. 1, 2006. Paperback: $33.95.

Hardcover: $94.95

Last in a three-part series (Part 1, Part 2)

© The Vancouver Sun 2005

TOP

Posted by Arthur Caldicott on November 24, 2005

Who's got the power with our power?

BC Progress Board Releases Discussion Paper on Provincial Energy
9-Nov-2005
Who's got the power with our power?
Les Leyne, Times Colonist, 24-Nov-2005



BC Progress Board Releases Discussion Paper on Provincial Energy

On November 9, 2005, the BC Progress Board tabled a discussion paper on energy with the provincial government. The paper, "Strategic Imperatives for British Columbia's Energy Future", was prepared for the Board by Sage Group Management Consultants. The document surveys BC's current energy situation and makes a number of suggestions for action

News Release
Executive Summary (589K)
Summary of Recommendations(572K)
Entire Report (1,391K)

TOP



Who's got the power with our power?

By Les Leyne
Times Colonist (Victoria)
24-Nov-2005

There's a revolutionary concept embedded in the B.C. Progress Board report on energy. The 60-page outlook floats the notion that the democratically elected government of B.C. should wrest control of energy policy away from B.C. Hydro.

That's the kind of coup d'etat plotting that can get you strung up in some countries. But the scheme is laid out in the Progress Board report, by the Sage Group. It's no secret that B.C. Hydro is a power unto itself in the province, so a discussion paper that confirms that fact is unlikely to ruffle too many feathers. Recommending a change to that situation, however, is something new and different.

The report comes dangerously close to questioning B.C. Hydro's supremacy in all things electrical. Not only that, but it states that a lot of people are doing the same sort of thinking.

"In discussion with the Progress Board, many parties stressed the importance of the overarching responsibility of the B.C. government and specifically the Ministry of Energy, Mines and Petroleum Resources, to determine energy policy and ensure it is implemented."

Suggesting that the Energy Ministry set energy policy would be a mushy motherhood position in some jurisdictions, but in B.C. it's actually a controversial proposition.

The Liberals came to power in 2001 with an attitude that "political interference" when it came to Crown corporations was a cardinal sin. NDP meddling in the ferry system -- "Go out and build some aluminum catamarans. And make them go really fast" -- was fresh in everyone's minds.

The Liberals also remembered the grand New Democrat misadventure in Pakistan, where they sent a Hydro subsidiary off on a questionable venture involving lies, off-shore bribery and missing money. (It's best remembered in the legislature for the Liberals bellowing: "Who is Ali Mahmood?")

New Democrats also dictated the Island energy policy that resulted in the proposed Duke Point generating plant in Nanaimo, which was just turning into a problem when the government changed, and gradually evolved into a debacle, since abandoned.

So the hands-off attitude, combined with the mass buy-outs of staff resulting from the budget-cutting spree, left most of the field clear to B.C. Hydro, when it comes to electricity policy.

As long as it makes the government a few hundred million dollars every year and keeps the lights on, it can do whatever it wants. (A good illustration of their relative status is at the annual Union of B.C. Municipalities convention, where the government and B.C. Hydro throw matching receptions. Grumbling delegates are obliged to line up for a half-hour to shake hands with the premier and make an appearance at the government function. Then they bolt over to the lavish Hydro bash, where the real party is.)

But now the Progress Board is questioning the natural order of things.

"There was particular concern expressed that the government does not have adequate staff and budget dedicated to developing electricity supply policy and ensuring that this policy is adhered to by B.C. Hydro," says the consultants' report.

It then makes the assertion: "It is the role of the B.C. government to speak for the public in this regard and it is the role of B.C. Hydro to follow the direction of government."

The board says Hydro has the government out-gunned at every turn when it comes to staff and resources, "which puts the government in the position of not being able to provide adequate oversight and direction to B.C. Hydro."

Consequently, "B.C. Hydro is seen as setting its own policies with regard to electricity supply or responding to matters of public interest, such as the government's energy plan, in its own time and manner."

The main reason for asserting control over Hydro is the paramount goal stated in the report of regaining self-sufficiency in electricity, an advantage that was lost around the turn of the century. Whether it was a lack of political will or the absence of compelling need, the province hasn't added any major generating capacity in more than 20 years, and is now a net importer of electricity.

Now they're trying to make up the shortfall, but the report said there is growing concern that many of the small-scale projects are being vetoed by local governments, for zoning or other reasons.

Local governments do have a say in approving such projects, but the report says the province must be the final decision-maker.

"B.C. is not yet in a crisis with regard to its supply of electricity, but it does have serious planning challenges and if these challenges are not met in a timely manner a supply crisis will likely follow."

Somebody needs to ramrod some fairly urgent action on this front. B.C. Hydro is compiling an integrated electricity plan that will try to address self-sufficiency. It would be reassuring if the elected officials did more than just wave their hands over it when it's done.

leyne@island.net

TOP

Posted by Arthur Caldicott on November 24, 2005

November 22, 2005

Huge green power reserves can fuel jobs, economy

Huge green power reserves can fuel jobs, economy
News Release, BC Sustainable Energy Association, 21-Oct-2005
Sustainable Energy Solutions for BC
Submission to BC Alternative Energy and Power Technology Task Force, BCSEA, 21-Nov-2005
Alternative energy sources potentially rich in jobs
Scott Simpson, Vancouver Sun, 22-Nov-2005




Huge green power reserves can fuel jobs, economy

FOR IMMEDIATE RELEASE
CONTACT: Guy Dauncey (250) 881-1304

News Release
BC Sustainable Energy Association
21-Nov-2005

Victoria, BC (November 21, 2005)-British Columbia has huge reserves of green power that could stimulate enormous economic development and employment opportunity, with as many as 400,000 new jobs over 25 years, and establish BC as a leader in renewable energy, according to a report released today by the BC Sustainable Energy Association (BCSEA).

Tallying the province's green energy potential from wind, solar, tidal, geothermal and other technologies, combined with energy-savings from efficiency measures, would produce 84,000 gigawatt hours (GWh) a year. This is 50% more than BC Hydro's current total generation and enough power for 8.4 million homes.

"BC can be a global leader in green energy technologies if it chooses to," said Guy Dauncey, BCSEA president and author of the report, Sustainable Energy Solutions for BC, prepared as a submission to the BC Alternative Energy and Power Technology Task Force. The Task Force is expected to release its findings soon. BC Hydro is also due to release its 2005 Integrated Electricity Plan that will outline how BC Hydro expects to meet anticipated customer electrical demand over the next 20 years.

The BCSEA report identifies tidal energy as BC's largest long-term source of potential power: 13,000 GWh/yr. A further 12,500 GWh /yr could be freed up by 2025 by saving electricity currently used wastefully. BC also has the potential for 11,000 GWh a year of wind energy. Full- and part-time jobs created over the 25-year period total 413,000 jobs, including installation of solar PV roof systems and retrofitting homes and businesses to double their energy efficiency. The report draws on BC Hydro energy resource data and a variety of employment studies to arrive at these conclusions. (See table "BC's Long-Term Potential for Sustainable Electricity Resources and Jobs" below.)

"BC's impressive solar energy potential is very similar to that of Germany, a world-leader in solar installations thanks to progressive government energy policies," said Kevin Pegg, of EA Energy Alternatives Ltd., a Victoria solar, wind and microhydro company. "Washington State recently announced incentives to grow their renewables industry: If they can do it, so can we."

"The challenge is not technical", said Guy Dauncey. "It lies with the decision to prioritize sustainable energy over other sources, such as coal, coal-bed methane, natural gas, or large-scale hydro." BC Hydro is currently following a voluntary commitment that 50% of its energy will come from "clean" resources, which includes cogeneration from natural gas. BC Hydro's 2005 Integrated Electricity Plan may conclude that BC's future power should come from green resources such as those described in the BCSEA report, or from coal-fired power, the Site-C dam, natural gas, or a combination of these sources.

"Deploying these resources will require a transition over several years along with some transition costs," said Dale Littlejohn, a Vancouver sustainable energy consultant and BCSEA director, "but we can do this profitably while improving jobs, health and the economy. As a bonus, we can make BC fossil-free by 2025 and set an example for the rest of the world."

The full report is available at: www.bcsea.org/policy/taskforcereport.asp

- 30 -

For more information:
Guy Dauncey (Victoria) 250-881-1304
Kevin Pegg (Victoria) 250-727-0522
Dale Littlejohn (Vancouver) 604-785-5130

 

MW

GWh/year

Cents/kWh

Jobs

Wind

5000

11,000

6-12

31,250(1)

Microhydro

2530

11,108

4-9

5,700(2)

Wood waste biomass

215

1800

4-9

484(3)

Geothermal

1070

9,000

5-9

7,000(4)

Tidal

2225

13,000

11-25

13,906(5)

Landfill

15

85

4-5

20(6)

Solar PV

6000

12,000

60 - 20

210,000(7)

Total potential power

58,000

   

Efficiency

n/a

12,500

3-6

145,200(8)

Solar Hot Water

n/a

10,000

n/a

[60,000](9)

GeoExchange Heating

n/a

3,750(10)

n/a

[21,420](11)

Total

 

84,250

 

413,560


references here

TOP



Alternative energy sources potentially rich in jobs


Waning supplies of oil and natural gas will trigger the need for other sources of energy, a report says

Scott Simpson
Vancouver Sun
Tuesday, November 22, 2005

British Columbia could open new industries and create hundreds of thousands of jobs by turning its attention to the world's $200-billion power technology industry, a report submitted Monday to the B.C. government says.

The report says global climate change, and waning production of oil and natural gas, will throw a wrench into 90 per cent of the world's present energy supply -- describing a fossil fuel shortage as "imminent."

B.C. residents are "solidly behind sustainability" but the province must increase its commitment to research and development of lower-cost alternate energy technology, the report from the B.C. Sustainable Energy Association says.

Wind, tidal and solar generation all offer significant opportunities.

"If B.C. makes this transition first, it will be in a position to be a global hub for one of the largest market opportunities in history," the report says.

The association estimates as many as 400,000 temporary, part-time and full-time jobs could be created and adds that B.C. could more than double its present hydroelectric capacity without building another major dam.

"Our analysis shows that B.C. has the potential to generate 84,250 gigawatt hours of sustainable, renewable energy [including efficiency savings]," says the report, which was submitted to the government's committee on alternative energy and power.

The panel is co-chaired by Environment Minister Barry Penner.

Penner said he hasn't had time to review the report but said that, "as Minister of Environment I can't help but be interested in ideas that support sustainable solutions."

Penner noted that B.C.'s alternative power technology sector already includes more than 60 companies providing 3,000 jobs and generating $700 million in annual revenues.

The report follows a 2002 BC Hydro study that listed the province's green energy resources, but focused on sources that are relatively close to the cost of hydro generation.

BC Hydro's generation cost is 2.5 cents per kilowatt hour (kWh) at its existing "heritage" hydroelectric facilities.

The sustainable energy association estimates micro-hydro at between four and nine cents per kWh and six to 12 cents for wind.

Estimated generating costs for tidal power, a fledgling technology, are 11 to 25 cents per kWh.

Solar power is 60 cents to $2 per kilowatt hour.

Association executive director Guy Dauncey said in an interview that Hydro could structure its electricity rates in a way that supports alternative energy, as several U.S. states have done.

"Everyone who pays a BC Hydro bill would pay an extra, say, half-cent per kilowatt hour which supports the development of new emergent technologies," Dauncey said.

He added that Germany, which has "the same sunshine ratio as British Columbia," is going full-tilt on solar power development.

Mary Hemmingsen, BC Hydro manager of power planning and portfolio management, noted the Crown corporation is compelled by the B.C. Utilities Commission to maintain the lowest-possible electricity prices for its customers -- who enjoy the third-lowest electricity prices in North America.

"We probably agree that B.C. has some really significant green resource potential," Hemmingsen said. She also cautioned that while tidal resources are significant, the technology is, as yet, unproven.

ssimpson@png.canwest.com

SWITCHING HOW WE THROW THE SWITCH:

The B.C. Sustainable Energy Association says the province has huge green power potential that could provide not only renewable sources of energy but could aso stimulate economic development and employment.

B.C.'s maximum long-term (25-year) potential for sustainable electricity resources

Gigwatts/year Cents/kilowatt hour* Jobs
Wind: 11,000 6-12 31,250
Microhydro: 11,108 4-9 5,700
Wood waste: 1,800 4-9 484
Geothermal: 9,000 5-9 7,000
Tidal: 13,000 11-25 13,906
Landfill: 85 4-5 20
Solar PV: 12,000 60-200 210,000

Efficiency: 12,500 3-6 145,000
Solar Hot Water: 10,000 n/a 60,000
GeoExchange: 3,750 n/a 21,420
Total: 84,250** 413,560

* BC Hydro's existing heritage assets: 2.5 cents per kilowatt hour.
Cost of adding new large hydro assets: 6.5 cents per kilowatt hour.

** 50% above Hydro's current total generation
Source: B.C. Sustainable Energy Association, Vancouver Sun

© The Vancouver Sun 2005

TOP

Posted by Arthur Caldicott on November 22, 2005

November 17, 2005

Prepare for Peak Oil Now

By Richard Heinberg
AlterNet
14-Nov-2005

Editor’s Note: This paper, exclusively available to AlterNet, was presented at a Reception with Their Royal Highnesses The Prince of Wales and the Duchess of Cornwall, at the California Leaders Round Table Dialogue on Peak Oil, Climate Change and Business Action; November 7, 2005 in San Francisco.

The subject I teach -- human ecology -- is a discipline that largely concerns population and resources. Over the past few years I have chosen to study oil, because it is the most important energy resource of the modern world.

Only 150 years ago, 85 percent of all work being accomplished in the U.S. economy was done by muscle power -- most of that by animal muscle, about a quarter of it by human muscle. Today, that percentage is effectively zero; virtually all of the physical work supporting our economy is done by fuel-fed machines. What caused this transformation? Quite simply, it was oil's comparative cheapness and versatility. Perhaps you have had the experience of running out of gas and having to push your car a few feet to get it off the road. That's hard work. Now imagine pushing your car 20 or 30 miles. That is the service performed for us by a single gallon of gasoline, for which we currently pay $2.65. That gallon of fuel is the energy equivalent of roughly six weeks of hard human labor.

It was inevitable that we would become addicted to this stuff, once we had developed a few tools for using it and for extracting it. Today petroleum provides 97 percent of our transportation fuel, and is also a feedstock for chemicals and plastics.

It is no exaggeration to say that we live in a world that runs on oil.

However, oil is a finite resource. Therefore the peaking and decline of world oil production are inevitable events -- and on that there is scarcely any debate; only the timing is uncertain. Forecast dates for the peak range from this year to 2035.

The peaking phenomenon itself has been observed again and again in individual oil fields and in entire producing nations. One of the first countries to hit its peak was the U.S.. During the 1930s and '40s, half the world’s production of petroleum came from Texas and Oklahoma. However, U.S. production reached its all-time maximum in 1970 and has been declining ever since. Currently the U.S. imports 60 percent of its oil.

Concern over the likelihood of an impending world peak has increased markedly in recent months as global spare production capacity has dwindled and as prices have achieved what seems to be a new baseline of over $50 per barrel.

Evidence that we are approaching peak includes the following:

ExxonMobil documents that global oil discoveries peaked in 1964. Declining rates of discovery are therefore a long-established trend.

Chevron notes in recent advertisements that 33 of 48 nations are in decline. We have thus seen the peaking of production in a majority of individual nations, including some important producers such as Indonesia, Norway, Great Britain, and Venezuela. Mexico will reach its peak within the next two years.

As noted by the International Energy Agency, there is evidence that a substantial amount of "proven reserves" in OPEC countries are illusory, the result of a scramble for market share within a cartel that allocates export quotas based on stated reserves.

With regard to this last point it should be noted that reserves figures, even when accurate, have historically given little warning of peaking. The U.S. instance is once again emblematic: in 1970, U.S. oil reserves were higher than ever; so were production rates. But only a year later, American production began its terminal decline. The study of discovery rates and depletion rates gives us a much better idea of when the global peak is likely to occur.

Optimistic estimates of future discovery and production issued by Cambridge Energy Research Associates and the U.S. Geological Survey have been criticized by several analysts. The optimists have generally failed to anticipate peaks, first in the U.S. and repeatedly in the case of other nations around the world.

This morning the International Energy Agency (IEA) issued a statement saying that the world will have sufficient energy supplies for the next quarter century. However, the statement noted the necessity of the investment of $17 trillion in the supply train in order to maintain sufficiency for so long. Also, the IEA anticipates Saudi Arabian production expanding to 18 million barrels per day by 2030—a figure considerably higher than the maximum possible rate of production from that country cited not long ago by Sadad al Husseini, the recently retired head of exploration for Saudi Aramco.

Expressions of concern have been voiced by corporations, prominent organizations, and knowledgeable individuals, including ChevronTexaco, the Royal Swedish Academy of Sciences, Volvo, Ford Motor Company Executive Vice President Mark Fields, the Chinese Offshore Oil Corporation’s chief economist, and numerous petroleum scientists and oil industry analysts.

The question immediately arises: Will alternative sources be able to make up the difference?

Alternative sources often discussed include oil sands from Canada, shale oil in Colorado, coal-to-liquids, gas-to-liquids, nuclear, and renewables such as solar and wind. Each of these will require immense investment and well over a decade of intense effort in order to produce substantial quantities of energy to offset declines from fossil fuels. And in most cases, rates of production are and will be constrained by non-economic factors. Take the oil sands, for example. Currently Canada produces one million barrels of synthetic crude per day from that source. There is expectation of two mb/d by 2010, and perhaps as much as four mb/d by 2025. We are unlikely to see higher numbers than that even with extraordinary capital investment, because the production process requires large amounts of natural gas and fresh water, both in short supply in Alberta. Moreover, according to the IEA, the world needs six mb/d of new production capacity each year (and that number is growing) to meet new demand and to offset depletion from existing fields.

How about increased efficiency -- surely that can offset any potential oil supply problems. In principle, yes, but most efficiency strategies will likewise require significant lead times. For example, we have the technology now to enable all of us who own cars to be driving ones that get up to 100 miles per gallon. If we were, that would obviously save an enormous amount of fuel. But how long would it take to implement that strategy? It would certainly take four or five years for Detroit to begin producing such high-efficiency cars in large numbers.

Then, not everyone buys a new car every year. In fact, it takes about 15 years to change out nearly the entire U.S. car and truck fleet. So, altogether, it would take about 20 years to fully implement this particular efficiency strategy.

Will the market be able to respond quickly enough to forestall serious economic, social, and political impacts? It is often said that the Stone Age did not end for lack of stones, nor will the Oil Age end because we run out of petroleum -- but instead because we find a cheaper source of energy. However, as we have just seen, that cheaper source of energy has yet to be identified.

Early this year a report was released, prepared for the U.S. Department of Energy by a team led by Robert L. Hirsch, who has a distinguished background in the oil industry and is a senior energy analyst at SAIC and the Rand Corporation. The Hirsch Report (titled "Peaking of World Oil Production: Impacts, Mitigation and Risk Management") concludes that price signals will arrive at least ten years too late to enable a gentle, market-led transition away from oil to other energy sources. The report describes Peak Oil as an "unprecedented" challenge for modern societies, and describes economic, social, and political risks if preparation is not undertaken soon enough, or on adequate scale.

Let me read you a few sentences from the Hirsch Report:

The problems associated with world oil production peaking will not be temporary, and past "energy crisis" experience will provide relatively little guidance. The challenge of oil peaking deserves immediate, serious attention, if risks are to be fully understood and mitigation begun on a timely basis. Mitigation will require a minimum of a decade of intense, expensive effort, because the scale of liquid fuels mitigation is inherently extremely large. Intervention by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic.

The report also concludes that the costs of preparing too late for global oil peak would far outweigh those of preparing too early.

The worst-case scenario for the impact of global production peak is very bad indeed. As I mentioned earlier, we are extremely dependent on oil for transportation, agriculture, plastics, and chemicals. In each area, we are already seeing serious impacts resulting from current prices in the $60-per-barrel range. For example,

Currently tens of thousands of farmers are agonizing over whether they can afford to plant next year’s crop, given high fuel and fertilizer costs.

Chemicals and plastics industries are already hard hit: In the chemistry industry alone, more than 100 plants have closed and more than 100,000 jobs have been lost just this year.

In the airline industry, 40 percent of revenues go to pay for jet fuel; most U.S. air carriers are already in bankruptcy or nearing that situation.

Home heating costs are projected to be 40-50% higher this winter than last.

As prices go even higher, and with actual scarcities of fuel, people will experience difficulties commuting, and the maintenance of our far-flung food distribution systems may become problematic.

On top of all this, oil is a strategic resource: as supplies become scarce, there is increasing likelihood of international conflict.

To avoid the worst-case scenario we must begin today to reduce our dependence on oil. The effort must have top priority. It must focus primarily on reducing demand, and only secondarily on producing large quantities of alternative transportation fuels.

A global Oil Depletion Protocol would reduce price volatility and competition for remaining supplies, while encouraging nations to move quickly to wean themselves from petroleum. In essence, the Protocol would be an agreement whereby producing nations would plan to produce less oil with each passing year (and that will not be so difficult, because few are still capable of maintaining their current rates in any case); and importing nations would agree to import less each year. That may seem a bitter pill to swallow.

However, without a Protocol -- essentially a system for global oil rationing -- we will see extremely volatile prices that will undermine the economies of all nations, and all industries and businesses. We will also see increasing international competition for oil likely leading to conflict; and if a general oil war were to break out, everyone would lose. Given the alternatives, the Protocol clearly seems preferable.

National governments, local municipalities, corporations, and private individuals will all need to contribute to the effort to wean ourselves from oil, an effort that must quickly expand to include a reduction in dependence on other fossil fuels as well.

All of this will constitute an immense challenge for our species in the coming century. We will meet that challenge successfully only if we begin immediately.

Further reading:

The Party's Over
Oil, War and the Fate of Industrial Societies
By Richard Heinberg
New Society Publishers, 2005

Powerdown
Options and Actions for a Post-Carbon World
By Richard Heinberg
New Society Publishers, 2004


Posted by Arthur Caldicott on November 17, 2005

The Baron talks up China and energy

By ERIC REGULY
Globe and Mail
Thursday, November 17

The Rothschilds have been in business for about 220 years, and every century or so investment banking's royals haul out the yellowed charts and realize the empire has a presence in Upper and Lower Canada. As a courtesy, they pay a visit, shiver in the cold, recoil at the wine -- the family gave Bordeaux snobs Mouton and Lafite -- and politely scurry back to Paris or London or New York.

This week, the Rothschilds' gilded airborne carriage took the dapper Baron David de Rothschild and his entourage to Toronto and Montreal. Mr. Rothschild's first official visit to Canada was a courtesy call. But it was also recognition that the small Canadian offices, formally known as N.M. Rothschild & Sons Canada, probably will take on a more prominent role in the family wealth creation machine.

That's because Canada has a lot of what the world covets -- energy and metals. Mr. Rothschild thinks the Chinese are about to emerge as voracious buyers of not just the commodities, but the companies that produce the commodities. The firm, with its presence in Canada and connections to China, might be in a good position to broker some of these deals.

"The Chinese want to demonstrate that they are starting to do what most big companies in the world do when they are national champions, which is look at opportunities everywhere," he says in an interview.

Ray Smith, chairman of Rothschild North America and former CEO of Bell Atlantic (now Verizon), who joined Mr. Rothschild on the Canadian foray, thinks China will be especially aggressive in oil. "The one thing they do not have is oil. [They] also want a seat at the table when the great energy decisions are made. The ones today are minor compared to what they will be 10 years from now."

Mr. Rothschild says the firm's long history of independence has made it especially attractive to the Chinese. This allowed Rothschild to emerge this year as the adviser to the non-executive directors of China National Offshore Oil Corp.

China National Offshore Oil (CNOOC), made an audacious bid for Unocal last summer but Chevron took the prize.

For that, Chevron can thank the political hysteria set off by various politicians. The Chinese bid was a national security threat, they said, even though CNOOC is publicly traded and promised not to remove oil from American soil and export it to China. Congress threatened to delay any decision to approve the merger for months.

The conventional wisdom is that that the Chinese vastly underestimated the political backlash. Not exactly true, Mr. Rothschild says. "We knew our chances were slim. I think the Chinese wanted to register the fact they are players."

CNOOC or other Chinese oil companies probably will make more acquisition attempts, although unlikely in the United States. The American energy press has speculated that Canada's Talisman or Husky Energy might become targets (China Minmetals last year went after Noranda, now part of Falconbridge, and then mysteriously lost interest).

Mr. Rothschild and Mr. Smith both agree that, in 10 years or so, China's pursuit of big resource companies will be an unexceptional aspect of the global M&A scene.

While the Rothschilds are probably best known among mere commoners for setting gold prices in the London gold market (a business they abandoned last year), the CNOOC adventure shows they have a fondness for grubbier industries. The family has a lot of experience in commodities and resources, especially in mining -- Mr. Rothschild started his career at a family-controlled mine in the 1960s -- and in infrastructure and utility plays.

Thanks to the commodities boom, Canada is back on the resources map, which means Rothschild Canada might be, too. Rothschild hasn't been a big name in Canada since 1953, when it led the syndicate to develop Newfoundland's Churchill Falls hydroelectric project, which wasn't finished until the early 1970s.

Mr. Rothschild, 63, has been chairman of Rothschild Continuation Holdings AG, the top company in the empire, since 2003, when Sir Evelyn de Rothschild, the dominant figure on the British side of the business, retired. The firm is fairly small; it has about 2,500 employees in 30 offices in 20 countries. But it has the distinction of being the only privately held global investment bank and one of the few independent names of any size. Most of its European rivals, including Schroders, Flemings and Casenove, were poached in the past decade or so by the big American banks. Another rival, Lazard, recently went public.

Independence and connections to governments and industries that might go back to the era when Napoleon was in diapers allow Rothschild to snag M&A advisory work, which accounts for three-quarters of its income, from varied and surprising quarters. But Mr. Rothschild knows that the firm can go only so far in a land of Wall Street giants. If nothing else, Rothschild, unlike the J.P. Morgans and Citigroups of the world, can't use its balance sheet to attract clients with loans.

Mr. Rothschild and Daniel Labrecque, the CEO of Rothschild Canada, insist the firm is not working on a transborder deal involving a Canadian company, although the rumours say it has teamed up with a Canadian investment bank on a potential resources company sale. But making a splash in the Canadian market seems only a matter of time as Rothschild thumbs through its fat Rolodex. "The ambition is to become a quality player in Canada," the baron says.

Posted by Arthur Caldicott on November 17, 2005

November 14, 2005

Enviros Need to Get With a Program


By Steven Pearlstein Washington Post November 2, 2005

The Sierra Club, the country's leading grass-roots environmental organization, has spent a year trying to figure out what it thinks about liquefied natural gas, so far without success. And therein lies a parable about politics and policy that explains a lot about the current stalemate in national energy policy.

Like most environmental groups, the Sierra Club would prefer that we meet our energy needs through conservation and stepped-up use of renewable resources such as solar and wind power. But with home heating bills set to climb as much as 50 percent this winter and some cold-weather states facing the very real possibility of rationing natural gas supplies, even most enviros concede the need to boost supply.



The liquified natural gas plant at Cove Point, Md., owned by Dominion Resources, is one of six such facilities in the United States. (By Mark Gail -- The Washington Post)
Click to enlarge image

Enviros, in fact, can take some credit for the current gas shortage. For years, they've fingered oil- and coal-fired power plants that are leading culprits behind acid rain and global warming. But so many utilities rushed to build cleaner gas-burning plants that demand has now badly outstripped supply.

The readiest source of additional domestic supply -- offshore drilling -- is hotly opposed by environmentalists as too risky to marine ecosystems. Instead, they prefer to tap the huge reserves that remain under Alaska's North Slope. They're willing to override their genetic disposition to tampering with the Alaskan wilderness and support a new (non-liquefied) gas pipeline along the trans-Alaskan highway through Canada to the Lower 48. But the pipeline would require a $20 billion investment that even Big Oil is unwilling to make.

Which leaves us natural gas in its liquefied form, which must be transported from abroad in cargo ships and unloaded at coastal terminals that change the liquid back into gas.

There are already six such facilities in the United States, including one at Cove Point in Calvert County, and the industry estimates that it will need as many as a dozen more. Fourteen proposals have already received federal approval, 20 have been proposed, and probably 10 more are in the works.

With all those to choose from, you might think that the Sierra Club would have identified the ones it could support. But with a few notable exceptions -- the expansion at Cove Point being one -- you'd be wrong. It would appear that for the Sierra Club, LNG has become the energy source to be supported in principle, but rarely in practice.

Go to the Web site of the Los Angeles chapter of the Sierra Club, for example, and you'll learn why any of three proposed terminals would be frighteningly dangerous and costly to electricity customers while making the nation even more dependent on foreign fuel.

In Louisiana and Mississippi, the Sierra Club chapter warns of tens of thousands of innocents who would be burned to a crisp if there were ever an explosion and fire at any of the LNG terminals proposed for the Gulf Coast.

On the East Coast, the Sierra Club's Delaware chapter has come out against BP's plan to build an LNG terminal in the Delaware River. In its April newsletter, the New York chapter lists eight environmental catastrophes that would befall the region if Shell were allowed to build a floating terminal 25 miles out in the Long Island Sound. And in Boston, the Sierra Club is leading the charge against a proposal by AES to build an LNG terminal on a small, unused and largely unusable island at the mouth of Boston Harbor.

The grass-roots politics of all this is easy to understand. For years, environmental groups have successfully opposed power plants, utility lines and offshore drilling by tapping into the not-in-my-back-yard instincts of anyone living near such projects. Now, when an LNG proposal comes along, the response is almost reflexive. Local residents see the need to gussy up their NIMBYisms with environmentalist garb, and local enviros are happy to oblige.

Back at Sierra Club headquarters, however, officials are still struggling to reconcile the knee-jerk opposition of local chapters to just about every energy infrastructure project with the political imperative to confront the realities of Republican rule and soaring energy prices.

"We are very conscious that we need to articulate what we are for as well as what we are against," says David Hamilton, who oversees energy policy issues for the Sierra Club in Washington.

Recently, a number of environmental groups were able to put aside their reflexive NIMBYism to support controversial wind-farm proposals off Cape Cod and San Francisco. And some environmental leaders have become so alarmed by the pace of global warming that they have even indicated a willingness to reopen the debate over nuclear power.

My guess, however, is that unless more enviros figure out how to prioritize their issues and engage in the kind of trade-offs and compromises needed to recapture the political center, their once vaunted movement runs the risk of falling further into irrelevancy.


Online discussion about this column
Washington Post business columnist Steven Pearlstein was online to discuss his latest column, an examination of environmentalists and their continued unwillingness to get behind liquefied natural gas projects. The transcript of the discussion is here.

Steven Pearlstein can be reached at pearlsteins@washpost.com.

FERC's map of Existing and Proposed North American LNG Terminals is here. Note that it is missing the two LNG proposals on BC's coast: Kitimat LNG at Kitimat, and Westpac Terminals (empty website) at Ridley Island, Prince Rupert.

Posted by Arthur Caldicott on November 14, 2005

November 11, 2005

Peak-power jolt for homeowners urged

Scott Simpson
CanWest News Service
Thursday, November 10, 2005

The provincial government should order B.C. Hydro to increase electricity rates for homeowners during peak hours, and to charge more for above-average electricity consumption, says a report released Wednesday by the B.C. Progress Board.

The advisory board to the B.C. Liberal government says British Columbians have a "false sense of security" because existing electricity rates are among the cheapest in North America -- and warns that additions to B.C.'s electricity supply will be significantly more expensive.

Hydro is already moving in the direction of variable rates with B.C.'s major industries. It will introduce a new pricing structure for industrial customers that involves a near-tripling of electricity rates on the last 10 per cent of electricity consumed in peak winter hours.

That would bump the price from 2.3 cents per kilowatt hour to 6.1 cents per kilowatt hour to reflect the higher costs of bringing new sources of electricity onto the Hydro grid. Off-peak rates will fall in the summer, allowing industry the opportunity to recoup some of its winter electricity costs.

The progress board says adopting a system of variable rates would send a signal that there are additional costs associated with consumption during peak times.

"B.C. has had the luxury of a secure supply of energy, which has resulted in complacency about where it will come from in the future and what it will cost," says the report, titled Strategic Imperatives for British Columbia's Energy Future.

The progress board was established by Premier Gordon Campbell in July 2001 to review the province's economic and social performance and to provide policy advice to government.

The report says B.C. has made only nominal additions to electricity supply in the last 20 years despite a 33 per cent increase in population over that time.

"The provincial government, through the B.C. Utilities Commission, should direct BC Hydro to introduce pricing of electricity that sends the correct signals to all consumers for their energy decisions, mindful of the government's pricing policy with respect to heritage assets," says the report.

Hydro residential and industrial customers have traditionally paid a flat rate for their power, reflecting the low-cost production coming from B.C.'s so-called 'heritage' assets -- its network of dams and electricity generating facilities on the Columbia and Peace rivers in eastern British Columbia.

New sources of electricity supply cost more. They include run-of-river hydro projects developed by the private sector, and Hydro is also mulling private wind farms, natural gas-fired generation, and a major new dam at Site C on the Peace River.

Variable pricing isn't entirely punitive -- consumers who use electricity-gobbling appliances such as dishwashers in the late evening hours could end up paying cheaper-than-standard rates as a reward for conservation.

Meanwhile, Hydro president-CEO Bob Elton warned in a speech Tuesday to the Vancouver Board of Trade that filling B.C.'s needs with imported electricity is an "increasingly risky" strategy.

B.C. currently relies on imports for 12 per cent of its electricity needs and Hydro projects that dependence to grow unless the province adds supply.

Elton said B.C. faces increased risk of supply bottlenecks due to a limited number of transmission lines, unforeseeable price-increase risks, and the risk of "severe" consequences for the economy if the present situation continues.

He said British Columbians need to be interested in the situation because "there is a long-term challenge that needs long-term planning to solve."

Later this month, Hydro will present to the B.C. Utilities Commission a plan for addressing B.C.'s long-term electricity needs. It will consist of a mix of projects, possibly including the Site C dam on the Peace River near Fort St. John.

In an interview, Elton acknowledged that Hydro's recommendations may stir up some controversy but said it is imperative for British Columbians to consider all the options and make choices that reflect the interests of the entire province.

© Times Colonist (Victoria) 2005

Posted by Arthur Caldicott on November 11, 2005

Energy becomes Canada's top export

By Eric Beauchesne
Times Colonist (Victoria)
11-Nov-2005


OTTAWA -- Energy has become Canada's No. 1 export, easily surpassing both machinery and equipment and automotive products, while also boosting total exports to a record high and pumping up the country's trade surplus.

"Energy has now moved firmly into first place among all our exports," senior Statistics Canada economist Philip Cross said.

The only other times that energy was Canada's top export was during the mid-1970s and early-1980s energy crises, he added.

Machinery and equipment had previously been Canada's No. 1 export, followed by auto products.

Energy exports crossed that milestone in August, according to revised figures for the month released Thursday with the September trade figures. Energy maintained that top spot in September with export sales rising above the $9-billion mark for the first time ever.

However, Canadians are also energy importers.

"The value of Canada's exports and imports both hit record highs in September, thanks to soaring outbound shipments of natural gas and inbound shipments of crude petroleum in the wake of back-to-back hurricanes," Statistics Canada said.

However, there is more to the strong trade report than just energy, other analysts noted.

"Canada's trade balance is still holding up, even in the manufacturing sector as the economy adjusts to the higher Canadian dollar," Nesbitt Burns economist Sherry Cooper said.

The strong trade performance, combined with evidence of a strong domestic economy, will reinforce the Bank of Canada's determination to continue raising interest rates to head off inflation, she and other analysts said.

"The Bank of Canada will take this surprisingly strong report, on the back of the surprising strong jobs report, as a sign that they are on the right path and will continue to raise rates," Cooper said.

In September, exports jumped 2.8 per cent to a record $39.8 billion, while imports posted a more moderate 1.4 per cent gain to a record $32.7 billion, Statistics Canada said.

As a result, the trade surplus rose to $7 billion, $1 billion more than expected, and up from an upwardly revised $6.4 billion in August, it said.

"Hurricanes Katrina and Rita sent natural gas prices soaring, resulting in a big gain in the value of natural gas exports going south of the border," it said, noting that about three-quarters of the increase in exports was due to higher natural gas prices.

Canada's surplus with the U.S. exceeded $10.7 billion, the second highest level ever, and up from $9.4 billion in August, as exports to the U.S. surged while imports from there edged down.

Canada's trade deficit with other countries, however, rose to $3.7 billion from $3 billion, as exports overseas shrank slightly, while imports surged nearly six per cent, reflecting increases in consumer goods from China and higher prices for oil from Saudi Arabia and Russia.

Exports of natural gas surged 26.7 per cent in September to a near record $4.4 billion, reflecting a 25 per cent jump in prices, which followed a 14.6 per cent surge in August. While petroleum-product exports also rose, crude-oil exports continued to edge down from what was a record high two months earlier.

Times Colonist (Victoria), Page C06, 11-Nov-2005
Alberta oilsand juggernaut 'could crush B.C. growth'
By Scott Simpson

VANCOUVER -- Alberta's oilsands are an economic juggernaut that could crush British Columbia's efforts to expand its northeast natural gas industry, a new B.C. Progress Board report warns.

The report says British Columbia should seek a collaboration with Alberta on job, transportation, and export strategies, lest Alberta simply "outbid' B.C. for gas industry workers and crimp economic growth in this province.

The report says B.C. has a lot of leverage to apply, if necessary, to encourage Alberta's cooperation.

B.C. assets include highways, transmission lines, oil pipelines, rail lines and ports without which Alberta cannot get many of its energy products -- including crude oil, natural gas, coal and electricity -- to market, says the report.

For example, Alberta-based Enbridge Pipelines just announced a $4 billion pipeline project running from Edmonton to the B.C. port town of Kitimat, planning to export Alberta oil sands crude to markets in China and the United States.

"In many ways, British Columbia holds the key to getting those products and services to market," says the report.

"Just as British Columbia is well advised to strike a joint labour strategy with Alberta to protect British Columbia interests, Alberta is well advised to develop a joint export strategy with British Columbia to protect Alberta interests."

The progress board was created in 2001 by Premier Gordon Campbell to serve as a senior policy advisory body to the provincial government.

This week it issued a report, Strategic Imperatives for British Columbia's Energy Future, that says B.C. must "protect and promote" its considerable energy assets -- and recognize that those assets are central to maintaining and improving B.C.'s high standard of living.

It says that "the development of the Alberta oil sands and the need to get both oil and electricity from the development to market provide an unparalleled opportunity for cooperation and resulting benefit between the two provinces."

Conversely, B.C. has relied on Alberta-based labour and investment to develop the gas industry in this province -- it uses pipelines built by Alberta-based companies to carry some of its gas to markets in eastern Canada and the United States.

"The development of the Alberta oil sands will put the Alberta government in a strong surplus position fiscally for years to come.

"Alberta's coming wealth will create a potential threat to British Coloumbia as better wages, take-home pay, health services and access to education in Alberta are likely to put enormous pressure on the British Columbia labour market, particularly in the area of skilled trades and engineers."

The report notes that those skill sets are "in short supply worldwide."

"Moreover they are the very skill sets British Columbia needs to grow its energy sector and to complete a wide array of transportation projects now underway in the province."

Posted by Arthur Caldicott on November 11, 2005

BCUC approves Kinder Morgan takeover of Terasen

KMI - Terasen Acquisition Decision
BC Utilities Commission, 10-Nov-2005
KMI - Terasen Acquisition Application
Document Registry at BC Utilities Commission
Terasen sale to Texas firm wins okay
Scott Simpson, Vancouver Sun, 11-Nov-2005



KMI - Terasen Acquisition Decision

BC Utilities Commission
10-Nov-2005

NOW THEREFORE the Commission, for the reasons stated in the Decision, orders that the Application is approved subject to the conditions contained in the Decision accompanying this Order.

DATED at the City of Vancouver, in the Province of British Columbia, this 10th day of November 2005.

BY ORDER
Original signed by:
Robert H. Hobbs
Chair

KMI - Terasen Acquisition Decision

TOP



Terasen sale to Texas firm wins okay

By Scott Simpson
Vancouver Sun
11-Nov-2005

The $6.9-billion sale of Terasen Inc. to a Texas energy firm can proceed, albeit with conditions that protect the interest of the Vancouver-based utility company's 875,000 customers, the British Columbia Utilities Commission ruled on Thursday.

The BCUC, in a 51-page ruling, said Kinder Morgan Inc.'s experience at operating natural gas systems, coupled with Terasen's management record and the continuing scrutiny of the utilities commission, assures that the public's interest will be served by the transaction.

The commission said it received more than 8,000 letters of comment on the sale, from "individuals, businesses, communities, community organizations, and associations," including about 650 form letters.

Last month, the BCUC described the volume of correspondence it had received on the sale as a "record" for any proceeding.

"Virtually all of the letters of comment oppose the transaction," with the "vast majority" expressing concern about foreign ownership of Terasen.

Terasen is a Toronto Stock Exchange-listed company whose shareholders voted 96 per cent in October to sell their shares to Kinder Morgan at an attractive premium to their recent trading value.

Other public objections included "general anger," the lack of oral public hearings on the transaction, "a perceived loss of control/sovereignty over resources (energy security)," a presumed reduction in quality of service, Kinder Morgan's spotty environmental record in the U.S., and general distrust of the United States.

However, the commission says, most of the objections are based on misunderstanding of Terasen's status as a publicly-traded private-sector company, and the presumed jurisdiction of the BCUC.

For example, the BCUC notes, concerns about foreign ownership are the responsibility of Industry Canada, a federal agency, and can only be reviewed through the Investment Canada Act.

Industry Canada has not yet rendered a verdict on the sale.

"The Commission Panel appreciates the input of so many citizens and has carefully reviewed and considered the concerns raised by the public," says the decision, which is signed by BCUC chair and CEO Robert Hobbs, commissioner Lori Boychuk, and commissioner Robert Whitehead.

"The Commission Panel is cognizant of the strong public opposition towards this Transaction, as exhibited by the number and tone of letters received. However, the Commission is also mindful that it must consider and adjudicate this application within its statutory mandate and the relevant provisions of the [Utilities Commission Act].

"The Commission Panel notes that much of the opposition to this transaction appears to be based on misunderstandings about the existing ownership and structure of Terasen, the structure of the natural gas market in B.C., and the authority of this Commission over public utilities operating in B.C."

The decision notes that there were restrictions on foreign ownership of Terasen shares when the company, formerly known as B.C. Gas, was created in the late 1980s out of an amalgam of private and public assets.

"The government of B.C. removed these restrictions in 2003," the ruling notes.

The BCUC put a number of restrictions on the sale and notes that the commission will continue to have jurisdiction over Kinder Morgan -- including regulating gas rates charged to customers and quality of service.

Restrictions include forbidding Kinder Morgan to transfer its Terasen customer and billing information out of British Columbia, and requiring that the company not strip away revenue that should be dedicated to maintaining Terasen's existing quality of service.

Kinder Morgan has already announced that it will keep the Terasen Gas name, as well as all of the company's employees except for some senior managers. The company has also said that, over the longer term, it expects to add more employees in B.C. and invest in new pipeline infrastructure in Western Canada.

B.C. Energy Minister Richard Neufeld said in an interview that the BCUC's requirement that Terasen and Kinder Morgan maintain "totally separate" finances "makes good sense" because it will protect the B.C. operation's ability to borrow money.

Neufeld described the New Democratic Party's anti-sale campaign as "pure politics" because Kinder Morgan won't own B.C. natural gas resources -- just the pipelines that deliver them.

"They will still be regulated by the B.C. Utilities Commission for what they pay for the services that are delivered to them by pipes. The cost of natural gas is priced on the North American market. That's just a pass-through on the costs -- although those pass-through costs are still reviewed by the B.C. Utilities Commission. They were before this deal and they will continue to be."

Terasen president and CEO John Reid said in a prepared statement that the company is "pleased with the Commission's decision and we remain confident that combining the assets, skills and people of Terasen with Kinder Morgan will provide long-term value and economic benefits to Canadians.

"There will be no change of service levels for Terasen Gas customers as a result of this acquisition. Natural gas consumers in BC will continue to be served by a first-class utility committed to public and employees safety and meeting the energy needs of its customers," Reid added.

Kinder Morgan chairman and CEO Richard Kinder echoed Reid's comments.

"We are pleased with the Commission's order and look forward to providing the same safe, reliable services to which Terasen's customers have become accustomed," Kinder said in a prepared statement.

"When the transaction is completed, the transition for Terasen's approximately 875,000 natural gas distribution customers in British Columbia should be seamless. The Terasen Gas name will remain the same, its headquarters will continue to be in Greater Vancouver (Surrey) and the BCUC will still maintain regulatory supervision and oversight of the company. Additionally, we intend to retain virtually all of the Terasen Gas employees, policies and procedures."

ssimpson@png.canwest.com
- - -

TAKEOVER TIMELINE:

Aug. 1: Kinder Morgan announces $6.9-billion bid to buy Terasen Inc.

Oct. 14: B.C. Utilities Commission reports record amount of correspondence about the sale, most object.

Oct. 19: Terasen shareholders vote 96% in favour of deal.

Oct. 24: BCUC rules out holding oral public hearing on sale, stays exclusively with written hearing.

Nov. 10: BCUC approves sale.

What's next: Industry Canada to render verdict on sale under Investment Canada Act.

TOP

Posted by Arthur Caldicott on November 11, 2005

November 10, 2005

BC SEA sponsors events in November

Victoria, Sat & Sun, Nov 12 & 13
Showcase Event:
Sustainable Energy Now!
Solving the Energy Puzzle

University Canada West
950 Kings Rd. in Quadra Village

Vancouver, Tue, Nov 22
Climate Change: The Biggest Show on Earth

UBC Robson Square, 7 pm

For more info:
www.bcsea.org

Posted by Arthur Caldicott on November 10, 2005

November 09, 2005

Powerline route ignores E&N corridor potential

By Dunc MALCOLM
Goldstream News Gazette
Nov 09 2005

A presentation concerning a proposed underground power transmission line produced sparks at the Nov. 1 council meeting in View Royal.

Sea Breeze Power Corporation, a Vancouver-based company, informed council of the proposed route for the underground and underwater transmission cable that will carry power from its Knob Hill wind farm, through View Royal to McCauley Point and on to Port Angeles, Wash.

Mike Wise, the project manager for the Juan de Fuca transmission cable, briefed council on the Sea Breeze's upcoming application to the National Energy Board.

Wise said he hopes the application will be heard by next spring and construction can begin in t hefallof2006.

According to Wise, although the application has to include alternative routes for the underground cable, the preferred route would see the cable running from the Pike Lake sub-station and along the hydro right-of-way between Thetis Lake and Francis King regional parks. The route would split into two lines at Creed Road with each line running to a single line along Old Island Highway, to Craigflower Road and south on Lampson Street.

The alternatives included a line through Thetis Lake Park and along Highland Road and a route following Munn's Road. There were no alternative routes put forward for the Old Island Highway section of the route.

Council had expected that Sea Breeze would discuss various alternatives with them prior to settling on a preferred route.

Indeed, it was the lack of alternatives and the logic behind Sea Breeze's preferred route that disturbed council the most. Coun. John Rogers asked pointedly why the E&N rail right-of-way was not included in the alternative routes to be presented to the federal government.

Wise stated that for the section of line north of Old Island Highway, Sea Breeze excluded the Munn's Road and Thetis Lake Park alternatives after identifying problems associated with both routes. He said the number of trees in Thetis and the park's topography made it unsuitable for an underground cable and that the Munn's Road route was too windy and took the line too close to residences to allow for safe.

"Like the Old Island Highway," responded Rogers. "If traffic is a consideration, then go along the E&N right-of-way," he added. Council also expressed concerns over the possible need to relocate existing utilities on Old Island Highway to accommodate the Sea Breeze cable and who would cover the cost.

"That could be negotiated," replied Wise.

The proposed line would cross the Juan de Fuca Strait and come ashore in Port Angeles, Wash. It would run beneath city streets and tie into the Bonneville power station - about a mile inland.

According to Scott McLain, Director of Public Works and Power Systems for Port Angeles, although no formal application has been made by Sea Breeze, any costs stemming from the city having to temporarily move or permanently relocate any utilities will be the responsibility of Sea Breeze. "It is an absolute condition of the license to use the public right-of-way," explained McLain.

In referring to the map showing the cable's proposed route along city streets, View Royal Mayor Graham Hill stated emphatically, "The town would like to see that red line gone."

Added Rogers, "To put it another way, we want to see the E&N back on as an alternative (to Sea Breeze's application before the NRB)."

Posted by Arthur Caldicott on November 09, 2005

Federal Court of Appeal Kills Sumas 2 Appeal

News Release
Sierra Legal Defense Fund
November 09, 2005

VANCOUVER - In a startling end to a long running dispute, the Federal Court of Appeal today dismissed Sumas Energy 2's challenge to the National Energy Board's March 2004 decision. The original ruling denied SE2 permission to build an international power line connecting its Washington State power plant to BC Hydro's power grid near Abbotsford.

After two full days of argument, the Court took the rare step of issuing a decision on the appeal immediately, finding that SE2's appeal has no merit and should be dismissed. It also ordered SE2 to pay the costs of the parties that have opposed its appeal.

"This is a huge, huge victory for opponents of SE2" said Sierra Legal Defence Fund lawyer Tim Howard. "It is extremely rare for the Court to dismiss an appeal right at the hearing, and the Court's decision to do so states loud and clear that SE2's appeal has no merit whatsoever."

Sierra Legal worked with Thomas Berger, Q.C. who spoke on behalf of the Society Promoting Environmental Conservation and the David Suzuki Foundation at the Federal Court of Appeal hearing. SE2 had argued that the NEB decision was not valid and that the Board overstepped its jurisdiction by making a decision involving a foreign company. The American Company unsuccessfully tried to use NAFTA to justify going ahead with the power project.

"This is good news for Abbotsford and everyone living near the U.S. border. It sets an important precedent for U.S. power companies looking to set up shop on the border, where their emissions will pollute Canadian airsheds, so that they don't have to deal with strict state laws governing domestic air pollution," said SPEC Executive Director Karen Wristen. "Our national regulators have a duty to protect the health of Canadians too, and the Court has confirmed it today.

Morag Carter, climate change program director for the David Suzuki Foundation added, "This is a huge victory for British Columbians. The judge's decision sends a clear message that air pollution and public health should be major considerations when it comes to energy supply. It bolsters the case for clean, renewable energy and a new focus on conservation and efficiency."

While the Court issued the decision denying the appeal today, it will still write detailed reasons to support that decision for release at a later date. SE2 could apply to the Supreme Court of Canada for permission to bring a further appeal. Background on the Sumas 2 hearings can be found online at www.sierralegal.org.

-30-

For more information, please contact:
Sierra Legal Defence Fund:
Tim Howard, lawyer
Cell: (604) 313-3132, (604) 681-4146

David Suzuki Foundation:
Morag Carter
Climate change program director
(604) 732-4228 ext. 280, cell: (778) 386-1448

SPEC:
Karen Wristen
Executive Director
(604) 736-7732, cell: (604) 788-5634

Sierra Legal Defence Fund (www.sierralegal.org) is a national non-profit organization dedicated to environmental justice.

Posted by Arthur Caldicott on November 09, 2005

November 08, 2005

Sea Breeze response to BCUC IR#1
concering Vancouver Island Cable

On October 6, 2005, Sea Breeze Power Corp. filed an application to build a transmission cable system from the Lower Mainland (Surrey's Ingledow Substation) to Vancouver Island (Victoria's Pike Substation). See Sea Breeze: Vancouver Island Cable

See also, BCUC Sea Breeze - VIC CPCN Project site (link)

On October 17, the BCUC presented Sea Breeze with its first Information Request (IR#1). The extensive IR was challenging, and intervenors in both the Sea Breeze - VIC proceeding and the competing BCTC - VITR proceeding have awaited the Sea Breeze response with interest.

On November 7. Sea Breeze responded in a set of documents totalling 40 megabytes. The entire response is available in one humungous download at the BCUC Sea Breeze - VIC CPCN Project site. (link)

The response is also available at the Vancouver Island Cable website (www.vancouverislandcable.com), in smaller, more convenient chunks: 269 page main document, plus separate appendices.

One of the more interesting BCUC questions was 1.11.3

1.11.3 If the Commission were to conclude that HVDC Light® technology as set out in the VIC Application and/or the VIC route is the preferred option, is there any reason why it should not direct BCTC to adopt this option?

RESPONSE:
Sea Breeze VCC is satisfied that the near term transmission needs of Vancouver Island could be met in a satisfactory way if the BCUC were to direct BCTC to utilize HVDC Light® technology, provided the interconnection points to be used are Ingledow and Pike, as proposed in the VIC Application.

However, in the circumstances, it would be unfair and unnecessary for the BCUC to grant a CPCN to BCTC for that purpose (as opposed to Sea Breeze VCC), given that BCTC has, to date, demonstrated a complete lack of interest in the HVDC Light® option, and has failed to adequately consider that option in
the VITR Application, despite Sea Breeze VCC's active promotion of HVDC Light® as providing the best solution for the Island's transmission needs; and, considering that, as a result, Sea Breeze VCC has now dedicated very substantial resources and has incurred very significant expense to put forward the VIC Application.

ABB's support for the Sea Breeze VCC proposal, its involvement as part of Sea Breeze VCC's technical team, and its contemplated responsibility for design, delivery, installation and commissioning of the parts of the system under a turnkey contract are also critical factors which the BCUC should consider. If, despite the foregoing, the BCUC does grant a CPCN to BCTC for the purpose of constructing an HVDC Light® facility substantially similar to what Sea Breeze VCC has proposed in the VIC Application:

• the BCUC should make an order under section 118 of the Utilities Commission Act requiring BCTC to compensate Sea Breeze VCC for all of the substantial costs it has incurred over the past two years prosecuting the HVDC Light® solution with the BCUC and BCTC; and

• the BCUC should also require BCTC to employ an objective project manager with experience in the construction/installation of HVDC Light® technology, to ensure that the prejudicial attitude previously demonstrated by BCTC toward this technology does not create a situation that could compromise the timeliness and effectiveness of the Project.

---

Posted by Arthur Caldicott on November 08, 2005

Spinning tar into oil

As Canada rushes to supply fuel-hungry nations by tapping its oil sands, northern Alberta is transforming from a sleepy backwoods into a bustling cash cow

oilsands.jpg
Karen Warren / Chronicle
The eight-story-tall cranes used to scoop up the oil sands tower over the landscape near Fort McMurray in Alberta, Canada. With crude prices hanging so high, Canada's unconventional oil sands — or tar sands, as they're often called — have become wildly profitable, adding more than 170 billion barrels of oil to Canada's reserve base

By LYNN J. COOK
Copyright 2005 Houston Chronicle
Nov. 6, 2005, 12:49AM

CALGARY, ALBERTA - Think Saudi Arabia has a lock on oil? Think again.

Turns out Canada has almost as much crude, if not more.

For years Canada has pumped oil from traditional wells, shipping it across the border to U.S. consumers.

In fact, our neighbor to the north is the top oil exporter to the United States. (Saudi Arabia ranks third after Mexico.)

But with crude prices hanging so high, Canada's unconventional oil sands — or tar sands, as they're often called — have become wildly profitable, adding more than 170 billion barrels of oil to Canada's reserve base.

Today, the sands produce as much oil as Texas — about 1 million barrels a day.

Output is set to nearly triple during the next 10 years, and the Canadian Association of Petroleum Producers is predicting a yield of 6 million barrels of oil a day by 2030, a little more than half of what Saudi Arabia produces now.

This swelling supply will feed Americans' voracious appetite for oil far into the future, but the promise is not without problems.

Extracting valuable crude oil from sand is labor-intensive and expensive. And the process, which involves leveling acres of evergreens and spewing greenhouse gases into the air, has riled environmentalists.

Still, energy companies such as Shell, Suncor, Exxon Mobil and ConocoPhillips press on.

As Bob Gibson, managing director of independent investment bank Mustang Capital Partners of Calgary, points out: "All the issues get diluted at $60 oil."

From above Fort McMurray, hundreds of miles north of the U.S. border, the landscape looks more like the cratered surface of the moon than the boreal forest of Alberta.

The sandy soil is sticky with crude, so energy companies have rushed in to clear-cut the land and strip mine for oil where vast stretches of pines and firs once stood.

At the Millennium mine, operated by Calgary-based Suncor, eight-story-tall cranes fitted with enormous shovels carve up the earth, scooping it into the back of dump trucks so big that operators have to climb a staircase to get into the cab.

Oil-soaked sand — called bitumen — is hauled to giant bins and dumped into an elaborate system of machinery, where it is crushed, washed, superheated and chemically treated. What's finally spun out is thick, sludgy crude that can be turned into, for example, the asphalt used to pave roads or the gasoline that fuels the vehicles driven on them.

Jim Proudfoot, Suncor's chief safety engineer, said 1,000 operators work in the mines every day as part of a round-the-clock operation that has a goal similar to that of air traffic control — constant movement.

That's because to wring one barrel of crude from the oil sands, 2 tons of earth has to be pulled from the mine and processed.

At Suncor, more than 330,000 tons of earth is excavated to produce 166,000 barrels of oil every day.

The equipment used to tap the oil sands is expensive, energy-intensive and beyond huge.

"You know how they say everything is big in Texas? Well, everything's big in Fort McMurray, too," Proudfoot said.

Caterpillar-brand dump trucks weighing 360 tons buckle the dirt roads beneath them as they ferry loads of bitumen out of the mine.

In the hot summer months, a wave of road will crest in front of the trucks' tires. They kick up so much dust, water trucks have to routinely spray the pathways that lace through the mine.

The trucks' 925-gallon tanks hold enough fuel to fill 40 new-model Hummers and burn through it in about 18 hours.

Even more immense are the cranes that gouge out the pits, So large there are no diesel engines big enough to run them, they are plugged into a power station by supersize electrical cables that worm their way around the site.

In the winter, Fort McMurray's thermometer can dip to 40 degrees below zero — the point at which mercury freezes. Then, the oil sands often come off in chunks the size of a Volkswagen bus, breaking several "teeth" on the shovel every shift. The cost to replace one tooth: $3,500.

When a dump truck needs a new tire it costs $50,000.

"I describe it as the ultimate big-toys-for-big-boys scene," Gibson said, though Suncor likes to note that 20 percent of its mine work force is female.

Only about 18 percent of Canada's oil sands are accessible by mining. The remainder is locked too deep underground to be accessed without drilling. Energy companies are turning to horizontal drilling and flooding wells with steam and fire to get at it.

The most common technology used when drilling in the oil sands is steam-assisted gravity drainage — or SAG-D.

Two horizontal wells are drilled parallel to each other. Piping-hot steam is blasted down the top chamber to heat the hardened bitumen, allowing the warmed, gooey oil sands to drain into the lower chamber, where it can be pumped out.

But once it gets to the surface, there are more headaches.

At about 50 degrees Fahrenheit, bitumen has the consistency of a hockey puck. So just getting the carbon-intensive solid to flow through a pipeline requires a lot of chemicals and condensate to dilute it.

Right now, most oil sands crude gets upgraded and refined pretty close to home in Alberta's Edmonton industrial complex and across the border in Washington state and the Midwest. Several proposed pipelines could take it a lot farther afield, namely to the Gulf Coast and China.

Enbridge, which has offices in Houston, is working on a project dubbed "Gateway," which would run oil sands crude across the Rockies to Kitimat on British Columbia's coast. The $4.1 billion project would require a new deepwater port to be built so supertankers could dock there to pull away with cargo bound for China or California.

Brian Fowler, the commercial manager for the Gateway project, said refineries in Los Angeles and San Francisco already are capable of processing heavy crude because they get that kind of supply from Alaska, where the resource stream is slowly but surely tapering off.

But it's China's demand for oil, which has been increasing even faster than U.S. demand, that's captivated Enbridge.

"Candidly, we're underpinning the success of this profitability to Asia," Fowler said.

He said most people don't realize it, but Canada is closer than the Middle East to China's major ports. A supertanker of crude takes 34 days to travel from Canada and 45 days from Saudi Arabia, he said.

The Gateway project will sink or swim based on whether companies that ship to Asia will agree to 15-year commitments. It's a lot to ask since most tanker contracts are locked in for only one year.

"It takes five years to build a pipeline, and, I'll tell you, getting a refinery to make that decision five years in advance is tough," Fowler said.

Houston-based pipeline company Kinder Morgan is spending $5.6 billion to buy Terasen, which operates a trans-mountain crude pipeline that moved oil sands output to Vancouver.

The company, which mostly operates natural gas pipelines, likely will double that line's capacity and continue to expand in the oil sands region, said Kinder Morgan President Park Shaper.

"We will remain agnostic," he said. "We're happy to go whatever direction people want as long as they're paying for it."

Enbridge and Exxon Mobil also are working to reverse the direction of some pipelines that ran Gulf Coast crude up to the Midwest. Now, those pipes will bring Canadian crude down to Cushing, Okla., and the heavy-oil-refining complexes on the Gulf Coast.

Not everybody in Alberta is happy about the way the oil sands are progressing.

A recent report from the University of Alberta's Parkland Institute said Canada is backsliding into the ancient role of "hewers of wood and drawers of water" and neglecting the development of Canadian industry.

The report frets about pipeline expansion into the United States, saying it has the potential to destroy Alberta's refining and petrochemical industry. The report's conclusion: Without drastic measures to protect itself, Canada could quickly turn into one more pool of raw resources for the United States to pillage.

The Alberta government and 16 energy companies are considering a huge, new
$6 billion refining and petrochemicals complex near Edmonton that would churn out upgraded — and more expensive — fuels and chemicals, keeping more money in Alberta. The proposal is in its initial stages.

Alberta Energy Minister Greg Melchin is on the ropes. He wants to make sure the sun doesn't set on Alberta's heyday, but a lot of Canadians are fighting mad about the province's economic windfall and greenhouse-gas emissions.

Despite levying only a 1 percent tax on most oil sands projects right now, Alberta is taking in almost as much money as the entire federal government.

The province also gets royalties from regular oil wells and earns even more from natural gas production.

The Canadian Association of Petroleum Producers said Alberta's energy prosperity is creating new wealth and jobs in other Canadian cities, including Ontario, where steel is manufactured.

Alberta, which became the only debt-free province in Canada last year, has a budget surplus, so the provincial government is cutting a $400 check to every man, woman and child who lives there.

The province, which churns out the lion's share of the country's carbon dioxide emissions, has put Canada's commitment to the Kyoto treaty on climate control in peril.

The accord calls for Canada to slash greenhouse-gas emissions — carbon dioxide output — from its 1990 benchmark level. That reduction is supposed to be achieved by 2012, but, thanks in large part to activity in the oil sands, Canada's carbon emissions have jumped more than 20 percent.

Many policymakers and energy executives say there's a solution that can keep the oil sands progressing while keeping Kyoto alive. None seems willing — or able — to spell out exactly what that answer is.

Shaper said Kinder Morgan is interested in carbon sequestration — binding up the greenhouse gas and injecting it back into the ground.

The company has experience with it in Texas because it runs a pipeline through which captured carbon dioxide is taken to old oil fields and pushed down wells to force more oil to the surface.

Energy Minister Melchin likes the idea of sequestration but said that, as it stands, the economics are marginal at
best.

One industry insider said that despite Kyoto's impending deadline, most decision makers aren't giving it too much thought.

"Not really," he said."Everybody's too busy making money."

ljcook@chron.com


Posted by Arthur Caldicott on November 08, 2005

Coal Smoke Adds to Band's Cancer Alarm

Elk Falls mill We Wai Kai say they were steamrolled by mill's permit approval.

By Quentin Dodd
TheTyee.ca
Published: November 4, 2005


A Campbell River area mill has been granted permission to continue to burn coal, outraging leaders of nearby First Nations band worried about high cancer rates among their people.

Less than a month after the We Wai Kai First Nation on BC's Quadra Island formally complained that the government hadn't met the law by consulting with them sufficiently, the permit approval was rushed into place, claim band leaders and their lawyer.

The granting of the permit to the Elk Falls mill is the latest twist in a struggle by the We Wai Kai to discover why, over the last decade, they've seen much higher levels of cancer at their Cape Mudge Village Reserve on Quadra Island than at their Quinsam Reserve in Campbell River.

The reason, they say, may be that the Cape Mudge reserve receives higher and more regular seasonal fallout from air-borne smoke-stack emissions from the nearby Catalyst (formerly Norske Skog) mill than does the Quinsam Reserve. For years the band has requested testing of mill emissions at Cape Mudge to shed light on their health crisis.

Toxic plume?

For several years the mill has been testing the burning of coal as an auxiliary fuel in its boilers, and applied to continue the practice indefinitely.

The We Wai Kai, through Vancouver lawyer Alan Donovan, informed the government they didn't want to see the mill's coal-burning test-period permit extended until proper monitoring studies have been done directly at the island-village reserve to assess the amount and nature of chemicals the site receives each year during the peak season from August through October. During that period, prevailing wind frequently blows the mill emissions over Quadra Island that eventually settle directly over the village.

On Thursday, the We Wai Kai received notification that the provincial waste management branch has granted Catalyst a permit to burn coal on an indefinite basis, according to band administrator Brian Kelly.

The permit-approval notification to the We Wai Kai indicates the mill will be required to install and operate an emissions-monitoring station at the village by April 30, as the band had long been requesting, says Kelly. But it's still not clear how long the monitoring station will be required to be in place, says Kelly.

Band demands more consultation

Kelly and other band leaders charge the government has failed to properly consult with the band.

He said after Donovan's letter went to regional waste manager Randy Alexander, the official extended the public-consultation period by a month to the end of October. Alexander let it be known that a decision could still be handed down before Oct. 31 if the government agency was satisfied it had addressed the First Nation's concerns and issues, and then held a meeting which lasted just a couple of hours with a few band officials.

"There wasn't time to meet with the (Band) Council," Kelly said, adding that the meeting had basically consisted of a question-and-answer exchange in which the government representatives asked questions to find out what the First Nation's main concerns were, and the Band personnel outlined their biggest concerns.

That, Kelly said, does not constitute sufficient consultation, and the council will discuss the situation early next week to decide its next move.

Mirror image communities

Backing the band on coal burning issue is the Sierra Club and activists running the Reach For Unbleached (RFU) campaign against pulp mill pollution.

The Cape Mudge Reserve and its sister community the Quinsam Reserve share similar age, gender and population-size figures, as well as identical lifestyle and diet patterns. Yet Cape Mudge villagers, exposed to more of the mill's air pollution, have three times the cancer rate recorded by its sister community over more than 10 years.

Recently, in preparation for its request to extend its temporary permit to burn coal, the Catalyst mill finally did launch a study of its air emissions. But the We Wai Kai claim that study wasn't going to include a monitoring or sampling station at the We Wai Kai's Cape Mudge village, even during the August-through-October period when the area of the village receives the plume of emissions from the mill's stacks most often.

'Extraordinarily high cancer death rates'

Donovan's letter to the provincial government on behalf of the First Nation, citing "respiratory ailments and extraordinarily high cancer death rates", reminded that Cape Mudge band members had for years asked unsuccessfully for suitable mill-emissions monitoring at the village.

Donovan said that studies should be conducted over at least two years, to cover that number of peak-fallout periods.

Upon learning of the terms of the permit approval on Thursday, Donovan, accused the government of "rushing ahead with little to no scientific data. They don't have the science and they haven't done the groundwork for a properly-informed decision."

"Additional contamination from the burning of coal would create further damage to the health, safety and enjoyment of life of this aboriginal community," says Donovan's letter on behalf of the band. In October, mill manager Norm Facey downplayed the band's concerns, telling Canadian Press that if the mill were causing health problems, mill employees would be the ones most affected and the Workers Compensation Board would have stepped in.

Facey also said that if the Elk Falls mill was not allowed to continue burning coal, it would seriously hurt the mill's bottom line.

Campbell River based journalist Quentin Dodd is a regular contributor to The Tyee.

Posted by Arthur Caldicott on November 08, 2005

The Conscience of Canada strikes again

BOOK REVIEW: Too Close for Comfort: Canada's Future Within Fortress North America

By JENEFER CURTIS
The Globe and Mail
Saturday, November 5, 2005

Back in the seventies, an energetic housewife named Maude Barlow jumped onto the feminism bandwagon. A few short years later, she was advising prime minister Pierre Trudeau on women's issues. When she failed in her bid for federal office, she helped found the Council of Canadians, now Canada's main citizen's advocacy group. Ever since, along with a few other citizen's groups, she and the council have been the conscience of Canadian politics. Free trade, the bank mergers, the Multilateral Agreement on Investment, safe milk, public pensions -- no other group has bellowed a critical voice at as many issues as the Council of Canadians.

Sadly, thanks to some of its methods and the elite accommodation that plagues today's Parliament Hill and provincial legislatures, the council has had little actual influence. But it raises awareness. And Barlow churns out a lot of books. This one is her 14th. Every Canadian should read it, its oversights notwithstanding.

Barlow's thesis in Too Close for Comfort is that, driven by the interests of both American and Canadian big business, our government is committed to create a "North American fortress with a common economic, security resource and regulatory and foreign policy framework." This despite antipathy by Canadians toward U.S. President George Bush.

Bush is probably the chief villain in this typical Barlovian call-to-arms, followed closely by the Canadian Council of Chief Executives' Thomas D'Aquino. The latter, Barlow delights in reporting, went on a 10-city "tour" of the United States, apologizing for Canada's refusal to support the Ballistic Missile Defence Plan. John Manley, positioned here as an accomplice of D'Aquino and referred to by one source as "the politician in whom the Bush administration had the greatest trust," and Conservative Party Leader Stephen Harper also get severely scolded.

Barlow's catalyst for the "deep integration" of our two countries (Mexico is hardly mentioned, despite the title's reference to North America) is security measures. The U.S. government is "retooling its military" to the annual tune, in 2005, of $445-billion -- the Iraq occupation alone is costing $220-billion -- and we are following suit, copying its laws, increasingly sharing information with it and potentially allowing for unprecedented invasions of privacy and violations of human rights.

She rightly attacks Bill C-36, the Anti-Terrorism Act, put in place right after 9/11; its sweeping powers include the rights to carry out a preventive arrest without warning, compel a person believed to have information about a terrorist to testify before a judge (and thereby remove a person's right to remain silent), wiretap suspected terrorist groups for up to a year, and lay criminal charges against anyone who knowingly participates in activities of a terrorist group. The bill's broadened definition of terrorism is such that, as academics have commented, South Africa's Nelson Mandela would be considered a terrorist.

And she offers up dozens of smaller yet eerie examples: What about the fact that the private data of thousands of Canadians with outstanding student loans is now available on request by U.S. Homeland Security officials, thanks to the sale of the Canadian Imperial Bank of Commerce student loan subsidiary Edulinx to a U.S. company called Nelnet?

Did you know that the new U.S. Ambassador to Canada, David Wilkins, was once campaign chairman for the late Strom Thurmond, the former senator most known for his opposition to equality for blacks? Barlow spends too much time passing on such accusations and lamenting the neo-conservative movement, the rise of the Christian right and U.S. military aggression before coming to the crux of the book: the "incremental and systemic harmonization of Canadian and American regulations and standards governing health, food safety and all aspects of the environment."

Anyone who works with a border-associated body in Ottawa can vouch for the accuracy of this phrase. They will tell you, as Barlow does, about "Smart Regulations," a laborious federal government initiative that is bringing countless regulations in line with international trade and investment policies. (That this initiative was started before 9/11 disrupts her thesis that this whole "fortress" has its roots in security matters.)

Many of Barlow's evil ramifications of Smart Regulations are factually correct: that it is crystallizing relationships with like U.S. bodies, that deregulation of certain industries is happening and that certain U.S. methods might infiltrate Canada. For instance, if C-27, the Canadian Food Inspection Agency Enforcement Act, becomes law, there is evidence that the U.S. preference for industrial livestock feed, which allegedly caused bovine spongiform encephalitis (BSE), will prevail here, over our more costly family-farm methods.

The book contains some oversights, a glaring one being the fact that a document she quotes frequently -- the CCCE's final report from its Task Force on the Future of North America -- was rejected by current Minister for Public Safety Anne McLellan. Also, many of our anti-terrorism measures came in response to our international obligations, and are not evidence of kowtowing to the United States. As well, her sources all seem to be activists or fringe groups. If she had, for example, talked to a government bureaucrat, she might realize that the line between "harmonization" and "co-operation" is fine, and that Canada is holding onto "made-in-Canada" approaches in several policy areas.

Moreover, there are examples where working together with Americans might be advantageous to Canada. Consider again the BSE crisis. "If we had openly shared all the science with the States," one agricultural insider recently commented, " they might not have been able to justify closing the border on a food-safety basis as they did."

But Barlow is onto something important, especially in the area of security, where any government always risks disrupting that delicate balance of protecting both the community and individual freedoms and privacy. The Senate's report on the Anti-Terrorism Act -- essentially a review-to-date of the legislation -- is due out Dec. 18. Already, the government has claimed that the contentious clauses in the act have been used sparingly, a sheepish defence if ever there was one.

Meanwhile, as retired Globe and Mail political columnist Hugh Winsor wrote this week, Canada's Muslim and Arab communities, thanks to U.S.-inspired heavy-handedness on the part of our security services, are beginning to feel like second-class citizens.

She may make a few errors, but the wake-up call that Barlow sends out in this informative and timely book more than makes up for them.

Jenefer Curtis is an Ottawa political writer. Her book The Hired Guns: How Lobbyists are Shaping Canada will be published next spring.

Dates in BC from Maude Barlow's speaking tour:

November 7 Prince George, British Columbia
University of Northern British Columbia, CANFOR Room
This event is co-sponsored by Prince George PIRG 7:00 p.m.

November 8 Parksville, British Columbia
Parksville Community and Conference Center
132 Jensen Avenue East
Sponsored by Oceanside Coalition for Strong Communities, 7:00-9:00 pm

November 9 Victoria, British Columbia
The Da Vinci Centre, 195 Bay St. (Victoria West) 7:30 p.m.

November 10 Vancouver, British Columbia
Maritime Labour Centre,1880 Triumph St.
(Triumph and Victoria) 7:30 p.m.

Council of Canadians website for Too Close for Comfort

Posted by Arthur Caldicott on November 08, 2005

November 02, 2005

Is Grid West Dead? - RTO spells inefficiency in power

GridWest.gif - click to enlarge
Compromise on unified power grid is blocked
Ted Sickinger, The Oregonian, 02-Nov-2005
RTO spells inefficiency in power
Steve Johnson, Seattle Post Intelligencer, 01-Nov-2005
Non-profit agencies keep the lights on
James P. Thorgerson, Seattle Post-Intelligencer, 20-Oct-2005
Grid West: Home Page
Grid West: Current Activities Overview, 29-Aug-2005



Compromise on unified power grid is blocked

Ted Sickinger
The Oregonian
02-Nov-2005

The Bonneville Power Administration and a cast of utilities, independent power generators, Native American tribes, environmental groups, regulators and consumer groups spent millions of dollars over the past decade haggling over how best to improve the efficiency and reliability of the Northwest's power grid.

Tuesday, the participants all but admitted their effort to create an independent entity capable of managing a unified grid is dead. A group of investor-owned utilities that had supported the project, called Grid West, voted to reject a compromise proposal that BPA had cobbled together to appease critics, most notably publicly owned utilities in Washington.

Instead, the investor-owned utilities will go forward with a scaled down version of Grid West, absent BPA, which controls the largest chunk of transmission assets in the region.

"It's unfortunate," said Dave Kvamme, a PacifiCorp spokesman. "We have 10 years of history working toward a not-for-profit entity that would oversee the region's transmission lines independent of buyers and sellers of electricity."

Grid West is the most recent regional iteration of an effort by federal regulators to increase efficiency and reliability in the electricity industry by eliminating piecemeal management of the power grid. Proponents maintain that a grid managed by a single cooperative entity rather than a host of competing interests would eliminate many bottlenecks, rate disputes and scheduling conflicts that plague the system today.

Regionally, supporters of a unified grid hoped it would clear the way for overdue investments in new transmission equipment that would improve reliability, help make it easier to access renewable power projects in remote areas, and help the BPA sell into power-hungry markets to the south.

But the effort has been controversial from the start. The most vocal opponents have been the publicly owned utilities in Washington, many of which have long-term contracts to buy power from BPA at preferential rates. BPA owns 75 percent of the high voltage transmission grid in Oregon, Washington, Idaho and Montana, so its participation was a linchpin in the organization.

The public utilities, backed by Washington's congressional delegation, worried the plan would increase their costs, and were skeptical that a regionwide organization would deliver any new efficiencies.

They were loath to see control of BPA's transmission grid pass to a private entity, particularly one that would be regulated by the Federal Energy Regulatory Commission. They waged an intense campaign to get BPA to say no to Grid West, and created an alternative proposal to solve transmission problems without creating an entity regulated by the federal commission.

Grid West "would have been a profound change for the region . . . the loss of local and state political control of Bonneville's operation," said Marilyn Showalter, executive director of the Public Power Council, a Portland based organization that represents public utilities in the region.

Investor-owned utilities, meanwhile, have been pressured by the Federal Energy Regulatory Commission to form the regional organizations, in part because the federal agency wants to eliminate utilities' incentives to use control of the grid to make life more difficult for competitors. With limited access to cut-rate BPA power, investor-owned utilities also have a greater appetite for electricity generated in remote areas -- by coal-fired plants and wind farms, among other things -- but don't want to deal with a complicated tariff structure to move the power to their customers.

BPA, the 800-pound gorilla of generation and transmission in the region, has come under enormous political pressure, and has tried to tack between the two camps. Earlier this year, it proposed a compromise plan that would have moved forward with some of the public utilities proposals, and taken incremental steps toward the implementation of Grid West.

The compromise satisfied neither camp.

On Monday, nine of eleven members of Washington's congressional delegation wrote to BPA Administrator Stephen Wright urging him to avoid going forward with the so called "convergence" approach.

A day later, a majority of the investor-owned utilities voted against Bonneville's compromise. Instead they decided to soldier on without BPA's participation and transmission assets.

PGE and PacifiCorp had both supported Grid West, as did the Oregon Public Utility Commission.

BPA said Tuesday its compromise proposal would have been the right way to go. In its absence, said spokesman Ed Mosey, "Nothing will change in terms of the operation of the system. We'll operate the way we always have."

Robert Kahn, executive director of the Northwest Independent Power Producers Coalition, said that's the problem. "Something needs to be done," he said. "The status quo is a mess."

TOP



RTO spells inefficiency in power

By STEVE JOHNSON
GUEST COLUMNIST
Seattle Post Intelligencer
November 1, 2005

James Torgerson claims the Northwest's power grid needs a regional transmission organization called Grid West because of the resounding success of the electricity transmission operators elsewhere ("Non-profit agencies keep the lights on," Oct. 20). Torgerson, who heads an RTO in the Midwest and an RTO interest group, is too buried in his rhetoric to realize the opposite is true. RTOs don't work there, and they won't work here.

Seven RTOs were created to deregulate markets and hypothetically lower electricity prices and increase reliability. But the letters R-T-O have spelled inefficiency, market abuse and higher bills for customers. Every one has failed to protect its consumers.

At Torgerson's own RTO, the Midwest Independent System Operator, founding members Louisville Gas & Electric and Kentucky Utilities Co. are withdrawing because of concerns over "keeping rates down and maintaining reliability," the utilities wrote in a Federal Energy Regulatory Commission filing.

MISO's operating budget increased 861 percent -- from $21 million in 2000 to $202 million in 2004 -- according to a Cambridge Energy Research Associates cost comparison.

Customers of PJM Interconnection have rebelled against the Mid-Atlantic RTO because of a pricing model that sent costs soaring.

"We are struggling to find out what the benefits are to us," one member utility's vice president was quoted as saying. PJM Interconnection's operating budget increased 166 percent since 2000, according to the same Cambridge comparison.

All told, the Cambridge costs study found that experiments in the organized markets -- which RTOs are intended to promote -- have cost the West $7.3 billion. The American Public Power Association has voiced its displeasure over "the dysfunctional nature" of RTO pricing efforts.

Torgerson claimed RTOs foster "significant new investment in their region's transmission infrastructure," yet FERC reported that RTOs in New England, the Midwest and New York built zero transmission circuit miles in 2004. The Northwest, without an RTO, built more than 300.

Nonetheless, some in our region, including the Bonneville Power Administration, are intent on forming Grid West, which would turn over Northwest control to private hands and federal regulators. One study estimated Grid West RTO would cost Northwest ratepayers $122 million a year. That estimate is likely to go up as the RTO comes online.

Most public power utilities in the region favor a "better, faster, cheaper" approach relying on local control and the region's history of working together. The Transmission Improvements Group has proposed an alternative that uses contracts and existing entities to improve the power grid -- not turn the keys over to a private entity.

Given the abysmal track record of RTOs in protecting consumers, it would be crazy to plunge ahead with a similar organization in the Northwest.

Steve Johnson is executive director of the Washington Public Utility Districts Association.

TOP



Non-profit agencies keep the lights on

By JAMES P. TORGERSON
GUEST COLUMNIST
Seattle Post-Intelligencer
Thursday, October 20, 2005

A debate is heating up in the Pacific Northwest about what direction regional power authorities should take to ensure the reliability and affordability of the electricity system that serves much of the region.

Like the rest of the nation, the Northwest faces growing electricity demand, transmission and generation needs, rising fuel prices, protection of the environment and the need to balance the competing needs and interests between producers and consumers, as well as those of public and for-profit entities.

A response that has proved effective for much of the country is the creation of Regional Transmission Organizations (such as the proposed Grid West). It's important for Northwest consumers to know how the not-for-profit organizations work and how they produce meaningful results.

RTOs and Independent System Operators deliver two-thirds of the electricity used in the United States, to two-thirds of the nation's population, with the core function of keeping the lights on.

These organizations also coordinate long-range planning for their respective regions and foster new, much-needed grid expansion. In addition, many RTOs and ISOs operate wholesale electric markets that save customers billions of dollars every year.

With the economies of scale RTOs employ, we bring more sophisticated tools to the complex management of vital grid operations. RTOs have built extensive networks to collect information about conditions across the grid, to meet customers' ever-changing electricity demands by coordinating the performance of thousands of power plants, and to deliver energy across hundreds of thousands of miles of utility-owned transmission lines.

RTOs and ISOs coordinate generation and transmission to make grid operations more efficient. For example, in the mid-Atlantic region, PJM Interconnection's plant scheduling software has reduced its customers' wholesale electricity costs by $56 million per year. ISO-New England's coordination of power outages saved customers about $40 million annually between 2000 and 2004, and New York's ISO has reduced generation outage rates to 4.5 percent today from a level of 9.5 percent in 1999. Total improvements in plant efficiency are equivalent to adding 1,500 megawatts of generation at no cost.

Through rigorous planning and analysis, RTOs and ISOs also fostered significant new investment in their region's transmission infrastructure.

As one example, New England has sited five major transmission upgrades totaling more than $1.5 billion and enabled more than $5 billion in construction of new, cleaner power plants between 2000 and 2004. These generators use natural gas more efficiently and reduce air pollution -- sulfur oxides are down by 48 percent and nitrogen oxide by 32 percent.

Transmission planning coordinated by the California ISO helped break a regulatory logjam and led to construction of several critical transmission lines. Since the California ISO opened access to the state's wholesale power grid, more than $3 billion in transmission improvements have been approved for construction. Four new transmission upgrades went into operation in 2005, improving grid reliability and leading to about $100 million in savings, which will eventually be passed on to consumers.

PJM's planning efforts have led to more than $1 billion in transmission upgrades since 1999.

In the Midwest, the Midwest ISO has overseen the addition of more than $600 million of transmission facilities and access to more than 1,000 megawatts of renewable resources since 2002.

Finally, RTOs are closely regulated and held accountable on many levels. Federal oversight takes place by FERC and there is local accountability as well. Formal councils of state officials oversee and contribute to our planning and cost allocation decisions. Transmission owners, local citizen groups and state regulators all participate actively in our activities and have input in our decisions.

The bottom line: RTOs are helping to deal with the difficult challenges facing the industry across much of the nation.

James P. Torgerson is the president and CEO of the Midwest ISO and chairman of the ISO/RTO Council, which is comprised of the seven ISOs and RTOs in the United States and two in Canada.

TOP

Posted by Arthur Caldicott on November 02, 2005

October 31, 2005

Resource expo eyes northern wealth

Aboriginal and business leaders meet to discuss development

Scott Simpson
Vancouver Sun
Monday, October 31, 2005

Aboriginal leaders, resource-industry companies and politicians are gathering this week in Vancouver for a conference that could unlock even more of British Columbia's northern wealth.

Resource Expo 2005 is organized by the Native Investment and Trade Association, focusing this year on natural gas and oil industry development, mining and forestry.

Three Canadian premiers, 2010 Winter Olympics CEO John Furlong and Alaska Gov. Frank Murkowski are on the speakers' roster.

Conference organizer Calvin Helin said Canadian federal and provincial governments are spending a total of $18 billion per year in transfer payments to first nations and Inuit peoples -- costs that could be reduced or avoided if those groups were brought closer to the economic mainstream.

For B.C., that means incorporating aboriginal interests into the development of natural resources in light of Supreme Court of Canada decisions recognizing the duty of Canadian governments to consult on questions of land use.

B.C. teems with opportunities for oil-and-gas development as well as potential for new mines that could provide high-paying employment for local first nations -- with the provincial government gaining the opportunity to increase resource royalty revenue.

However, those projects often need first nations support to proceed.

Resource Expo attracts many of the aboriginal leaders who represent a key to unlocking those resources -- and their attendance is an indication of their willingness to listen, Helin said.

"I think this is one of the best times in the history of aboriginal people that we have a chance to actually move forward," Helin said in a recent interview.

"The tribes have real leverage. They are figuring out how to utilize that leverage in a way that makes a difference to the grassroots people. People should be aware of it, not only aboriginal people but non-aboriginal business people should be aware that these opportunities are there.

"We have to turn what's a social and economic drain into a huge economic and social positive. We've never been in a better situation to do this."

Helin describes the conference as a neutral forum.

"It's hard to get a lot of these people from remote places together and if you want to do business with them you have to go out and meet with them -- and if you're going to Nunavut it's a $3,000-$4,000 ticket."

Tony Fogarassy, an energy-sector lawyer who works with clients on first nations issues, will update conference delegates on recent legal and political developments, notably B.C.'s "New Relationship" policy.

"If a project can be done right, with environmental sensitivity, then first nations would love to be a part of it," Fogarassy said.

"The downside of all of this is that it takes time. Most companies look at their quarterly financials or year-ends and expect certain deliverables, or shareholders expect certain deliverables to be met. When they deal with first nations communities the timelines are different."

Michael McPhie, president of the Mining Association of B.C., says "the greatest majority" of resource-development projects in B.C. will have a "substantive first nations component."

"This conference is a really good example of bringing all these groups together. It shows how top-of-mind it is to most of us."

The mining industry took a hit earlier this week when the B.C. Assembly of First Nations announced unanimous support for first nations who oppose Northgate Minerals' plan to use Duncan Lake to store gold mine waste for a $200-million expansion of their Kemess gold mine.

McPhie says one of the benefits of Resource Expo is that it can serve as a forum for resource developers to highlight well-executed projects.

"There are going to be challenges. When you interlace that with an uncertain treaty environment, with Supreme Court decisions in different forums on different issues, I think what it speaks to is the need for forums like this to show projects that have been done well.

"Are there going to be conflicts? Of course. That's human nature. But I think [what] we need to do as an association is first to recognize the very legitimate role that indigenous people play in our decision-making and find ways to work together. That's got to be critical."

ssimpson@png.canwest.com

Resource Expo 05
Native Invest Trade Association
Oct 31 - Nov 1
Sheraton Wall Centre, Vancouver

Posted by Arthur Caldicott on October 31, 2005

October 30, 2005

Between Midnight and the Rooster's Crow
a film about EnCana in Ecuador

Between Midnight and the Roosters Crow: a film about EnCana in Ecuador by Nadia Drost
directed by Nadja Drost

Follow the story of big oil from the toxic rivers of the Amazon to company headquarters in Alberta.

Canadian oil giant EnCana is under fire for the construction of an oil pipeline that is generating controversy and conflict in the Amazon.

Faced with the contamination of their lands and coercion by military forces, Ecuadorian peasants tap into reserves of remarkable strength and courage as they resist. Between Midnight and the Rooster’s Crow explores the experiences of the people whose lives are being drastically altered by the race for black gold -- a race fuelled by oil companies, a government desperate for foreign investment, and a rapidly-globalizing world.

* Best Canadian Documentary at Hot Docs Canadian International Documentary Festival

* Best Documentary, Bogotá Film Festival

* Honourable Mention, Best Canadian Film, Planet in Focus International Film Festival

Calgary, Thursday, November 3
Uptown Stage and Screen
610 8th Ave. SW, Calgary
Advance Tickets are available at Sunnyside Market, 338 - 10 St. NW
For more info: 270-3200

Edmonton, Friday, November 4
Global Visions Film Festival
Screens Friday November 4th, 9pm
Garneau Theatre
8712 109 St., Edmonton
www.globalvisionsfestival.com

Vancouver, Saturday, November 5
Amnesty International Film Festival, Vancouver
Screens Saturday, November 5th, 6:25 pm
Pacific Cinémathčque
1131 Howe Street, Vancouver
For more info: www.amnesty.bc.ca/filmfest/

Victoria, to be announced

Posted by Arthur Caldicott on October 30, 2005

October 29, 2005

B.C. oil, gas industry to grow 20% in 2006

SURVEY: Sector expects to drill 1,600 wells next year, placing the province in third spot

Scott Simpson
Vancouver Sun
Saturday, October 29, 2005

British Columbia's booming oil and gas industry will grow an estimated 20 per cent in 2006 as activity across Canada reaches record levels, a new industry survey suggests.

The Petroleum Services Association of Canada's drilling forecast for 2006 says the industry will grow six per cent next year, "the result of continued strong commodity prices and a growing emphasis on natural gas from coal."

Alberta will account for the bulk of all Canadian activity with an estimated 20,000 wells -- a "milestone record" -- representing a six-per-cent increase in wells drilled in that province.

The level of activity in Saskatchewan will remain flat, at 3,430 wells, while B.C. in third place will see 1,600 wells drilled -- a 20-per-cent increase.

"While the total number of wells drilled in B.C. is relatively low compared to Alberta, activity levels in that province have been climbing over the past few years," PSAC president Roger Soucy said in a news release.

"B.C. is becoming a favourable location for oil and gas activity, and with the move towards southern B.C. for NGC [natural gas from coal], we are expecting a significant elevation in activity levels there."

PSAC said it's basing its 2006 forecast on crude oil prices of $60 US per barrel and natural gas prices of $9.50 Cdn per thousand cubic feet an Alberta gas trading hub.

"For most of 2005, the commodity price story was oil. More recently, natural gas prices have risen significantly. We expect the pricing of both commodities to stay strong next year," Soucy said.

In a subsequent interview, Soucy said commodity prices are important, but added that B.C. government efforts to expand the industry are major factors.

"The provincial government over the last three or four years has set the stage, so to speak," Soucy said. "They have expanded the infrastructure in the province, in the northeast in particular, so that it was easier to gain access to the resource. They have expanded road systems, upgraded roads and bridges."

B.C.'s summer drilling program has also boosted activity.

"Historically there was only a 90-day window of opportunity to drill in B.C.," during winter when northeastern B.C.'s vast muskeg plain was frozen.

"What that created was a situation where the equipment and the rigs moved in from Alberta for three months and then left at the end of the winter season. That didn't help the local communities to benefit much.

"Now what's happening is that you see a very active service and supply industry in B.C., growth of jobs, business opportunities, and so forth. The government has done its part."

In addition, British Columbia is attractive because, unlike the mature gas fields of Alberta, this province is relatively unexplored.

Soucy said there is still tremendous potential in B.C. for gas drillers to make huge, lucrative finds.

"B.C. has a good resource area that hasn't been exploited to the extent it has in Alberta, where, particularly in the south, the industry is almost limited to small wells that produce low amounts for a short period of time.

"That's not the case in B.C., where there is still lots of potential for very good quality wells that will produce for a number of years. That's why you're seeing the activity levels you're seeing in B.C. now."

ssimpson@png.canwest.com

Posted by Arthur Caldicott on October 29, 2005

October 28, 2005

BCUC postpones cable projects consolidation decision

The BC Utilities Commission has issued some (in)decisions and a revised schedule following the BCTC - VITR Pre-Hearing Conference on October 21.

1. Consolidation

The Commission is deferring a decision on consolidation of the BCTC - VITR application and the Sea Breeze - VIC application until:

- Sea Breeze has filed its responses to BCUC IR#1 to Sea Breeze in the VIC application on November 7

- completion of the VITR Pre-Hearing Conference #3 on November 10.

"If after reviewing the responses to the BCUC Information Request No. 1 and after hearing submissions during the Pre-hearing Conference, the Commission Panel decides to proceed with a review of the Sea Breeze CPCN Application the Commission Panel expects that a consolidated process will be more efficient and effective than the alternative of two review processes. Therefore, the Commission Panel has established a process that assumes the Sea Breeze CPCN Application is to be consolidated. If, however, the Commission Panel decides that a consolidated process is not appropriate in the circumstances, then a revised regulatory timetable for review of the VITR Application will be issued after the Pre-hearing Conference to be held on November 10, 2005. "

2. Town Hall Meetings

A schedule is provided (see below), but may be adjusted based on further submissions to the Commission

3. Scope will not include prior decisions on zero-rating HVDC

"the Commission Panel concludes that scope of this proceeding should not include a review of prior Commission decisions regarding the zero-rating of the HVDC system for planning purposes."

4. TRAHVOL request for clarification as to whether environmental effects are within scope

"IRAHVOL requests that the Commission Panel provide further directions to Participants regarding whether or not “environmental and socio-economic issues” are within the scope of this proceeding. IRAHVOL submits that if it were not for participant funding issues, IRAHVOL would not seek further directions as applied for in Exhibit C34-5 regarding the scope of this proceeding (T2: 257). The Commission Panel is of the view that participant funding issues should be given no weight when considering procedure or any other matters that are before the Commission. IRAHVOL’s request is denied, and IRAHVOL is encouraged not to raise participant funding issues unless done so pursuant to the Participant Assistance/Cost Award Guidelines and in writing."

5. Panel Inspection of Transmission Line Corridor

Commission is uneasy about doing the inspections, based on one objection from BCPIAC - BCOAPO. Commission awaits further submission from TRAHVOL.

6. Process for Review of Hul’qumi’num Treaty Group Request

"By letter dated October 19, 2005 (Exhibit C27-5), Hul’qumi’num Treaty Group sought certain orders. The process for review of this request will not be established at this time, and may be established after further submissions from Hul’qumi’num Treaty Group (T2: 318)."

Letter and Order G-109-05

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BCTC-VITR: BC Transmission Corp. - Vancouver Island Transmission Reinforcement, 230 kV AC cable from Delta to Duncan
http://www.bcuc.com/ApplicationView.aspx?ApplicationId=78

Sea Breeze-VIC: Sea Breeze Pacific Regional Transmission System Inc. - Vancouver Island Cable, 300 kV HVDC Light cable from Surrey to Victoria
http://www.bcuc.com/ApplicationView.aspx?ApplicationId=90

Posted by Arthur Caldicott on October 28, 2005

Canada can control oil destiny: Morgan

Heft makes companies predators, not prey

By DAVE EBNER
Globe and Mail
Friday, October 28, 2005


CALGARY -- Canadian oil and natural gas companies are big enough and strong enough to fend off advances by potential international suitors, the outgoing chief of Canada's largest energy company says.

Gwyn Morgan -- speaking yesterday in his EnCana Corp. office on the 18th floor of Bankers Hall in Calgary -- said his company has reached a size where it doesn't need to fret about being someone else's dinner.

"If you're one of the strongest and fastest, you're not at the back, you're not going to be taken out by those that are chasing you, in the Darwinian sense," Mr. Morgan said.

Mr. Morgan made his point -- which is shared by Murray Edwards of Canadian Natural Resources Ltd. -- during his first extensive interview since announcing on Tuesday that he is stepping down as chief executive officer of EnCana.

Speculation about the future of Canadian oil and gas companies hit the headlines this month, reaching a particularly fevered pitch last week as investors pushed stock of EnCana up almost 10 per cent in a single day on rumours of a bid from Royal Dutch Shell PLC.

EnCana has said there was no bid, no suggestion of a bid and no talks about a bid.

Shell yesterday reported its quarterly results.

Shell's chief financial officer said on a conference call that that it would be difficult to justify a "very large acquisition" to investors given high prices in the market.

Deals of less than $10-billion (U.S.) would be more sensible, the CFO said. EnCana's market capitalization is more than $40-billion.

Mr. Edwards, vice-chairman of Canadian Natural, the No. 2 player behind EnCana, said he is "skeptical" about the potential for foreign takeovers and added that Calgary companies are just as capable of buying their international peers.

"Canadian companies have got to a size where they're as much acquirers as acquirees, in terms of critical mass," Mr. Edwards said in a Tuesday interview.

In May, rumours swirled around that Talisman Energy Inc., Canada's No. 3 independent explorer, was going to be bought by France's Total SA, chatter that pushed Talisman stock higher.

Mr. Edwards said the world's biggest public energy companies simply might not be interested in Canadian firms.

That's because some assets owned by domestic players were acquired in sales by supermajors like BP PLC. Talisman owns former BP assets, for instance, and in 1999 Canadian Natural acquired its Horizon oil sands lease from BP as part of a $1.1-billion (Canadian) purchase of oil properties in Alberta.

"A lot of these assets were acquired over time through rationalization by other people," Mr. Edwards said. "I'd be skeptical if guys wanted to go back" to buy back what they sold.

In January, 2002, Mr. Morgan unveiled a made-in-Canada merger to create EnCana by bringing together his Alberta Energy Co. with PanCanadian Petroleum.

"When the opportunity came to bring the two companies together, I knew and David [O'Brien of PanCanadian] knew that we could create something that was so much stronger and would most likely be able to maintain its independence for a long time to come," Mr. Morgan said.

Because of this, there is no pressing need to bulk up today, Mr. Morgan said, especially if it's only to get bigger rather than better.

"To do that would be a very short-term, foolish thing to do. Unless you can merge assets that are complementary, you're going to lose," Mr. Morgan said.

Talisman CEO Jim Buckee said his company has assets that are attractive to supermajors, but added Talisman is strongest as a whole, and that selling parts are not part of the plan.

"I know they like the Southeast Asia assets and they like [Canadian] Foothills very much. But having said that, I couldn't answer for what the majors are going to do," Mr. Buckee, a onetime BP executive, said in an interview last week after his company announced a $2.5-billion takeover of North Sea oil producer Paladin Resources PLC.

Mr. Morgan is being replaced as EnCana CEO on Jan. 1 by Randy Eresman, currently the company's chief operating officer. Mr. Morgan said Mr. Eresman was the obvious choice.

"Randy's consistently been No. 1 on the depth chart," Mr. Morgan said. "Since that was well known by the board and well accepted and supported by the board, we didn't have to have a long discussion when I told them what my plans are because [the succession] was something that was a natural evolution."

Canadians stand tall

Leaders of Canada's two biggest oil and natural gas companies say homegrown firms are not likely to be picked off by larger international players, suggesting in fact, that Calgary based explorers could just as easily be the acquirers, not acquirees.

The Canadian and U.S. independents ($U.S.)
EnCana Corp. $41 billion
Devon Energy $29 billion
Burlington Resources $27 billion
Canadian Natural Resources $22 billion
Anadarko Petroleum $21 billion
Talisman Energy $16 billion

The supermajors ($U.S.)
BP PLC $244 billion
Exxon Mobil $358 billion
Royal Dutch Shell PLC $209 billion

Total - NYSE $158 billion

Posted by Arthur Caldicott on October 28, 2005

Exxon, Shell: spare a subsidy sir, we're not rich enough yet

Possible Federal stake in pipeline 'still on table'
Claudia Cattaneo and Paul Vieira, Financial Post, 28-Oct-2005
Exxon, Shell gush to record profits
Steve Quinn, Associated Press, in Globe and Mail, 28-Oct-2005


sqwalk.com
COMMENT: More federal subsidies to oil and gas companies already engorged with obscene profits? Exxon and Shell want the Mackenzie Gas Pipeline because they'll make money operating it, it will open up new fields for development of lucrative oil and gas, and it will provide gas to the oil sands - where Exxon and Shell are also major players and need the valuable gas to extract the even more valuable oil from the sand. Oil sands operators are already greased up on subsidies, tax and royalty breaks. And so rich, it makes your head spin. In one of these articles, Exxon is reporting revenues of $100 billion in the quarter. Enough.
sqwalk.com




Possible Federal stake in pipeline 'still on table'


Imperial said no: source

Claudia Cattaneo and Paul Vieira
Financial Post
Friday, October 28, 2005

A proposal by Ottawa that it could take an equity stake in the Mackenzie Valley pipeline "is still on the table" despite being rejected by the companies behind the megaproject, highly placed sources confirmed yesterday.

"There's no denying the question of equity was used inside the umbrella discussion of subsidies," a senior source said. "And Imperial [Oil Ltd.], as soon as 'equity' was mentioned, they said 'no.' "

"It's certainly there in so far as the feds are concerned," the source said.

Anne McLellan, the Deputy Prime Minister and the minister responsible for the pipeline file, denied a National Post story that a formal offer has been made to try to move forward the stalled $7-billion project proposed by a consortium of oil companies led by Imperial.

Ms. McLellan told reporters yesterday the government has no intention of re-entering the megaproject business and emphasized that a "private-sector" solution is required when it comes to Mackenzie.

However, she did not rule out the idea.

"We have not put any proposal on the table," she said. "We have talked to Imperial because they came to us with the discussion around fiscal enhancements. In fact, there is a long, long, lengthy list of things that could or could not be done. It is way too soon to see whether this government will choose to take a serious look at a package that is defined as fiscal enhancements."

Several sources confirmed the Post report that the federal government has proposed taking a stake of about 20% in the pipeline.

The proposal was made because Ottawa is now very concerned that a rival US$20-billion line from Alaska is gaining momentum and wants the Mackenzie project back on track, although "in the end there may be other ways than outright ownership to help the project move forward," said one source.

A proposal for an equity stake "was put on the table and the producers' group, basically, said 'no thanks.' And [the producers'] position now is that we are not going to discuss it," said another source.

Secret negotiations between the companies backing the project and the federal government over fiscal terms are getting down to the wire.

Imperial has said it will decide by next month whether enough progress has been made so it can move forward with public hearings for the pipeline, which would bring to market much-needed supplies stranded in the Arctic and help cap soaring natural gas prices.

The talks have bogged down on fiscal terms with Ottawa and access and benefits deals with aboriginal groups along the Mackenzie Valley. Imperial and its partners, Shell Canada Ltd., ConocoPhillips and the Aboriginal Pipeline Group -- an aboriginal enterprise -- want a fiscal regime that recognizes that the up-front costs are huge and it will take years before profits are recorded.

But the government believes giving breaks to highly profitable energy firms would be politically unpopular at a time consumers are being squeezed by high energy bills. Ottawa's negotiators have advanced the equity proposal as a way of getting something in return.

Ottawa's ownership in the megaproject could be similar to the 20% interest the State of Alaska is seeking to hold in Alaska gas pipeline under agreements being negotiated with Alaska producers, the sources said.

Ms. McLellan confirmed that Imperial has approached the government about cutting a deal that would make the project more financially palatable.

"Absolutely no proposal has been made to Imperial in any form in relation to any fiscal enhancements," Ms. McLellan said.

"The one thing I will say is that we're all committed to making sure this project takes place but we clearly see this as a private sector-driven project in co-operation with the aboriginal communities along the valley.

"We know that Imperial has talked about fiscal enhancements. We have indicated we're willing to sit down and talk to them about that but the suggestion that there has been any proposal at any time from us in relation to this project on the fiscal enhancement side is completely false."

Tim Hearn, Imperial's CEO, said recently the oil companies are not looking for handouts, but terms that recognize that today's high gas prices are unlikely to continue as large quantities of liquefied natural gas come to North America from foreign sources in the next decade.

He said the terms should also take into account that the project is opening a new basin and requires huge capital investment that will not yield a return for many years.

The government sources said oil companies have asked for tax and royalty concessions of $1.2-billion to $2-billion and certainty on fiscal terms.

© National Post 2005

TOP



Exxon, Shell gush to record profits


Hurricanes help drive largest oil company past $100-billion (U.S.) in sales for quarter

By STEVE QUINN
Associated Press
inGlobe and Mail
Friday, October 28, 2005

DALLAS -- High prices for oil and natural gas propelled Exxon Mobil Corp. and Royal Dutch Shell PLC to their best quarterly results ever yesterday, with Exxon becoming the first U.S. company to ring up quarterly sales of $100-billion (U.S.).

To put Exxon's performance in perspective, its third-quarter revenue was greater than the annual gross domestic product of some of the largest oil-producing nations, including the United Arab Emirates and Kuwait.

The world's largest publicly traded oil company also set a record for U.S. companies by posting profit of almost $10-billion, according to Standard & Poor's equity market analyst Howard Silverblatt.

Both Exxon and Shell said their performances were buoyed by higher prices for crude oil and natural gas, even as output suffered due to a busy hurricane season in the Gulf of Mexico. The companies noticed slight decreases in fuel demand.

Exxon's profit ballooned 75 per cent to $9.9-billion, compared with $5.7-billion a year ago. Revenue grew to $100.7-billion from $76.4-billion in the prior-year period. The previous oil industry earnings record was Exxon's 2004 fourth-quarter profit of $8.4-billion.

At Shell, third-quarter profit grew 68 per cent to $9-billion, compared with $5.4-billion a year earlier. Revenue at the Anglo-Dutch company rose 8 per cent to $76.4-billion.

"We are capturing the benefits of high oil and gas prices and refining margins," Shell chief financial officer Peter Voser said, referring to the profit margin on each barrel of crude that is refined into gasoline, diesel and jet fuel.

Shares of Exxon fell 60 cents to $55.60 on the New York Stock Exchange, where U.S.-traded shares of Shell rose $1.15, or 1.93 per cent, to $60.65.

Excluding special items, Exxon's profit was $8.3-billion, or $1.32 a share, or slightly below the $1.38 per share expected by analysts polled by Thomson Financial.

With oil futures above $60 a barrel for much of the third quarter, Exxon's profit from petroleum exploration and production rose by $1.8-billion to $5.7-billion. Prices for gasoline, diesel and jet fuel lifted refining and marketing profits by $727-million to $2.1-billion.

However, income at the company's chemicals unit declined by $537-million to $472-million, a reflection of the higher prices for raw materials.

Exxon said the hurricanes slashed U.S. production volumes by 5 per cent from a year ago, while global daily production slipped to 2.45 million barrels of oil equivalent from 2.51 million barrels. By the end of the year, it will cost the company about $100-million after taxes, the company estimated.

Shell said its adjusted earnings -- arrived at by stripping out the fluctuating value of petroleum -- added up to $7.4-billion, sharply higher than analysts' forecasts.

Shell's profit from exploration and production increased by $2.6-billion to $5-billion in spite of an 11-per-cent decline in oil and natural gas output. Its refining and marketing profit climbed by $201-million to $1.7-billion. Its chemicals business saw profit decline by $251-million to $321-million.

Shell said hurricane damage would cost it about $350-million, although much of the expense would be covered by insurance.

Slick profits

High gasoline prices in the wake of hurricanes Katrina and Rita helped fuel record profits at Exxon Mobil and Royal Dutch Shell.

$106.7-billion Combined profits expected this year for the world's five biggest publicly traded oil companies -- Exxon Mobil, BP, Shell, Chevron and Total.

26% The estimated increase in profits at the Big 5 energy companies this year.

28% The rise in U.S. gasoline price in the past 12 months.

Although many polls show U.S. consumers are intent on altering their behaviour (i.e., driving less), we still have not seen significant structural shifts in behaviour.'

Man Financial analyst Edward Meir

SOURCES: BLOOMBERG NEWS, THOMSON FINANCIAL, ENERGY INFORMATION ADMINISTRATION

TOP

Posted by Arthur Caldicott on October 28, 2005

Bid process lets funny smell taint Ridley Island deal

Don Cayo
Vancouver Sun
Friday, October 28, 2005


A bad smell is emanating from the few known facts concerning the likely sale of Ridley Island coal terminal in Prince Rupert.

The short story is that Ottawa is poised to turn over a facility that cost $250 million (in 1980s dollars) for just $20 million, most of which won't be paid until years from now. The only "preferred bidder" has no track record in running a port. And even though the coal industry is on a roll, the bidder isn't asked to pledge even-handed access to all companies wanting to use the terminal.

Would you like to know why there's only one bidder on the list, or who else would like to make a bid, and what they might bring to the table? Me, too.

Yet, if there's a scandal here, it's not that this basic information is being kept secret. Fact is, these days it's the norm for a government to invite some bids and refuse to consider others for reasons they never explain.

Governments like pre-qualified bidders, particularly for complex procurement contracts or large construction jobs that are complicated by a design component, because the bidding process has become so convoluted and expensive. Companies balk at going through such hoops unless they see a reasonable chance of winning; "pre-qualification" limits the competitors and tells them who they're up against. And the government people who pick the winning tender no doubt find it more convenient and less risky to deal with known quantities.

So in theory, pre-qualified bidders are companies proven to possess the expertise and resources necessary to do the job. I have enough faith in the general integrity of the system to believe that's often the case.

But a pre-qualified bidder could be one who pays bribes, who is friends with or related to a decision-maker, or is a political ally. With so much of the process hidden, how can the public tell?

With complex contracts there may be cases where it's justified for a government to take what looks on the surface like a second-best bid. But in the absence of detailed information and independent assessment, it's hard to have confidence that any given instance is a valid case.

And certainly it's possible to manipulate the criteria for pre-qualification to ensure a certain bidder gets, or doesn't get, a job. That's what I think happened last year when BC Ferries called for proposals on three big new ferries that are now being built in Germany. The criteria for yards to be allowed to make a final bid included basing 40 of 100 points on an examination of each yard's recently built, similar-sized ships. Since no B.C. yard had built any such ships, they had no chance of winning the contract -- yet BC Ferries CEO David Hahn and Premier Gordon Campbell were able to maintain the political fiction that they hadn't arbitrarily excluded B.C. bids.

The danger of losing accountability when public contracts are negotiated in private first hit my radar screen several years ago when I started looking at public-private partnerships. They're inherently complex, often involving not just design and construction, but also operation. Trade secrets are involved in many bids, and it's not fair to ask a bidder to tip its hand to competitors.

I wrote about P3s and accountability during the Campbell government's first stumbling forays into that turf, and later during its more successful hand-off of P3s to Partnerships BC.

And, lo, Partnerships BC came up with a full-disclosure policy. It publishes all contract information, except the details of the losing bids, once a contract is awarded. It also releases a value- for-money report on what it would cost if government did the work. And a fairness commissioner -- the first one was the independent-minded Ted Hughes -- observes each bid process and reports publicly on it.

This is a made-in-B.C. template that could provide the basis for accountability policies for other arms of government. Unfortunately, it has so far been ignored.

For example, the province's Alternative Services Secretariate, the body that steers through all privatization initiatives, releases only summaries of contracts and withholds key information such as performance penalties and/or rewards. And Vanoc, with all its pricey Olympic construction looming, can't or won't even tell me how extensively it will be requiring bidders to pre-qualify, let alone what its disclosure policy will be.

Which is a pity. Because when things are hidden, people are certain to wonder why.

So whenever there are questions -- when something smells funny as it does now in Prince Rupert -- many will assume the worst. And, as with the Ridley deal, the process and the projects will be tainted -- whether they deserve to be or not.

dcayo@png.canwest.com

© The Vancouver Sun 2005

Posted by Arthur Caldicott on October 28, 2005

October 27, 2005

Alberta proposes giving oil priority over environment

John Cotter
Canadian Press
Thursday, October 27, 2005

OilSands.gif

EDMONTON -- Alberta is proposing sweeping changes to the way it manages its booming oil sands sector, but critics fear the new plan will run roughshod over the environment.

The proposed Mineable Oil Sands Strategy would make mining the top priority in development areas over other concerns such as forestry, rivers and wildlife. (link)

The change is expected to increase oil sands recovery and make development, including the reclamation of mined areas, easier to manage.

"We are developing a strategy that will help coordinate development in this area," Energy Minister Greg Melchin said Wednesday.

Recent reports suggest Alberta's oil sands could triple production to as much as 1.2 million barrels a day in the next 20 to 25 years.

With enough investment, the oil sands could contribute up to half of Canada's oil supply by 2020, an increase of more than 25 per cent.

Environmental groups such as the Pembina Institute warn the Alberta government's proposal marks a fundamental shift in policy. (link)

In the past, oil sands mining has been permitted on the condition that rivers remain intact, the integrity of watersheds is maintained and key wildlife corridors are preserved.

Under the proposal, strip-mining the oil sands would take priority over protecting the environment, said Pembina Institute spokesman Chris Severson-Baker.

He estimated the plan would mean writing off 2,800 square kilometres of boreal forest.

"Albertans who value the integrity of the province's boreal forest and the people who live, fish, hunt and trap in the Athabasca region should be concerned about this strategy," he said.

Severson-Baker called on the province to shelve the strategy and come up with a better plan.

Alberta Environment Minister Guy Boutilier said the proposal would balance economic development and environmental protection.

"The environment is our mother ship," he said in a release.

The proposal would allow companies to reroute some tributaries of the Athabasca River. Any fish habitat lost from such activity would have to be replaced.

© The Vancouver Sun 2005

Alberta Ministry of Energy Mineable Oil Sands Strategy pages

Pembina Institute statement on Mineable Oil Sands Strategy

Tell the Alberta Government what you think

Posted by Arthur Caldicott on October 27, 2005

October 25, 2005

Gas will stay up: analyst

By ANGELA BARNES
Globe and Mail
Tuesday, October 25, 2005

TORONTO - Relatively high natural gas prices are here to stay for the next few years, according to Bank of Nova Scotia's commodities expert. That isn't good news for Canadian homeowners facing a long cold winter of high heating costs, but it is for Canadian gas producers.

"Today's tight North American supply/demand balance for natural gas is unlikely to ease significantly until 2008, when six new U.S. LNG [liquefied natural gas] import terminals come on stream," said Patricia Mohr, vice-president of Scotia Economics, in the latest report on the bank's commodity price index.

Natural gas prices on the New York Mercantile Exchange have doubled in the last year, rising from $7.37 (U.S.) a million British thermal units in October, 2004 to a record high of $14.22 three weeks ago. They have since eased off to around $13, helped in part by indications that demand has eased somewhat, particularly in the industrial sector, in the face of the exceptionally high prices.

Ms. Mohr sees NYMEX natural gas prices averaging around $9 per mmbtu next year and West Texas intermediate crude oil prices averaging about $60 a barrel - levels "guaranteeing exceptionally strong financial results for Canadian oil and gas producers," she said. Crude prices touched a record intraday high of $70.85 on Aug. 30, just as hurricane Katrina was bearing down on New Orleans.

It currently stands at about $61.35 High energy prices were a key factor fuelling the rise in the Scotiabank commodity price index to a record high in September, its second in as many months. The index increased 9 per cent from August to a level that is double the October, 2001 cyclical low.

Climbing metal and mineral prices also were a major contributor to the advance in the index, which measures price trends in 32 of Canada's major exports. "Widespread gains in most base metals, precious metals, uranium and potash offset slightly lower prices for nickel, aluminum and cobalt," Ms. Mohr said. The metals and minerals index rose to a record last month to stand 2 per cent above the peak set in June, 1988.

Posted by Arthur Caldicott on October 25, 2005

BCUC rules out oral hearing on Terasen deal

By Scott Simpson
Vancouver Sun
Tuesday, October 25, 2005

Utilities commission is satisfied with written submissions

The B.C. Utilities Commission announced Monday that there will be no oral hearing on the proposed $6.9-billion sale of Terasen Inc. to Texas-based Kinder Morgan Inc.

BCUC commission secretary Robert Pellatt said in a letter to Kinder Morgan that hearings proceed to an oral stage "only when the commission panel has questions arising from written submissions."

The BCUC was deluged with a record volume of correspondence, more than 6,000 letters, in connection with the sale. Many of those letters came from Terasen Gas residential customers who objected to an American company taking ownership of the province's largest gas utility.

Vancouver-based Terasen, like Kinder Morgan, is a publicly traded company. Kinder Morgan made an unsolicited offer for Terasen in August at a 19-per-cent premium to recent share value.

Terasen shareholders voted overwhelmingly last week to accept that offer.

Pellatt said the BCUC is satisfied with written correspondence on the transaction and expects to issue a final decision on Nov. 10.

"The commission has an established practice of proceeding with an oral phase only when the commission panel has questions arising from written submissions," Pellatt said, adding that in this instance the panel "does not have any questions" arising from the proceeding.

"Further, given the extensive submissions and comments received in the written process ... the commission panel considers the record is closed for this proceeding."

Terasen public affairs director Cam Avery said the commission was "able to enjoy a huge, huge amount of information."

Avery added that concerns expressed by many correspondents were "beyond the purview of the commission."

"Canada's energy export policy is just not part of the BCUC's deliberations," Avery said.

Pending approvals from the BCUC, and from Industry Canada, the Kinder Morgan purchase could be wrapped up by Nov. 30.

Avery said Terasen's customers won't notice a difference: Terasen Gas will still be the name of the company on monthly gas bills, and rates cannot rise as a result of the deal.

"You will see no effect on your gas bill as a result of this transaction. Gas rates are reviewed quarterly by the B.C. Utilities Commission and have been for years. This transaction will have no effect on people's gas bills," Avery said.

"It will still be a Terasen Gas billing, same people hooking up the meters, same people reading the meters, same people buying the gas for them. Nothing is going to change here."

ssimpson@png.canwest.com

© The Vancouver Sun 2005

BCUC Letter to Kinder Morgan

Posted by Arthur Caldicott on October 25, 2005

SE2 issues simmering with MPs

By Trudy Beyak
Chilliwack Progress
Black Press
Oct 23 2005

A legal battle over a controversial international power line is surging ahead, triggering renewed public environmental concerns in the Fraser Valley.

Conservative MPs - including the Opposition party's environment critic Bob Mills - took a public stand last Saturday against Sumas Energy 2, an American power corporation which wants approval to build a power line on Canadian soil.

SE2 is a 660-megawatt natural-gas-fuelled power plant, which Washington state has approved to be built in Sumas less than 500 metres from the Canadian border.

The power plant, if built, would "become the largest new air polluter in the Fraser Valley," said Langley MP Mark Warawa, a former Abbotsford councillor.

Mills said this legal case will be carefully watched across Canada.

"This issue is precedent-setting for every border region across Canada," said Mills.

There has been unanimous opposition to SE2 from local citizens and local governments, the province of B.C. and the Conservative Party of Canada, Warawa said.

The power company intends to spew more than 2 1/2 tons of pollution daily into the confined Fraser Valley air shed, which has a history of episodes of poor air quality. The B.C. government has stated it would not approve such a power plant in the Fraser Valley on the north side of the border.

SE2, however, is appealing the National Energy Board of Canada's decision to deny the company owners the right to construct a 230,000-volt international power line through Abbotsford to wheel power from its power plant to U.S. markets.

The Federal Court of Appeal is set to hear SE2's appeal case in Vancouver from Nov. 7 to 9.

Whatcom County, meanwhile, will not permit the company's 230,000-volt power line to be built in its jurisdiction because of public concerns on the south side of the border about decreased property values and health concerns.

Sharon Roy, a director with Whatcom County, said the county continues to be opposed to SE2.

"We are very much opposed to the building of that power plant - and we certainly don't think it is fair that Canadians would have to breathe most of the pollutants to be emitted from that power plant," Roy said.

Whatcom County is watching the legal proceedings in Canada with interest. If SE2 fails in its bid to build a power line in Canada, the company may eye a legal challenge in Whatcom County, predicts Roy.

Lawyers for the Province of B.C., City of Abbotsford, FVRD, and Sierra Legal Defence Fund, including Tom Berger, have submitted legal arguments against SE2.

Mills said environment ministry officials must represent Canadian interests abroad.

"An International Joint Commission report recommended the federal government become more involved with cross-border air-pollution initiatives," Mills said.

Depending on which way the court rules, this matter could still end up on the desk of the Canadian federal government for approval, said Abbotsford Coun. Patricia Ross.

"The U.S. will get the power generation, but it will be mostly Canadians that will suffer the negative effects."

Alex Drozdow, president of the federal Liberal Abbotsford riding, said the organization is opposed to SE2 and feels confident the court will make the right decision and uphold the NEB denial decision.

Posted by Arthur Caldicott on October 25, 2005

October 24, 2005

Bidder offered a fraction of Ridley's cost

By Peter O'Neil
Vancouver Sun
Monday, October 24, 2005

'Fire sale' offer by group expected to gain control of port facility unacceptable, MP says

OTTAWA -- The expected winning bidder in the privatization of Ridley Terminals, the coal shipping facility in northern B.C. that cost taxpayers $250 million to construct in the early 1980s, offered $20 million for the Crown corporation in 2003, The Vancouver Sun has learned.

But the offer included only $3 million in cash up front, with the remaining amount to be paid out starting seven years after the deal closes and continuing for the next 33 years in amounts no greater than $500,000 annually.

The offer, from Ontario companies Fortune Minerals Ltd. and Federal White Cement Ltd., was obtained by Conservative MP John Cummins and provided exclusively to The Vancouver Sun.

"This asset has got some value but it's being sold off at fire sale prices. And you've really got to wonder why," said Cummins.

"This is outrageous. To begin these payments in the seventh year, and it ends 40 years later, really rubs salt in the wounds."

Members of the Ridley Shippers Coalition, a group of western Canadian mining firms that oppose the planned sale to the Ontario companies, say the Fortune bid was inferior to at least two offers from their member companies.

They provided The Sun with documents showing that Western Canadian Coal of Vancouver offered $25 million, of which $5 million would be delivered within six months of the deal closing and the remaining $20 million over eight years.

However, the WCC offer was made March 30, 2004, after the original competition was over and coal prices had jumped substantially.

Cline Mining of Toronto offered $9.36 million up front plus a royalty over 15 years of $64 million, which was intended to pay off Ridley's huge debt. No date was included in that document.

The Fortune offer was based on Ridley being cleared of its debts.

Fortune President Robin Goad said the B.C.-Alberta coalition is trying to manipulate the media to advance their self-interests.

He said the leaked Fortune offer doesn't reflect the final terms of the deal he expects to strike with Ottawa, though he said he was forbidden from saying what those terms are because of a confidentiality agreement.

The proposal is detailed in a Sept. 30, 2003, letter sent via courier to former transport minister David Collenette from Goad and Federal White Cement president George Doumet.

Northern Energy Mining Inc. president Pat Devlin, a member of the Ridley Shippers Coalition, urged the government Friday to consider his group's bid to run the terminal as a co-operative that will keep shipping costs low.

He said the Fortune group intends to charge higher fees that will make it a profit but will hurt the ability of Canadian resource firms to compete with Australian exporters.

"Remember, when this was built by the federal government it was never supposed to be a privately run, for-profit business. It was to be a benefit to the province and the country, and Canadian taxpayers paid $250 million for it. So selling it out cheap is only justifiable if it still creates the economic benefit it was originally intended for."

The leak of the deal's terms is the latest in a bizarre business saga that has included a bitter clash between Transport Minister Jean Lapierre and the corporation's so-called "rogue" management team and board of directors.

Lapierre was forced earlier this month to obtain a cabinet order preventing Ridley from signing long-term contracts after he failed to bring the managers and board to heel with a "dressing down" in his office earlier this year.

Lapierre said last week he will go ahead with his plan to obtain cabinet approval to begin negotiating with the Fortune group, despite complaints from industry and opposition MPs.

But Cummins said the federal government is shortchanging taxpayers by selling a valuable asset just prior to a rebound in coal prices that has considerably increased the asset's value.

"I think the government should just pull back from this issue. This whole thing needs a rethink. The government needs to determine what's in the best interests of northern British Columbia."

The issue came up in the B.C. legislature Thursday when the New Democratic Party called on the B.C. government to step in to prevent the sale to Fortune.

B.C. Transportation Minister Kevin Falcon, who acknowledged that Victoria had considered acquiring Ridley from Ottawa, said he's satisfied the privatization plan will result in "equal and open access for all users in British Columbia."

poneil1@hotmail.com

© The Vancouver Sun 2005

Earlier articles on the Ridley Island sale to Fortune Minerals are here

Posted by Arthur Caldicott on October 24, 2005

October 23, 2005

Canada doesn't have oil, Alberta does

By Rondi Adamson
Toronto Star
23-Oct-2005

Canada doesn't have oil, Alberta does, and U.S. is our main trading partner, says Rondi Adamson

The United States does not have too much "control" of our oil. The idea that it does — because, under NAFTA, we sell a certain proportion of oil to the United States — shows a failure to understand any number of things.

Who is the "our" in our oil? I don't know many Albertans, but I know enough of them to know they don't think Ontario, or much of the rest of Canada, is part of that "our."

Since Ottawa sold its stake in Petro-Canada, it could be argued that the federal government doesn't control any oil. Albertans do. And Albertans may feel that they kindly allow Ottawa to collect billions of dollars in taxes from that oil.

In short, Eastern oil consumers and Western oil producers most likely disagree about who controls what, and who it "belongs" to.

Control of oil comes from the marketplace, not from any buyer. Let's just imagine that the Canadian government mandated oil sales to China. China would then buy less from everyone else and American firms would still end up paying about the same price on the world market and getting about the same amount.

The only difference? According to John Palmer, economics professor at the University of Western Ontario, "We would force Canadian producers to pay more to ship it to China instead of the United States. In the process, we would further strain Canada-U.S. relations while donating cheap oil, by probably subsidizing the transport costs, to China."

Prime Minister Paul Martin should keep that — among other things — in mind when he decides to use oil to threaten the United States. Speaking two weeks ago in New York, the Prime Minister attempted to address the ongoing softwood lumber dispute. He hinted that Canada would look at China and India as a marketplace for "our" oil, restricting energy exports to the United States, if the Bush administration doesn't smarten up.

Apart from how morally questionable it is to suggest that trading with a dictatorship like China is a preferable/equal option to trading with a free country like America, there is also the matter of reality.

Canada is dependent on the American market, which buys approximately 85 per cent of what we have to offer. This is not to mention how our Prime Minister is causing further deterioration of already tenuous Canada-U.S. relations.

In the world market, oil is fungible. Who sells how much to whom is of little import. The price is determined by supply and demand, not a single oil company, or state. Certainly, if American demand dropped, so would the world price, but American firms do not set oil prices.

It would be nice if Canadian politicians would realize all of this and find less childish ways to deal with our largest trading partner. We always seem to be reacting against the United States, rather than carefully thinking through our rhetoric and our options.



Rondi Adamson is a Toronto writer whose work has been published in the Christian Science Monitor, Wall Street Journal Europe and USA Today.

Posted by Arthur Caldicott on October 23, 2005

Scrap NAFTA to loosen American grip on our energy sources

By Linda McQuaig
Toronto Star
23-Oct-2005

We would have to scrap NAFTA to loosen American grip on our energy sources, notes Linda McQuaig

When it comes to oil, the Middle East is where the action is. Or as Dick Cheney once put it — before he was vice-president and became careful about saying such things — the Middle East is "where the prize ultimately lies."

Outside the Middle East, generous oil endowments are rare. Interestingly, Canada is among the well-endowed. With our small population and relatively abundant reserves, we are one of the few western nations with the potential for something the U.S. yearns for: energy independence.

Oil is the lifeblood of the modern economy. It's the most effective and flexible form of energy, so we could count ourselves lucky up here.

Too bad, then, that we trusted our fate back in the early 1990s to a small team of negotiators appointed by the Mulroney government.

Sadly, in the course of negotiating the North American Free Trade Agreement, these Canadian negotiators acquiesced to Washington's demands for guaranteed access to our oil. They agreed to Section 605, which prevents us from cutting back our oil exports to the U.S. The section also prevents the U.S. from cutting back its oil exports to us, but they don't export oil to us.

This has potentially ominous implications for Canada.

The world is rapidly running out of easily accessible oil. Supplies of affordable oil will therefore be more precarious in the future. A recent report by the U.S. Energy Department's National Technology Laboratory bluntly noted: "The world has never faced a problem like this."

Of course, oil contributes to global warming, so it's important we reduce our consumption. But, until we move to an alternative or learn to live with less, oil remains crucial to our way of life.

Yet, despite looming oil shortages, Canada is blithely exporting roughly 70 per cent of all the oil we produce each year to the U.S., rapidly depleting what's left of our easily accessible oil. Under NAFTA, we can't cut back that proportion, unless we cut our own consumption.

Meanwhile, Canada is also an oil importer. The eastern and central parts of the country, including Ontario, rely heavily on imported oil.

So, if there were international oil shortages, many Canadians would suffer. NAFTA would prevent us from redirecting oil headed for the U.S. to destinations in Canada, no matter how great the Canadian need.

If this doesn't amount to handing over too much control over our oil to the U.S., what would?

The Mulroney government presumably surrendered this control in exchange for what it said was a guarantee that our goods would have access to the U.S. market — a guarantee which, we were told, was Canada's reason for signing NAFTA. But the final deal contained no such guarantee, as Canadian critics noted at the time, and as the ongoing softwood lumber saga underscores.

So we not only gave up control over our oil, it seems we gave it up for, well, nothing.



Linda McQuaig, a Toronto-based commentator, is author of It's the Crude, Dude: War, Big Oil and the Fight for the Planet. available in paperback. lmcquaig@sympatico.ca.

Posted by Arthur Caldicott on October 23, 2005

Senate Energy Committee Approves ANWR Drilling

Green Car Congress
20 October 2005


ANWR. Click to enlarge.

The Senate Energy and Natural Resources Committee on Wednesday approved legislative language instructing the Secretary of the Interior to create and implement an oil and gas leasing program in the Coastal Plain of the Arctic National Wildlife Refuge that impacts no more than 2,000 surface acres.

The legislation approved by the committee today is Title IV of the budget reconciliation bill to be marked up by the Senate Budget Committee on October 26. The committee passed Title IV in response to instructions from the Budget Committee to raise $2.4 billion in revenue for fiscal years 2006-2010. According to the Congressional Budget Office, the competitive sale of oil and gas leases in the plain will raise $2.5 billion during that time.

During the meeting over the ANWR provision, three amendments were offered and defeated.

Sen. Maria Cantwell (D-Wa), offered an amendment to ensure the payment to the US Treasury of 50% of revenues from oil and gas leasing and production on the Coastal Plain. Defeated 9–13.

Senator Ron Wyden (D-Or), offered an amendment prohibiting the exportation of oil and gas produced under ANWR leases. Defeated 10–12.

Ranking Member Jeff Bingaman (D-NM), offered an amendment to limit the authorization of oil and gas development on the Coastal Plain in the same manner as in other units of the National Wildlife Refuge System. Defeated 8–14.

The time is ripe for ANWR. Global and national conditions mandate the environmentally-sound development of oil and gas in the Arctic. The Senate first passed ANWR legislation in 1996. If that hadn’t been vetoed, I don’t think we would be paying $3 a gallon for gasoline today. The hurricanes in the Gulf underscored what Congress has known for along time: We must produce more of our own oil and we must diversify the places where we produce it. We must do it for our economy and our energy security.

—Sen. Pete Domenici (R-NM), Chair, Senate Energy and Natural Resources Committee

In March of 2004, the Energy Information Administration, at the request of Representative Richard W. Pombo, Chairman of the U.S. House Committee on Resources, published a report using government figures and analyzing—to the extent that anyone can without sinking a well shaft down through the coastal plain—the effect of drilling in ANWR.

Given the uncertainty over the exact amount of oil in place, the report lays out three scenarios: one for low-oil resources, one the mean case, the other for high oil resources.

Some of the report’s findings:

The mean-case estimate is that there are 10.4 billion technically recoverable barrels of oil in ANWR, divided into many discrete fields. This estimate includes oil resources in Native lands and State waters out to a 3-mile boundary within the coastal plain area. The mean estimated size of oil resources in the Federal portion of the ANWR coastal plain is 7.7 billion barrels.

It will take approximately 10 years to bring the first field on-line (comparable to other Arctic drilling).

Assuming sequential development of the fields, rank ordered by size, ANWR production would peak, in the mean case scenario, in 2024 at 870,000 barrels of oil per day.

Today the US imports some 10.5 million barrels per day. In 2025, the EIA estimates that almost to double to some 20 million barrels imported per day.

Using the EIA’s projections of declines in domestic oil production and increases in oil consumption (mostly from the transportation sector), by 2025 ANWR would reduce US reliance on imported oil by four percentage points—from 70% to 66%.

In other words, ANWR oil would make a small difference, but not a substantive, strategic difference. It doesn’t come close to solving the problem or providing “energy security.” Even if peak ANWR oil were available today, the US would still be importing more than 9 million barrels per day, and climbing.

As an aside, the 2,000 acres don’t need to be contiguous, and only the equipment that touches the ground (i.e., the pipeline stanchions, not the pipelines, which are in the air) count toward the figure. Since a drilling platform can occupy as little as 10 acres, there’s still the possibility of having several hundred platforms, with a maze of interconnecting roads and pipelines, spread throughout the 1.5 million acre reserve.

Posted by Arthur Caldicott on October 23, 2005

October 22, 2005

No fur flying at the VITR Pre-Hearing Conference

On Friday, October 21, the BC Utilities Commission held a Pre-Hearing Conference with applicants and intervenors in both the BCTC - VITR proceeding and the Sea Breeze - VIC proceeding.

The transcript is here.

The big point of debate was expected to be whether the Sea Breeze VIC application should be consolidated with VITR. In my notes, only one intervenor firmly opposed the Sea Breeze motion to consolidate, and despite lots of cautions about the Sea Breeze proposal and whether it would pass the "threshold" or "credibility test" of the BCUC, even the heavy hitters - BCTC, BCH, JIESC - did not oppose.

"What credibility test?" was asked, to which no answer was forthcoming.

The lawyer for Sea Breeze came all set up to defend a motion that he expected to have roundly trashed in the debate, and when he had his chance at the microphone, he was at sixes and sevens in his reply which was cobbled on the spot out of his prepared notes and his need to recognize that most likely (the decision is now in the hands of Chairman Hobbs, who may seek advice from Heaven, but sure isn't taking any from anyone else) Sea Breeze was going to get what it wanted.

On a number of occasions Hobbs was reminded about the risk of appeal if he were to make any decision that was not watertight in terms of its legal integrity. One great line from Mr. Carpenter, counsel for BCTC: "I'm not going to suggest that some of my friends in this room are actually wearing their court robes under their suits but I can assure you that they have them close by." (The GSX Concerned Citizens Coalition is pleased to take significant credit, with thanks to its lawyer, Bill Andrews, for the sensitivity of appeal at the BCUC.)

The fur didn't fly, so it wasn't as rich a day as some hearing days - the mention of energy and Vancouver Island is akin to a lit cigarette tossed out a car window.

Perhaps the next most interesting event in these two proceedings will be the Sea Breeze replies to BCUC Information Request #1 with respect to the VIC application. I expect a lot of people will devour that document. It's due November 7. Some excerpts from the lengthy IR are appended, below.

BCTC-VITR: BC Transmission Corp. - Vancouver Island Transmission Reinforcement, 230 kV AC cable from Delta to Duncan
http://www.bcuc.com/ApplicationView.aspx?ApplicationId=78

Sea Breeze-VIC: Sea Breeze Pacific Regional Transmission System Inc. - Vancouver Island Cable, 300 kV HVDC Light cable from Surrey to Victoria
http://www.bcuc.com/ApplicationView.aspx?ApplicationId=90

--
BCUC Information Request #1

[The BC Utilties Commission has fired its first Information Request to Sea Breeze for the Vancouver Island Cable (VIC) project. Here are just a few of the questions from the 3 MB, 27 page document. The selection is pretty random. These are questions that I could understand, and which I found interesting after a quick read of the 27 page IR.]

Sea Breeze does not agree with BCTC's assessment of HVDC Light® technology in its CPCN application for the VITR Project.

56.1 From Sea Breeze's perspective, what are the errors or misconceptions in BCTC's review of HVDC Light®? Please support the list of errors with relevant statistics, system studies, or technical papers, and include BCTC's Appendices P, Q, and R in the review.

2.1 The VIC Application states that Sea Breeze management is confident that, if a CPCN is granted for VIC, there will be no major difficulty in obtaining funding. Please explain whether Sea Breeze believes that a CPCN under Section 45 of the Utilities Commission Act ("UCA") is the unique significant condition precedent for arranging funding for VIC, and if so why it holds this view. If a CPCN is not the unique significant condition precedent, what others are there?

3.6 Where the VIC proposed route would be in lanes, streets or other municipal property, does Sea Breeze anticipate that it will be expected to pay fees under franchise or operating agreements with the municipalities through which it will pass? Why or why not? Please outline the discussions regarding franchise or operating fees that Sea Breeze has had to date with municipalities.

[there are more in this vein on ROW from BCTC, expropriating from unwilling private owners, etc.]

6.1 On page 178, Sea Breeze states it agrees with the position of BCTC, that there is a clear need for new transmission facilities providing additional reliable transmission capacity from the Mainland to Southern Vancouver Island. Please confirm that in Sea Breeze's view, the power supply deficiency lies on Vancouver Island and the primary requirement of the new transmission facilities is to carry power to the Island,

6.2 The VIC Application states that the Juan de Fuca Cable Project is well advanced and is scheduled to be operational as much as one year prior to VITR. On page 180, Sea Breeze states that either VIC or the Juan de Fuca Project will avoid the need for the VITR project until 2016. On page 178 of the VIC Application, Sea Breeze submits that the Vancouver Island transmission need is best served "by one or both of (Sea Breeze's) proposed projects. If the Juan de Fuca Cable Project is "well advanced" and is sufficient to meet the transmission need, why is Sea Breeze proposing VIC?

6.3 Please expand on how "well advanced" the Juan de Fuca Cable Project is, and when all necessary project approvals are expected.

6.4 The discussion on page 160 indicates that the VIC and Juan de Fuca projects are redundant until 2016, when they would become complementary. Please explain how Sea Breeze believes the Commission should deal with the VIC Application at this time, when Sea Breeze appears to be also actively pursuing the more-advanced Juan de Fuca Project.

6.9 Please clarify the statement on page 204 that ".. .when energized this project (Juan de Fuca) would come under the jurisdiction of the BCUC pursuant to the Province's legal definition of a 'utility'." Does Sea Breeze expect that the Commission will approve rates for the Juan de Fuca cable?

6.10 Please discuss whether Sea Breeze intends to hold an Open Season for VIC transmission rights. Why or why not?

6.11 Please discuss whether Sea Breeze is requesting Commission approval of a CPCN for the VIC Project on the basis that it will be a merchant transmission facility. Why or why not?

8.2 The VIC Application at page 199 estimates the EPC cost of VIC at $302 million, based on a turnkey project estimate from ABB. Please provide a copy of the information with regard to cost and schedule that Sea Breeze received from ABB.

[and many more questions that nose around Sea Breeze costs for VIC]

9.12 Sea Breeze notes on page 44 of the VIC Application that the VIC will bypass the Gulf Islands. What (if any) are the differences between the VITR and the VIC with respect to providing transmission service to the Gulf Islands?

11.3 If the Commission were to conclude that HVDC Light technology as set out in the VIC Application and/or the VIC route is the preferred option, is there any reason why it should not direct BCTC to adopt this option?

12.1 The VIC Application at page 44 states that the VIC project line will be operated exclusively by BCTC. Does this mean that BCTC will be the only customer of Sea Breeze? What other customers would Sea Breeze intend to serve using the VIC line?

14.5 With reference to Exhibit B-6, BCUC DR 56.4 in the VITR proceeding, please provide a comparison of the seismic risk of VIC to VITR Options i and 2, in terms of the ability to withstand seismic events that have a return period of once every X years.

15.1 Further to the statement that HVDC Light® systems are in commercial operation around the world, please provide a summary of all comparable HVDC Light® systems that are in service, stating the length of the cables, the transmission capacity and commercial in-service date of each.

15.2 For each of the foregoing HVDC Light® systems, please provide the year by year availability performance statistics, including Forced Energy Unavailability and Scheduled Energy Unavailability.

17.0 Reference: VIC Application, Exhibit HI, page 8

"The VIC Project eliminates or defers for many years the need to upgrade the Island's AC grid to relieve constraints on Cut-Plane D (between Dunsmuir and Pike substations) because it will serve the major load on Vancouver Island below the existing bottleneck. BCTC has estimated that it would cost $49 million to alleviate such north to south transmission constraint."

Reference: VIC Application, Exhibit Bl, p. 188

"Our studies indicate that the transmission capability problem can be related to any of the transmission sections between Dunsmuir and Pike Lake, hence the additional infeed at VIT alone does not provide an adequate solution."

17.1 Please supply the studies referenced on page 188.

[this may be a key part of Sea Breeze's costing comparison. I believe Sea Breeze says BCTC is not including costs of necessary upgrades on the line between Duncan (VIT) and Victoria (Pike) if VITR goes ahead.]

"Export of energy off island via VITR by an DPP, BC Hydro, or Powerex, to a customer in the Lower Mainland or U.S. would be problematic."

26.1 What level of on-island generation would be required before a power flow in the VI to Lower Mainland direction could be reasonably expected on either the VIC or VITR projects?

26.2 Is Sea Breeze aware of any VI to Lower Mainland scheduling path constraints?

Sea Breeze notes that the VIC would become part of the BC electricity grid and would be operated exclusively by BCTC.

29.1 Does Sea Breeze expect to continue to own the VIC?

Sea Breeze suggests that one or both of the VIC and the Juan de Fuca Cable Project could meet the need for new transmission facilities to Vancouver Island.

55.2 The construction of transmission facilities alone is not sufficient to ensure an adequate supply of energy to Vancouver Island customers. Please provide Sea Breeze's proposals with respect to the acquisition of energy. In the response, please address potential energy sources, the responsibilities of the various parties (including BCTC and BC Hydro), the mechanism(s) for accessing transmission capacity on the Juan de Fuca link, the implications for BC Hydro's EEP and REAP, and the consequence of BC Hydro not acquiring capacity on that link.

Sea Breeze submits that it is not necessary, nor would it be appropriate, for the Commission to carry out a detailed review of the potential environmental effects of the VIC Project.

85.1 Given that the relative environmental impact of the VIC and VITR projects has been cited by Sea Breeze as a factor in favour of the VIC project, why is it not appropriate that the Commission consider the environmental effects in its deliberations?

Read the entire IR:
BCUC Information Request #1 at


Posted by Arthur Caldicott on October 22, 2005

Power station due to be in operation by mid-November

Vancouver Sun
22-Oct-2005

Construction is entering the final stages at the new power station on China Creek. Project engineers hope to throw the switch on the twin generators in mid-November.

The project has been led by the Hupacasath First Nation, with $2.5 million of the funding from the federal government.

The 6.5-megawatt station will power about 6,000 homes.

Revenues from the project will be paid out to the various equity partners on a quarterly basis.

The city of Port Alberni will receive five per cent, while Ucluelet First Nation will get 10 per cent. The industry partner, Sunex, will take home 12.5 per cent of revenue, leaving 72.5 per cent for project proponent Hupacasath First Nation.

Posted by Arthur Caldicott on October 22, 2005

Gather round the gas flare for a big Alberta boost

By JEFFREY SIMPSON
Globe and Mail
Saturday, October 22, 2005

EDMONTON -- Each Albertan will be receiving a $400 cheque in January. Called a "resource rebate," it's each taxpayer's share of $1.4-billion carved from the huge provincial surplus. It's really, really dumb policy.

Maybe the rebate is great politics. Maybe Premier Ralph Klein's popularity as Alberta's Santa Claus will jump a few points in the polls. As policy goes, however, the rebate stinks.

The first page of the economics textbook says: Don't overheat a hot economy. Alberta's economy is the hottest in North America. It doesn't need more heat, which is what the rebate will provide when people spend the money.

When recipients spend, retailers will be happy. So will manufacturers in Ontario and the United States. And hoteliers in Arizona or Hawaii. Some of the rebate money will stay in Alberta, where it isn't needed economically, and the rest will go elsewhere.

The rebate's unfair, too. The millionaire gets it, and so does the person on welfare. If the government wanted to help people on low incomes, the rebate is perverse.

Alberta already has Canada's lowest taxes. It also has the brightest future within Canada. The place is crying out for visionary political leadership. Instead, it gets cheesy rebates.

The paranoid right-wingers in Alberta think the rest of Canada lusts after Alberta's wealth. They're coming. Just you wait. They're cooking up another national energy program. As with all paranoia, it's not based on facts, just memories, fears and an ideological agenda.

No one in the rest of Canada wants to hold Alberta back. Instead, they want to grab hold of the province's coattails and soar into the future.

Alberta has an amazing opportunity to show Canada how to succeed in a globalized world driven by knowledge, innovation, research and brainpower.

The places in the world that hard-wire this message -- It's global, stupid! It's knowledge, stupid! -- into their genes will be the ones with the highest standards of living, the best jobs and the best social programs.

Alberta has the people, resources, wealth and power to lead. It needs the political vision to set high targets for a big-sky place.

So here are a few.

Make the province's two leading universities -- the University of Calgary and the University of Alberta -- rank in the world's top 50 by 2020. The ambition for the largest university, the U of A, should be No. 20 in '20. University operating budgets are rising by 6 per cent annually for the next three years (after years of previous neglect). The U of A has a terrific new president, Indira Samarasekara; she can aim for the top 20 if she gets the resources.

Make Alberta's school system, already one of the continent's best, the best in North America and one of the top two or three in the world. Alberta has the power to make this happen -- if the political leaderships exists.

Make Alberta's training systems, public and private, the best in Canada. Labour shortages are everywhere in the province's hot economy. It's going to take public investments in skills development and upgrading to keep abreast, or ahead, of demand.

Make Alberta one of the top two or three places for medical research in North America, and one of the top five in the world. Former premier Peter Lougheed's brilliant invention, the Alberta Heritage Fund, already finances medical research. It could do so much more. What does the world call the breakthrough in diabetes treatment? The Edmonton Protocol, because that's where the discoveries were made. Build on this legacy. On second thought, leap from it.

Make Alberta a continental leader in sustainable development. Don't just burn huge quantities of natural gas to develop the tar sands, because the carbon emissions will be huge. Finance urgent research into carbon sequestration, shipping and burying carbon, so that a virtuous circle is created of energy exploitation with diminished atmospheric impact.

Make Alberta the model for health-care experimentation. Help break Canada free from the existing model that is devouring public budgets everywhere, depriving governments of the ability to make more sensible investments in the future.

Make Alberta the country's fairest place. Shrink poverty, because poverty holds back development. Unequal societies are often less productive than more equal ones. Lower taxes don't necessarily mean high productivity, right-wing ideology notwithstanding. If they did, Finland wouldn't have the world's most productive economy.

Make every important decision revolve around this question: How does Alberta become the most outward-looking place in North America? The world isn't at all "flat," as one pundit pretends, but space is shrinking.

Alberta has a superb private sector, a competent civil service, creative people, an excellent work ethic, a can-do spirit, and natural resources in high demand. It's been hugely influential in reshaping how people elsewhere think about public issues, whether or not the province understands this influence.

Alberta has the power to do better than cutting cheques to itself. That's why its future political decisions are so important to Albertans, and to the rest of us.

jsimpson@globeandmail.ca



sqwalk.com
COMMENT:Well, we should be cooking up a national energy program, despite intimidation by Alberta.. We have health policy, environment policy, industrial policy, trade policy, but no energy policy.

Oh, let's see, it's the most important economic activity right now in the world. It's the largest resource economy in the country. It makes and breaks governments and nations. Energy is the stuff which is driving American international policy. And it pits little old Canada against the largest richest corporations the world has ever known.

And we shouldn't do a little national strategizing around it? Gimme a break. Of course we should, and it's only because Alberta Ottawa is afraid of an Albertan hissy-fit that it won't talk about what we so obviously need. Canada needs a national energy policy.

British Columbians are up in arms over the Kinder Morgan takeover of Terasen. You don't think that's the stuff of national energy policy? Kinder Morgan is the agent of US energy policy. Terasen should be a part of Canada's.

Canada's largest ever energy project is the Mackenze Gas Pipeline, controversial for a generation, and still the subject of intense debate. No policy guides its implementation or abandonment - oh, no - just a bunch of companies pushing their interests on government and indigenous peoples.

How about all the public discussion about using energy as a weapon in lumber wars with the US? And what about NAFTA and Canada's impossibly dumb commitment to ensure oil and gas keep flowing to the US? What about paced development, instead of market-driven expansion that does its thing without reference to local needs or sustainability. What about the fiscal and regulatory environment in which renewable energy could be thriving?

We need a national energy policy, and we should be developing it right now. - Arthur Caldicott
sqwalk.com

Posted by Arthur Caldicott on October 22, 2005

October 21, 2005

Ottawa to review U.S. takeover of Terasen

By PETER KENNEDY
Globe and Mail
Friday, October 21, 2005

VANCOUVER -- In an unusual move, Ottawa issued a public statement yesterday saying it will review U.S. energy giant Kinder Morgan Inc.'s proposed $6.9-billion takeover of Terasen Inc. to ensure that it will be of "net benefit" to Canada.

Facing opposition in British Columbia, Federal Industry Minister David Emerson is stepping aside from the review process to avoid conflict of interest allegations stemming from an earlier role as a director of Terasen, which was previously known as BC Gas.

"He will not be involved in the final decision on this investment," a spokesman for Mr. Emerson said, adding that Intergovernmental Affairs Minister Lucienne Robillard will be the one to approve the deal if it proceeds.

Mr. Emerson's decision to recuse himself comes after Terasen shareholders overwhelmingly approved the controversial takeover by Kinder Morgan, a Houston-based pipeline operator, at a meeting in Vancouver on Tuesday. The acquisition is widely seen as a strategic move by Kinder Morgan to gain a broad foothold in the Alberta tar-sands industry and to give Terasen more capital to expand the pipeline side of its business.

However, it has sparked a firestorm of criticism from citizens and politicians who worry about the ramifications of a U.S. firm gaining control of a Canadian company that supplies natural gas to 870,000 B.C. residents.

"We do not want the possibility that the U.S.A. Patriot Act will give the American government access to our billing records via Kinder Morgan," said David Askew, a member of the Vancouver chapter of the Council of Canadians.

Corky Evans, a B.C. New Democratic Party MLA, said the B.C. Utilities Commission, which is also reviewing the sale, should open up the transaction to public hearings before Canada's third-largest utility is sold to a U.S. company.

"This is about whether or not Canadians should be able to have a conversation about Canada before we sell a chunk of it," he said.

A spokesman for Mr. Emerson said Ottawa doesn't usually issue a statement to say that it is reviewing a transaction like the one involving Terasen. However, he said the decision to do so was due, in part, to criticism of the deal.

"I'm told that the B.C. Utilities Commission has received something like 5,000 e-mails on this, almost universally opposed," the spokesman said. "They tend to come from Canadian nationalists who don't want to see the company sold into foreign hands.'' Industry Canada has issued a statement saying there is an ongoing review of the transaction under the Investment Canada Act, which gives the federal government the ability to negotiate enforceable commitments with the investor during the review process. It also said that acquisitions that are subject to review under the act receive approval only when they demonstrate a net benefit to Canada.

Yesterday, B.C. Energy Minister Richard Neufeld said he preferred to offer no opinion on the transaction, saying it is up to the B.C. Utilities Commission to determine whether it is in the best interests of the citizens of British Columbia.

Posted by Arthur Caldicott on October 21, 2005

October 20, 2005

Share and share alike

By Donald Gutstein
Georgia Straight
Publish Date: 20-Oct-2005

The evening after the British Columbia government introduced legislation imposing a contract on the province's teachers, Michael Smyth interviewed British Columbia Teachers' Federation president Jinny Sims and Labour Minister Mike de Jong on his CKNW Nightline BC radio show. Smyth was argumentative and surly with Sims. He accused her of not being straight with the public. When he interviewed de Jong, Smyth was respectful and attentive. He sought de Jong's opinion; he disputed Sims's opinion. Smyth ended the segment with a promo for his next-day column in the Province.

The column continued his attack on teachers. Smyth accused Sims of displaying "predictable moral outrage", as if it had been fabricated for the cameras and tape recorders. He lambasted the union for its "militancy" and the NDP for its predictably "snuggly relations" with the teachers.

As for the government, Smyth informed us, Premier Gordon Campbell had to bring down the hammer because "the hammer.is the only thing the BCTF understands." The kindly but firm father applied the punishment he knew would hurt but would be good for his unruly children.

Several days later, his column and radio show spread some of the blame for the impasse to the government. Both sides were at fault, Smyth said and wrote. Government was responsible for provoking and baiting the teachers, among other factors.

It's as if he's creating his own echo chamber. He shouts "teachers are militant" or "government provoked the teachers" in one direction. He shouts it again in another. It bounces back from somewhere else, as other media pundits join in. Soon the message surrounds us and we don't know any more where it originated. The message seems to have always been out there, so it must be true.

Smyth is not alone in appearing on supposedly rival news outlets. Vancouver Sun political columnist Vaughn Palmer appears every morning on CKNW's Morning News With Philip Till. Palmer also hosts the Voice of BC show weekly on Shaw Cable 4. Keith Baldrey, Global TV's legislative bureau chief, is a weekly radio commentator on the "Cutting Edge of the Ledge" segment of the Bill Good Show on CKNW.

CKNW is one of 50 radio stations across Canada owned by Corus Entertainment, including four in Vancouver. Both Corus, which also owns 10 cable channels, and Shaw Cable-the second-largest cable system in the country-are controlled by the Shaw family of Calgary, whose net worth last year was $635 million.

Global TV, the Vancouver Sun, and the Province are owned by the Asper family of Winnipeg. The Aspers own major newspapers across Canada, the Global Television Network, eight cable channels, and the canada.com Web sites. This family was worth $1.09 billion in 2004.

When the Senate Communications Committee came to town earlier this year to study media concentration, it heard loudly and clearly that CanWest holds too much of the Vancouver English-language media market. The inevitable consequence, many presenters told the committee, is a reduced diversity of news and opinion available to citizens.

Now CanWest is sharing its people with Shaw and Corus. Reduce, reuse, and recycle are excellent concepts when applied to the environment; they are dangerous when practised by news media.

CTV, CHUM, and the Globe and Mail are small players in the Vancouver market. CBC radio and television are the only news organizations equal in size and scope to the giants. But after its recent labour troubles, the public broadcaster may be permanently weakened. That leaves industry leaders the Vancouver Sun, the Province, Global TV, and CKNW, and they're increasingly speaking with one voice.

Some of the connections between CanWest and Shaw-Corus are long-standing. The premier's brother, Michael Campbell, has had his Money Talks show on CKNW for years, and his Vancouver Sun business column is tired news. Vaughn Palmer has been doing his Voice of BC show for several years.

Others are more recent. Global TV anchor Jill Krop often hosts CKNW's The World Today. Weatherman Phil Reimer does the weather for the Sun and CKNW.

In January 2005, CKNW began airing Adler on Line, hosted by right-wing broadcaster Charles Adler from Winnipeg. Adler does a TV segment each night on Global Winnipeg, known as "Adler on Global", and he hosted CanWest's Global Sunday program in Calgary for several years.

CanWest News columnist Jonathan Manthorpe is a regular guest with John McComb's CKNW afternoon show discussing international affairs. Shell Busey writes a Sunday Homes column in the Province and hosts two weekend radio shows on CKNW.

If these exchanges were happening within one company, it would be called convergence. The late Izzy Asper once said his model in building his company was the Chicago Tribune. In the mid-'90s, the paper constructed a cable-television studio in the middle of its fourth-floor newsroom. Reporters who wrote stories in the day's paper would be interviewed in the evening about the story and add elements not included in the print version-at no extra pay, of course. Convergence was supposed to increase revenues and reduce costs.

But the exchanges are happening between separate companies. And not only are they sharing their human resources, they're writing and talking about each other.

On September 29, the Province ran a picture of CKNW reporter Leanne Yuzwa, who is noteworthy, perhaps, because she's a boxer.

On September 7, Fanny Kiefer returned to work as the ubiquitous host of Shaw Cable's Studio 4. The next day, the Province put her picture on the front page and ran a story and another picture inside. The Sun provided a long article.

A Province story about the epidemic of drug-overdose deaths in the Downtown Eastside near the end of August quoted just two sources: a police constable and CKNW. The Province E-Today section of August 12 carried a discussion about Philip Till's suitability as CKNW's morning-show host. Several days before that, Pete McMartin's Sun column discussed an on-air interview he had done with Till.

And that's just in a two-month period. Are CanWest and Shaw setting the stage for a merger that would create the largest media empire in Canada? Or are two of Canada's wealthiest families merely obsessed with cost-cutting by laying off staff and sharing whomever is left with the other guys, a kind of contracting-out to the competition?

CanWest's near-monopoly means that its commentators and columnists are the experts, not because they are most knowledgeable and well- informed but because they have the soapbox and no one else can compete. If another organization wants to be taken seriously, it grabs CanWest's experts.

These practices may be good for shareholders but they do little for readers and viewers. With so few major news organizations in the city, the pool of experts is shallow. They know each other, they interview each other, and they rarely disagree. The range of opinions is narrowed even further.

Sharing employees creates other concerns for the audience. Can CanWest ever report objectively on Corus or Shaw, or Corus on CanWest, if their most high-profile people are scurrying between the organizations? Can one reporter work simultaneously for two competing media organizations? Can one reporter use the facilities of one newsroom to write for another? Where is the reporter's loyalty when she obtains a scoop? What ethical issues might arise?

Certainly, the love-in between the two companies today is a far cry from the situation seven years ago when they were bitter rivals vying for the media empire of the late Frank Griffiths. When he died in 1994, Griffiths had assembled in Western International Communications the jewels of B.C. broadcasting: BCTV and CKNW, plus eight other television stations, 11 radio stations, interests in four cable channels, and a 54-percent interest in Canadian Satellite Communications, a satellite TV provider.

In 1997, Izzy Asper and son Leonard sat down opposite J.?R. Shaw and son Jim in a Toronto hotel to divvy up the WIC assets, but no deal was reached. Two years later, after bids, counterbids, and lengthy court challenges, a deal was finally reached-the one that had been before them all along. CanWest got the television stations; Shaw got CanCom and Corus, the radio stations, and the cable channels.

Leonard Asper became CEO of CanWest in 1999, and within a year he transformed the company from a money-spinning second-rate television network into a converged conglomerate with billions of dollars in debt after paying $3.2 billion for Conrad Black's major city daily newspapers and a half interest in the National Post (later increased to full ownership).

Jim Shaw took over in 1998 and turned his father's cable firm, the second-largest in Canada, into a diversified media empire of radio stations, cable channels, and Internet holdings, plus the leading Canadian animation house, Nelvana. Unfortunately, his empire was created just before 9/11, when advertising revenues tanked. Corus took several years to climb out of its hole back to profitability.

Corus compensated for lost advertising revenues by laying off as many staff as possible while still being able to run the operation. Less than a week after Corus received CRTC approval to take over the Women's Television Network, it axed 60 jobs. This followed an earlier company move to eliminate 100 jobs across the country, except for in the radio division. The radio cuts came next: 20 of the 155 full-time employees at the four Vancouver stations and 11 more in Edmonton. With its depleted resources, Corus needs CanWest.

The end game is not yet clear. Both companies seek an end to foreign-ownership restrictions. This would allow them to cash out. But opening Canada's media to control by people like Rupert Murdoch, who owns sham news service Fox News, is a nonstarter unless Stephen Harper and the Conservatives gain power. The Canadian Radio-television and Telecommunications Commission wouldn't necessarily turn them down, because it has become so supportive of what the industry wants.

Leonard Asper and Jim Shaw are probably having too much fun moving the dominoes around the board to want to sell. So they might do a deal.

Telus says the future is friendly, but in media the future is all about controlling content and distribution. CanWest has huge content resources but no electronic distribution systems such as cable or satellite TV to deliver them. Shaw-Corus has the cable and satellites but is light on content. Together they make a world-class powerhouse, at least domestically.

Such a combination would make the Aspers and Shaws even richer. But it would be a black day for Canadians, weakening our rights to receive the information we need to be informed citizens. The echo chamber would be made permanent and we would forever lose our bearings.

Meanwhile, Jim Pattison's AM600 pulled the plug on Rafe Mair's talk show last week. Mair ended up on that station after his popular CKNW show was cancelled by Corus several years ago, in part because he was critical on-air of Corus's cost-cutting measures. Who will tell those stories now?

Posted by Arthur Caldicott on October 20, 2005

October 18, 2005

China as Canada's No. 1 trade partner? Not likely

By Richard Gwyn
Toronto Star
18-Oct-2005

One of the first things China will do once it becomes a major customer for Canada's oil — as apparently is Prime Minister Paul Martin's policy — is to tell us to get lost when we next suggest that Beijing join the Kyoto Protocol to combat global warming.

The same answer will come winging across the Pacific should we complain about China's treatment of its democracy activists.

On these issues and many more like them, we will, if not actually get lost, then go silent as soon as China starts importing the rumoured 400,000 barrels a day of Alberta tar sands oil.

There's no argument whatever that Martin is absolutely right to go toe-to-toe with President George Bush and his administration over American failure to abide by the NAFTA panel ruling against it on the softwood lumber issue. The panel decision was unanimous. Three other panels have ruled the same way on the same issue.

Even The Wall Street Journal, usually a cheerleader for Bush, believes Washington should pay back the $5 billion it has collected in special charges on our lumber.

In economic terms, the lumber issue isn't that big a deal. Despite the discriminatory treatment, we're still selling a lot of the stuff across the border. But ignoring international law and thereby putting the NAFTA trade pact at risk is a very big deal indeed.

The best measure of how big a deal this is is that Americans, themselves, are getting nervous about their own behaviour.

On a trip to London last week, the State Department's legal counsel John Bellinger told reporters, "We are very interested in countering this perception that the U.S. doesn't have regard for international law." Earlier, Bellinger had said the same thing to the judges of the International Court of Justice at the Hague.

Bellinger's problem — and that of the U.S. in terms of its image around the world — is that "perception" is reality.

Thus, in Sunday's New York Times, columnist Nicholas Kristof wrote that, "The Bush administration's campaign to bully a poor country (by cutting off some aid) over the (International Criminal) court is cultivating more ill will toward the U.S. than extremists ever could have."

Bellinger himself had a hard time in London coming up with any significant current examples of the U.S. implementing the spirit and letter of international agreements. But, and this is a big but, "U.S. Bad" doesn't mean "China Good."

Of course, we should sell our logs and rocks to China, or to anybody. With the tar sands, though, there is the embarrassing fact that digging out the oil from it does more to heat the globe than any other oil project, by far.

But the notion of China as an alternative trade partner to the U.S. is pure fantasy. In fact, a double fantasy.

As trade partners go, China would make the U.S. look like a patsy.

Brazil, which entered into a much-touted, special trade agreement with China, is now going through an agonizing rethink because so few of the agreed return benefits (investments, infrastructure projects) have come through.

Also, for whatever we would get, we'd find ourselves paying a political surcharge. The surcharge of silence about China's repressive, authoritarian regime.

There'd be more than silence in the equation. The Chinese industrial and commercial system remains comprehensively corrupt. Bribes paid over there — as they have to be to get almost anything done — will come back here, in one way or another.

In the immortal words of the otherwise forgotten Social Credit leader Robert Thompson, "The Americans remain our best friends, whether we like it or not."

It would help, though, if they tried a bit harder to be a bit friendlier.



Richard Gwyn's column appears Tuesdays and Fridays. gwynR@sympatico.ca.

Posted by Arthur Caldicott on October 18, 2005

October 17, 2005

Fossil fuels are here to stay, says expert

Gordon Jaremko
CanWest News Service
Monday, October 17, 2005

Doom-and-gloom forecasts for gas, coal and oil are wrong, says SFU prof in a new book

EDMONTON -- Reports of the death of fossil fuels are greatly exaggerated, a prominent Vancouver scholar and public servant has concluded after a research odyssey burned off his preconceptions and academic training about energy.

"They call me the fossil fool now," Mark Jaccard joked recently between lectures he was giving in Edmonton.

But the Simon Fraser University professor and former chief executive officer of the British Columbia Utilities Commission was only half-kidding.

Cambridge University Press in England will this fall publish a book by Jaccard that breaks away from a recent gush of literature claiming current supply scares, price spikes and environmental resistance are the death rattles of oil, natural gas and coal. The volume will be titled Sustainable Fossil Fuels: The Unusual Suspect in the Quest for Clean and Enduring Energy.

It has been assumed for decades societies will gradually switch to renewable energy forms and wean themselves off oil, gas, coal and atomic power, Jaccard said.

But he concluded the assumptions he was taught were wrong. His forthcoming book forecasts that oil, gas and coal will still satisfy 58 per cent of world energy needs in the year 2100.

That market share will be down from today's 85 per cent but still require high production because total global consumption of all energy forms will grow as developing countries strive for North American-level living standards.

That includes China, whose seemingly endless industrial and transportation needs will see it battle the United States and other trading partners for investment opportunities in the Canadian oilsands. China now buys most of its imported oil from the Middle East, Indonesia and Africa. It is also expanding its presence in central Asia, a rapidly growing energy producing region, as well as South America.

Heating, cooking, transportation and electric power are bound to become steadily more expensive, Jaccard said. Costlier sources of fossil fuels will be tapped. Producers and consumers alike will face stricter environmental standards. Expensive alternatives such as wind and solar power will spread. A revival of atomic power awaits regions with the greatest need for new supplies.

But obtaining energy to maintain current living standards, and support new services and gadgets requiring energy, will not bankrupt North American consumers, Jaccard predicted.

By the end of this century energy will burn up about eight per cent of family budgets, he calculated. That will be up from today's six per cent but still barely half the 16 to 20 per cent of Canadian and American household money, work and time that went into gathering and preparing fuel and tending primitive appliances in 1900, Jaccard said.

Periodic cost increases above the long-range average trends are built into the global energy market and play a role in stimulating economic evolution, he suggested.

Current steep oil prices, for instance, are part of a natural trend to replace dwindling traditional supplies from conventional wells with costlier new sources such as Alberta's oilsands.

"Prices will jump around," Jaccard said. But governments can help make energy changes easier by introducing policies that help markets adapt to changing needs and technologies, he added.

For example, clear, long-range emissions-reduction targets should be set by climate change policy makers so industry can engineer new projects to make steady improvements, he said.

He urged Canada to try a system of "niche market regulation'' used in California. The state stimulated cuts in auto emissions and helped spawn hybrid electric and gasoline cars by requiring manufacturers to make small fractions of their fleets comply with low- to zero-pollution targets, Jaccard said.

CALCULATING THE TRUE COST OF ENERGY PRODUCTION

It takes energy to make energy -- and a lot of it -- in the northern Alberta oil sands.

Bitumen projects will burn 1.01 billion cubic feet of natural gas a day by late 2006, the National Energy Board says in a new forecast. That will be a 40-per-cent increase from 2004 and about twice as much gas as all the homes in Alberta burn.

The growth in gas consumption roughly matches the pace of increases in oilsands output, which is forecast to hit 1.2 million barrels per day by late 2006.

The consumption growth rate is expected to moderate as new projects adopt emerging methods of cutting their use of gas -- or making their own fuel -- for heat-driven bitumen extraction systems, synthetic-oil upgrading and power generation.

But energy will remain a big oilsands expense. FirstEnergy Capital Corp. forecasts that as production grows to two million barrels daily by 2010, annual operating costs will more than double to about $10 billion from $4 billion in 2004 with increasingly expensive gas driving much of the rise.

The Alberta government will pay a share of the tab. Oilsands royalties are collected on the net value of production to the industry, after subtracting expenses.

Ran with fact box "Calculating the True Cost of Energy Production", which has been appended to the end of the story.

© The Vancouver Sun 2005

Posted by Arthur Caldicott on October 17, 2005

October 15, 2005

Kitimat selected for Enbridge's Gateway Pipeline

Kitimat, B.C., Selected as End-Site Location for Enbridge's Gateway Project
Enbridge news release, 14-Oct-2005
$4-billion pipeline to land in Kitimat
Scott Simpson, Vancouver Sun, 15-Oct-2005

sqwalk.com
COMMENT:Good news in Kitimat; Disappointment in Prince Rupert, the other potential terminal location for the proposed Gateway Pipeline, which - if built - will transport oil from Alberta's oilsands to China and other markets, including, possibly, the US. A Chinese company has already secured half the capacity of the Gateway project. (link)

Dashed hopes at Fortune Minerals, as well, which appears to have won a quiet move by the federal government to sell Ridley Island Terminals near Prince Rupert (link). Revenues from the Gateway project will not now be part of Ridley Island's future.

It won't look like boom town in Kitimat for a while, as the Methanex plant closes on November 1 and 125 or so people are out of jobs. But EnCana has an option on the Methanex site for a "soluent" terminal facility (link), and Gateway is actually two pipelines, the oil export pipe, and a "condensate" import pipe. Even if the EnCana project and the Enbridge condensate project eventually become just one project, Kitimat is going to be busy. Then there's the Galveston Kitimat LNG project on the books as well, proceeding through a BC environmental assessment with little fanfare. (link)

But the big issue: oil tankers in Douglas channel. There's some understanding that a tanker moratorium is in place on the coast. Does it apply to the oil tankers that will be taking Gateway oil to China and elsewhere? What do the Haisla and Haida think of this? What do the salmon think of this?




Kitimat, B.C., Selected as End-Site Location for Enbridge's Gateway Project

NEWS RELEASE TRANSMITTED BY CCNMatthews Printable Version
FOR: Enbridge Inc.

TSX SYMBOL: ENB
NYSE SYMBOL: ENB

OCT 14, 2005 - 12:30 ET

CALGARY, ALBERTA--(CCNMatthews - Oct. 14, 2005) - Enbridge Inc. (TSX:ENB) (NYSE:ENB) is pleased to announce that after months of fieldwork, Kitimat, British Columbia, has been selected as the end-site location for the proposed Gateway Project. Key factors in the decision to select Kitimat were the deepwater port and abundant industrial land.

"Enbridge is very excited about the Gateway Project and what it will mean to the North Coast of British Columbia," said Art Meyer, President of Gateway Pipeline Inc. "We believe this project will bring economic benefits not only to Kitimat, but the entire region during both the construction and operation phases."

The Gateway Project is estimated to cost approximately $4 billion and will consist of a petroleum export pipeline and a condensate import pipeline along the same right-of-way, and a marine terminal. The pipeline will run from Strathcona County, near Edmonton, to Kitimat.

"The Gateway Project is good news for Kitimat and will provide many opportunities for our community in the future," said Mayor Richard Wozney of the District of Kitimat. "We have worked hard over the last number of months to attract Enbridge as a corporate citizen and look forward to working with them."

The Gateway Project is expected to generate thousands of direct jobs during construction and up to 75 permanent jobs for the operation of the pipeline, marine terminal and related facilities.

Over the past three years Enbridge has met with communities and First Nations, interest groups and governments to discuss the Gateway Project and is committed to open and transparent consultation about the project.

Once commercial certainty and regulatory approval are achieved for the Gateway Project, Enbridge anticipates starting construction in 2008, with the pipeline being operational in 2010.

Gateway Pipeline Inc. is a wholly owned affiliate of Enbridge Inc. that has been created to manage the development of the Gateway Pipeline.

Enbridge Inc., a Canadian company, is a leader in energy transportation and distribution in North America and internationally. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world's longest crude oil and liquids transportation system. The Company also has international operations and a growing involvement in the natural gas transmission and midstream businesses. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State. Enbridge employs approximately 4,400 people, primarily in Canada, the U.S. and South America. Enbridge's common shares trade on the Toronto Stock Exchange in Canada and on the New York Stock Exchange in the U.S. under the symbol ENB. Information about Enbridge is available on the Company's web site at www.enbridge.com.

Certain information provided in this news release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Although Enbridge believes that these statements are based on information and assumptions that are current, reasonable and complete, these statements are necessarily subject to a variety of risks and uncertainties pertaining to operating performance, regulatory parameters, weather, economic conditions and commodity prices. You can find a discussion of those risks and uncertainties in our Canadian securities filings and American SEC filings. While Enbridge makes these forward-looking statements in good faith, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. Enbridge assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

BACKGROUND INFORMATION ON THE ENBRIDGE GATEWAY PROJECT

- The Gateway Project, estimated to cost approximately $4 billion, involves the proposed development of two new pipelines, a new marine terminal, tankage, pumping stations and related facilities.

- The Gateway Project will run from Strathcona County near Edmonton to Kitimat, British Columbia.

- Key factors in the decision to select Kitimat as the end-site location for the pipeline were the deep-water port and abundant industrial land.

- The pipeline will be 1,200 kilometres in length.

- The petroleum export pipeline will be 30-inches in diameter and designed to move an average of 400,000 barrels per day.

- The condensate import pipeline will be 20-inches in diameter and designed to move an average of 150,000 barrels per day.

- Condensate is a by-product of natural gas production and is used as feedstock to oil refineries but its primary use in Western Canada is to dilute heavy oil for easier transport by pipeline.

- Certified marine tankers will be used to either import condensate or export petroleum. The marine terminal will include tankage, emergency response equipment, tanker births and other related facilities.

- Enbridge anticipates filing the National Energy Board application for the Gateway Project in April 2006, beginning construction in 2008 and having the pipeline operational in 2010.

- The socio-economic benefits during construction of the project are estimated at $1.52 billion in BC and $1.26 billion in Alberta.

- During the operation of the Gateway Project, the socio-economic benefits are estimated at $107 million per year in BC and $60 million per year in Alberta.

- The Gateway Project is an important part of Canada's energy future and will help ensure there is enough capacity to transport new oil expected from Canada's oil sands in the years to come.

FOR FURTHER INFORMATION PLEASE CONTACT: Enbridge Inc.
Jim Rennie
News media:
(403) 231-3931
Email: jim.rennie@enbridge.com

or

Enbridge Inc.
Bob Rahn
Investment community:
(403) 231-7389
Email: bob.rahn@enbridge.com
Website: www.enbridge.com

or

NATIONAL Public Relations
Michelle Ward
(604) 970-5901
Email: mward@national.ca

TOP



$4-billion pipeline to land in Kitimat

GATEWAY I Enbridge project means thousands of jobs for northwest B.C.

Scott Simpson
With files from Leanne Ritchie, Prince Rupert Daily News
Vancouver Sun
October 15, 2005

The final decision on a Pacific terminal for Enbridge's $4-billion Gateway pipeline project came down to money, with Kitimat announced Friday as the Calgary company's preferred location.

The sprawling pipeline project, slated to span some 1,200 kilometres from Edmonton to the Pacific Ocean, is expected to create a mini-job boom and economic spinoffs worth about $1.5 billion for the B.C. economy.

A route to Prince Rupert would have cost at least $500 million more than Kitimat, although an Enbridge spokesman said communities across northern British Columbia will benefit from the project.

The company expects unspecified "thousands" of jobs during a two-year construction phase and about 75 permanent jobs including about 35 at the terminal in Kitimat.

Gateway Pipeline Inc. president Art Meyer said economic spinoffs will include materials purchases, construction jobs and indirect employment.

The company hopes to gain all regulatory approvals by 2007 and have the pipeline operational by 2010.

"Certainly this is great news for Kitimat, and Terrace, and the region," said Kitimat Mayor Richard Wozney, who was in Terrace for the announcement.

"We welcome this industrial investment. I think it will be a great addition to our community and to our private port operation in Kitimat.

"This will add to our reputation as being somewhat of an energy hub and a petrochemical centre. We hope they will get through all of their regulatory approvals, start construction in 2008 and be in operation in 2010."

Gateway involves twin pipelines between Kitimat and Edmonton -- a condensate line taking oil-thinning materials east from a terminal in Kitimat to oil processing facilities in Alberta, and a larger petroleum line carrying crude oil to the West Coast.

The project must still address regulatory and market hurdles -- including signing up enough pipeline customers to make the lines economic.

Meyer noted during a teleconference with reporters that the proposed condensate line already has strong support from shippers.

Later this month Enbridge will embark on an "open season" for expressions of interest from shippers for the petroleum line -- which passed a major milestone earlier this year when PetroChina signed a memorandum of understanding for half its capacity.

"We have decided on Kitimat as the end point for the pipeline. That's really been based on economic criteria, as well as the deep water port and industrial land that's available in the area. But the primary factor was economic and a business case determined Kitimat was the most appropriate choice," Meyer said.

"With that said, we certainly do see this project being an economic benefit to the entire region and we've been pleased to work with all communities in the region to pursue that.

"We are looking forward to working hard over the next while to make this vision a reality, both through the phase in which we will be confirming commercial certainty, then through the regulatory approval process, and finally into construction."

Meyer said the pipeline route to Prince Rupert was longer, but it would have meant a shorter travel time for tankers plying the route from a B.C. terminal to potential markets in California and Asia.

TOP

Posted by Arthur Caldicott on October 15, 2005

The Other Hurricane
Has the Age of Chaos Begun?

By Mike Davis
TomDispatch.com
October 6, 2005

The genesis of two category-five hurricanes (Katrina and Rita) in a row over the Gulf of Mexico is an unprecedented and troubling occurrence. But for most tropical meteorologists the truly astonishing "storm of the decade" took place in March 2004. Hurricane Catarina -- so named because it made landfall in the southern Brazilian state of Santa Catarina -- was the first recorded south Atlantic hurricane in history.

Textbook orthodoxy had long excluded the possibility of such an event; sea temperatures, experts claimed, were too low and wind shear too powerful to allow tropical depressions to evolve into cyclones south of the Atlantic Equator. Indeed, forecasters rubbed their eyes in disbelief as weather satellites down-linked the first images of a classical whirling disc with a well-formed eye in these forbidden latitudes.

In a series of recent meetings and publications, researchers have debated the origin and significance of Catarina. A crucial question is this: Was Catarina simply a rare event at the outlying edge of the normal bell curve of South Atlantic weather -- just as, for example, Joe DiMaggio's incredible 56-game hitting streak in 1941 represented an extreme probability in baseball (an analogy made famous by Stephen Jay Gould) -- or was Catarina a "threshold" event, signaling some fundamental and abrupt change of state in the planet's climate system?

Scientific discussions of environmental change and global warming have long been haunted by the specter of nonlinearity. Climate models, like econometric models, are easiest to build and understand when they are simple linear extrapolations of well-quantified past behavior; when causes maintain a consistent proportionality to their effects.

But all the major components of global climate -- air, water, ice, and vegetation -- are actually nonlinear: At certain thresholds they can switch from one state of organization to another, with catastrophic consequences for species too finely-tuned to the old norms. Until the early 1990s, however, it was generally believed that these major climate transitions took centuries, if not millennia, to accomplish. Now, thanks to the decoding of subtle signatures in ice cores and sea-bottom sediments, we know that global temperatures and ocean circulation can, under the right circumstances, change abruptly -- in a decade or even less.

The paradigmatic example is the so-called "Younger Dryas" event, 12,800 years ago, when an ice dam collapsed, releasing an immense volume of meltwater from the shrinking Laurentian ice-sheet into the Atlantic Ocean via the instantly-created St. Lawrence River. This "freshening" of the North Atlantic suppressed the northward conveyance of warm water by the Gulf Stream and plunged Europe back into a thousand-year ice age.

Abrupt switching mechanisms in the climate system – such as relatively small changes in ocean salinity -- are augmented by causal loops that act as amplifiers. Perhaps the most famous example is sea-ice albedo: The vast expanses of white, frozen Arctic Ocean ice reflect heat back into space, thus providing positive feedback for cooling trends; alternatively, shrinking sea-ice increases heat absorption, accelerating both its own further melting and planetary warming.

Thresholds, switches, amplifiers, chaos -- contemporary geophysics assumes that earth history is inherently revolutionary. This is why many prominent researchers -- especially those who study topics like ice-sheet stability and North Atlantic circulation -- have always had qualms about the consensus projections of the Intergovernmental Panel on Climate Change (IPCC), the world authority on global warming.

In contrast to Bushite flat-Earthers and shills for the oil industry, their skepticism has been founded on fears that the IPCC models fail to adequately allow for catastrophic nonlinearities like the Younger Dryas. Where other researchers model the late 21st-century climate that our children will live with upon the precedents of the Altithermal (the hottest phase of the current Holocene period, 8000 years ago) or the Eemian (the previous, even warmer interglacial episode, 120,000 years ago), growing numbers of geophysicists toy with the possibilities of runaway warming returning the earth to the torrid chaos of the Paleocene-Eocene Thermal Maximum (PETM: 55 million years ago) when the extreme and rapid heating of the oceans led to massive extinctions.

Dramatic new evidence has emerged recently that we may be headed, if not back to the dread, almost inconceivable PETM, then to a much harder landing than envisioned by the IPCC.

As I flew toward Louisiana and the carnage of Katrina three weeks ago, I found myself reading the August 23rd issue of EOS, the newsletter of the American Geophysical Union. I was pole-axed by an article entitled "Arctic System on Trajectory to New, Seasonally Ice-Free State," co-authored by 21 scientists from almost as many universities and research institutes. Even two days later, walking among the ruins of the Lower Ninth Ward, I found myself worrying more about the EOS article than the disaster surrounding me.

The article begins with a recounting of trends familiar to any reader of the Tuesday science section of the New York Times: For almost 30 years, Arctic sea ice has been thinning and shrinking so dramatically that "a summer ice-free Arctic Ocean within a century is a real possibility." The scientists, however, add a new observation -- that this process is probably irreversible. "Surprisingly, it is difficult to identify a single feedback mechanism within the Arctic that has the potency or speed to alter the system's present course."

An ice-free Arctic Ocean has not existed for at least one million years and the authors warn that the Earth is inexorably headed toward a "super-interglacial" state "outside the envelope of glacial-interglacial fluctuations that prevailed during recent Earth history." They emphasize that within a century global warming will probably exceed the Eemian temperature maximum and thus obviate all the models that have made this their essential scenario. They also suggest that the total or partial collapse of the Greenland Ice Sheet is a real possibility -- an event that would definitely throw a Younger Dryas wrench into the Gulf Stream.

If they are right, then we are living on the climate equivalent of a runaway train that is picking up speed as it passes the stations marked "Altithermal" and "Eemian." "Outside the envelope," moreover, means that we are not only leaving behind the serendipitous climatic parameters of the Holocene -- the last 10,000 years of mild, warm weather that have favored the explosive growth of agriculture and urban civilization -- but also those of the late Pleistocene that fostered the evolution of Homo sapiens in eastern Africa.

Other researchers undoubtedly will contest the extraordinary conclusions of the EOS article and -- we must hope -- suggest the existence of countervailing forces to this scenario of an Arctic albedo catastrophe. But for the time being, at least, research on global change is pointing toward worst-case scenarios.

All of this, of course, is a perverse tribute to industrial capitalism and extractive imperialism as geological forces so formidable that they have succeeded in scarcely more than two centuries -- indeed, mainly in the last fifty years -- in knocking the earth off its climatic pedestal and propelling it toward the nonlinear unknown.

The demon in me wants to say: Party and make merry. No need now to worry about Kyoto, recycling your aluminum cans, or using too much toilet paper, when, soon enough, we'll be debating how many hunter-gathers can survive in the scorching deserts of New England or the tropical forests of the Yukon.

The good parent in me, however, screams: How is it possible that we can now contemplate with scientific seriousness whether our children's children will themselves have children? Let Exxon answer that in one of their sanctimonious ads.

Mike Davis is the author of many books including City of Quartz, Dead Cities and Other Tales, and the just published Monster at Our Door, The Global Threat of Avian Flu (The New Press) as well as the forthcoming Planet of Slums (Verso).

Copyright 2005 Mike Davis

This was originally published as a tomgram at TomDispatch.com
"a regular antidote to the mainstream media"

Posted by Arthur Caldicott on October 15, 2005

October 13, 2005

Martin dismisses criticism from Klein
that oil is Alberta's to sell

Greg Bonnell
Canadian Press
Thursday, October 13, 2005

sqwalk.com
COMMENT: Albertans are as intelligent and industrious as other Canadians. But that's it. They're not smarter than the rest of us. They don't work harder than the rest of us. They're not more deserving or entitled than other Canadians. But they're a hell of a lot richer than the rest of us.

Albertans don't pay provincial sales tax. They don't have a provincial debt. They're constant contributors to national accounts. Lucky them. And that's all it is. Luck of geographical placement.

Yet Ralph Klein gloats about his province's economy as if he made it all happen, as if Albertans earned the riches. His province is not rich because of special business acument. It's because they "have" most of Canada's oil and gas. Alberta would be debt free and Klein's voters rich, even if he were permanently pissed to the eyeballs and unable to stand up between elections. What's fair or just about that?

By today's rules, what's under Alberta isn't Canada's oil and gas. It is Alberta's. (Actually, it belongs now to whatever corporations Alberta has sold the rights to. Alberta keeps some, in the form of royalties, but most of it is handed over to the corporations. Corporations which are rolling in unprecedented profits. Undeserved, unearned profits. But that's another rant.)

This is not right. It's time to rewrite the deal. Canada's environment belongs to all of us, and it's our national duty to protect it. Canada's natural resources should belong to all of us, and it's time to change the deal. Time for Canada to stand up to Alberta's bullying and claim substantially more of the benefits for all Canadians of all that fossil fuel wealth.

Paul Martin is playing that old electoral strategy that makes the US a foe. George Bush makes that easy to do right now. "BC vs Ottawa" has been a winning gambit for decades. Alberta has played the same game against Ottawa at least ever since Trudeau's National Energy Program in 1980.

Martin has nothing to lose in Alberta, and plenty to win in the rest of the country. Maybe it's time to get ugly with Klein.

I can already hear the whining about "National Energy Program II" starting in Alberta and BC. Yep.

And how to stay the course when those bloated oil and gas corporations turn their bankrolls to bringing down a government.
sqwalk.com

OWEN SOUND, Ont. (CP) - Prime Minister Paul Martin was on the defensive Wednesday about his government's role in promoting Canada's commodities, a day after Alberta Premier Ralph Klein told Ottawa to keep its hands off of his province's resources.

"Of course the federal government has a role in trying to open markets, new markets, and we will continue to do that," Martin told reporters in Owen Sound, Ont., where he met with community leaders. He was responding to criticism from Klein, who has pointedly said his province's petroleum isn't the prime minister's to sell.

"I'm not trying to pick a fight with anybody. I just want the Americans to live up to the terms of the NAFTA agreement, both in letter and spirit," Martin later told reporters at an event in Petersburg, Ont., near Kitchener.

Martin slammed the U.S. for continuing to impose duties on Canadian softwood lumber, while also hinting that countries such as China and India are becoming a more lucrative market for Canadian oil that the U.S. needs.

Washington is refusing to recognize a trade panel's final ruling that said U.S. duties on Canadian softwood are unwarranted.

Martin and other government leaders have been careful not to directly link the softwood conflict with punishment for the United States on other trade fronts.

But speaking to a Wall Street audience last week, Martin warned that the softwood dispute is threatening the integrity of the continental trade pact and future economic relations.

Martin said Wednesday that business leaders have encouraged his government to develop more markets for a range of Canadian commodities.

"That should not be a disagreement with Mr. Klein. In fact, I would have expected Mr. Klein to really support our position, given the importance of his own cattle producers," he said.

Klein said Wednesday in Edmonton that he in fact does support Martin trying to open new markets for Canadian products.

"I think that what we have here is a media thing. I don't care if he wants to sell and promote our oil but it's not his to sell. That is the only point I was trying to make."

The Opposition, meanwhile, renewed calls for Martin to get tough with U.S. President George W. Bush to solve the longstanding softwood lumber problem.

Conservative Leader Stephen Harper said the United States needs to be reminded of its legal obligation to comply with NAFTA rulings.

"If the U.S. has some difficulty with that . . . then this is going to have repercussions," he told reporters in Vancouver Wednesday.

The U.S. has collected $5 billion in duties on softwood imports since May 2002, hurting Canadian companies which export lumber south of the border.

© The Canadian Press 2005

Posted by Arthur Caldicott on October 13, 2005

October 12, 2005

Secret firm backs bid for Ridley Terminals

Mining officials slam Ridley sale
Peter O'Neil, Vancouver Sun, 10-Oct-2005
B.C. coal miners object to terminal plan
Peter Kennedy, Globe and Mail, 11-Oct-2005
Fortune responds to Vancouver Sun article regarding Ridley Terminals Inc.
Fortune Minerals news release, 11-Oct-2005
Secret firm backs bid for Ridley Terminals
Peter O'Neil, Vancouver Sun, 12-Oct-2005
Shippers have 'huge concern' about Ottawa's handling of coal terminal
Don Whiteley, Vancouver Sun, 12-Oct-2005
Bidder offered a fraction of Ridley's cost
Peter O'Neil, Vancouver Sun, 24-Oct-2005

sqwalk.com
COMMENT: What a wierd situation this is, in which corporations are whining to government to interfere on their behalf against other corporations. Big guys whining about little guys, no less. These are corporations which have invested a fortune, so to speak, in putting governments in place which generally march in time to the hands-off tune of these same corporations. Corporations which were upstaged by Fortune Minerals, not quite one of their own.

BC's other coal port, Westshore Terminals at Roberts Bank had revenues last year of some $127 million dollars. Net earnings were $48 million. In the first six months of 2005, revenues of the Westshore Terminals Income Trust jumped to $76 million and net earnings of $27 million. This is no penny-ante operation ekeing out a tough living. It's no wonder Teck Cominco et al want a piece of the Ridley Terminals action now that the coal business, especially, is booming in the north.

Westshore Terminals is owned by BC's own King Midas, Jim Pattison. Over 90% of Westshore's business is derived from a comfortable relationship with the "Coal Partnership" - essentially Teck Cominco, Fording (with substantial Teck Cominco ownership) and Elk Valley Coal Corporation (which is largely a Teck Cominco and Fording entity).

One might ask, however, why the federal government was okay with operating the Ridley Terminal for the years it was losing money, but feels it necessary to privatize the thing just when it looks like it is poised to make substantial profits - and on highly suspect giveaway terms.
sqwalk.com



Mining officials slam Ridley sale


Association says Prince Rupert facility shouldn't go to Ontario firm

Peter O'Neil
Vancouver Sun
Monday, October 10, 2005

162619-54076.jpg
CREDIT: Glenn Baglo, Vancouver Sun Files
Ridley Terminals coal-loading facility near Prince Rupert.

OTTAWA -- The federal and B.C. governments, despite touting a "Pacific Gateway" initiative to help Canada exploit booming Asian markets, are acting against the interests of Western Canadian resource exporters by planning to sell off the Ridley Terminals facility to an Ontario-based junior mining firm, says a mining industry official.

The Mining Association of B.C. said Transport Minister Jean Lapierre should take a second look at a proposal by five resource companies from Vancouver and Calgary, including mining giant Teck Cominco, to buy and operate the Ridley coal shipping facility in Prince Rupert.

Association president Michael McPhie said the coalition will ensure that Canadian shippers are charged shipping fees low enough to allow them to compete with Australian firms.

McPhie said he realizes that Lapierre is anxious to get rid of money-losing Ridley, which cost taxpayers $250 million in the early 1980s and is believed to be on the market for a tiny fraction of that price.

"But I don't think expediency should be a driver for making good or bad decisions," he said, adding that Lapierre's move contradicts political promises to make it easier for Canada to trade with China and India.

Lapierre has confirmed that Fortune Minerals Ltd., a London, Ont.-based mining firm with no revenue-producing properties, is the front-runner to acquire the Crown corporation, which he said is costing taxpayers $500,000 a month in subsidies. Fortune stresses that it has $20 million in cash and three mining properties, including one coal project in northern B.C., nearing production stage.

But a group of five resource firms based in B.C. and Alberta say the federal government should re-open bidding to allow them to buy and operate Ridley as a kind of co-operative that is focused on keeping shippers' costs down.

The group is called the Ridley Shippers Coalition and is made up of Teck Cominco, Northern Energy and Mines, and Western Canadian Coal, all based in Vancouver. Sumitomo Canada, a subsidiary of a giant Japanese firm, and Grand Cache Coal, both based in Calgary, are also part of the coalition.

Fortune president Robin Goad said Friday he will issue a news release before markets open Tuesday to confirm The Vancouver Sun's disclosure that his company, along with an unidentified corporate partner, are poised to acquire Ridley.

He ridiculed the coalition's position that the terminal should be shipping resources at below-market prices.

"It's nonsense. How many businesses operate not-for profit?" Goad said.

Goad also confirmed that he asked Lapierre to prevent Ridley management from signing long-term contracts before the sale is complete.

The unusual move by Lapierre, who had cabinet issue an order under the Financial Administration Act, was necessary because Ridley wanted to sign contracts -- and hand over some of its assets -- at below-market costs.

He said some of Ridley's putative customers were members of the same coalition trying to buy the Crown corporation.

The federal government is preparing legislation and budgeting at least $500 million as a down payment to advance the gateway concept that's aimed at improving port, road and rail infrastructure on the West Coast.

"It makes geographic sense that British Columbia become the nexus of trans-Pacific trade, the gateway to Asia," Prime Minister Paul Martin said in a speech earlier this month, echoing early statements from B.C. Premier Gordon Campbell.

"But make no mistake: the further development of the Pacific Gateway will benefit not only B.C., and not only the West, but all of Canada. Indeed, when we say that Canada is much greater than the sum of its parts, this is the kind of example we can point to."

The B.C. government said earlier this year it would consider buying Ridley, but recently wrote to Lapierre saying it is satisfied with Ottawa's plans to privatize the facility.

Lapierre said the provincial government is satisfied that a sale to Fortune wouldn't be contrary to the interests of the resource industry.

poneil1@hotmail.com

© The Vancouver Sun 2005

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B.C. coal miners object to terminal plan


Ottawa names Ontario firm as preferred bidder for sole operator of gateway

By PETER KENNEDY
Globe and Mail
Tuesday, October 11, 2005


VANCOUVER -- British Columbia's mining industry is urging Ottawa to reconsider a process that could make a small Ontario company the sole operator of a B.C. shipping terminal that is emerging as a key gateway for Asia-bound coal shipments from Western Canada.

The plea comes after the federal Ministry of Transport named Fortune Minerals Ltd. of London, Ont., as the preferred bidder among the roughly 60 companies that expressed interest in buying the Ridley Island coal terminal at Prince Rupert.

B.C. Mining Association president Michael McPhie said rising coal prices and the prospect of soaring port shipments in the next few years has made Ridley a "strategically important asset" for the province's resource sector.

"Having a single operator running the terminal with a profit motive could seriously comprise access in the future," he said.

Mr. McPhie said the industry wants Ottawa to consider an alternative proposal from a coalition of northwestern coal producers, including Teck Cominco Ltd., Northern Energy and Mining Inc. and Western Canadian Coal Corp.

Ridley Terminals Inc. president Greg Slocombe agrees that Ottawa should consider the coalition's plan to run the terminal in a co-operative environment where all of the members share in the costs and the risks. "Why not put it in the hands of those who are going to own and operate it as a cost centre," Mr. Slocombe said.

By making the terminal available to the industry at large, he said Ottawa can help the Canadian coal sector compete with rivals in Australia that run their terminals as a co-operative and benefit from closer proximity to sea ports.

The controversy over ownership has arisen two years after Ottawa put the terminal up for sale. At that time, the Prince Rupert region was facing the economic consequences of its declining fishing and forestry sectors.

But because of rising coal prices and the development of new mines in B.C. and Alberta, coal shipments through Prince Rupert are expected to soar in the next few years, reaching up to eight million tonnes annually by 2008, compared with 1.3 million last year, according to Ridley Terminals estimates.

Vancouver-based Hillsborough Resources Ltd. expects to boost shipment levels after signing a preliminary deal to develop a basket of B.C. coal properties in a joint venture with the coal division of Anglo American PLC of South Africa.

"We are aghast that the federal government would consider a private company as the sole owner of that facility," Hillsborough president David Slater said.

A spokeswoman for federal Transport Minister Jean Lapierre confirmed that ministry officials are in talks with Fortune Minerals, which was named the primary bidder following a request-for-proposals process that she described as both "legal and open.'' But she said no final decision on who gets to operate the terminal will be made until the company's proposal is reviewed by a cabinet committee.

In an interview, Fortune Minerals president Robin Goad said fears that his company will limit access to the terminal, if it is allowed to buy the site, are "groundless."

"As part of our proposal we are providing guarantees to the federal and [B.C.] provincial governments that we will provide free and open access to all bulk shippers on a commercially competitive basis," he said. "We have guaranteed to maintain the facility as a bulk handling terminal with priority being given to coal."

Fortune is a junior exploration company that is developing the Mount Klappan coal project, about 300 kilometres northeast of Prince Rupert. It is one of two partners in a private company that hopes to acquire and operate the Ridley Terminal. The other partner is a yet-to-be-named B.C. firm with significant experience in shipping and handling bulk material, Mr. Goad said.

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Fortune responds to Vancouver Sun article regarding Ridley Terminals Inc.

News Release
Fortune Minerals
10/11/05


Issued Capital: 34,037,573

LONDON, ON, Oct. 11, 2005 (Canada NewsWire via COMTEX) --
Fortune Minerals Limited (TSX-FT) is responding to an article that appeared last Friday in the Vancouver Sun newspaper, which quoted federal Transport Minister, Mr. Jean Lapierre as indicating that Fortune has been selected as the primary bidder for Ridley Terminals Inc. (RTI), a Crown Corporation that owns and operates the Ridley Island coal terminal in the City of Prince Rupert, British Columbia. RTI operates on lands under lease from the Prince Rupert Port Authority, which is also a Federal Crown Corporation.

Fortune confirms that it is a shareholder of Northwest Bulk Terminals Inc. (NBTI), a private company that has submitted a proposal to Transport Canada (TC) to purchase the assets of RTI pursuant to a tendered "Request for Proposal" process. The other shareholder in NBTI is a British Columbia company with expertise in handling bulk materials. NBTI is in discussions with representatives of TC with respect to such a purchase. Completion of the proposed transaction would be subject to various conditions.

Prince Rupert has an ice-free, deepwater harbour and is the closest port in North America to Asia in terms of sailing time. It is also a western terminus for the Canadian National Railway Company. The coal terminal was built by the federal government in the 1980's to load and export coal from the past producing Quintette and Bullmoose coal mines in northeast British Columbia. The facility has an annual capacity of approximately 16 million tonnes.

NBTI has a business plan, which it believes will make the Ridley terminal profitable. The proposed acquisition presents a significant opportunity for Fortune to participate in Asian economic growth through this major conduit for Canadian sourced commodities. The terminal is located 330km southwest of the Company's Mount Klappan anthracite coal project, which was recently assessed in a positive, full feasibility study expected to be released shortly.

Fortune Minerals is a diversified natural resource company with seven mineral deposits and a number of exploration projects, all located in Canada. They include the Mount Klappan anthracite coal deposits in British Columbia, and the NICO cobalt-gold-bismuth deposit, the Sue-Dianne copper-silver deposit and other base and precious metals exploration projects in the Northwest Territories. Fortune is the managing partner of Formosa Environmental Aggregates Ltd., an industrial mineral company developing the Greenock high calcium limestone quarry in Ontario. Fortune Minerals is a company focussed on outstanding performance and growth of shareholder value through assembly and development of high quality mineral resource projects.

SOURCE: Fortune Minerals Limited

please contact: Fortune Minerals Limited: Robin Goad, President, Julian Kemp, Vice President, Jennifer Gauthier, Executive Assistant, Tel.: (519) 858-8188, Fax: (519) 858-8155, info@fortuneminerals.com, www.fortuneminerals.com; Renmark Financial Communications Inc.: John Boidman: jboidman@renmarkfinancial.com; Sylvain Laberge: slaberge@renmarkfinancial.com; Henri Perron: hperron@renmarkfinancial.com; Media:
Cynthia Lane: clane@renmarkfinancial.com, Tel.: (514) 939-3989, Fax: (514) 939-3717,
www.renmarkfinancial.com;

To request a free copy of this organization's annual report, please go to http://www.newswire.ca and click on reports@cnw.
Copyright (C) 2005 CNW Group. All rights reserved.

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Secret firm backs bid for Ridley Terminals



Peter O'Neil
Vancouver Sun
Wednesday, October 12, 2005

OTTAWA -- An unidentified B.C. company is backing the bid by Fortune Minerals, a small Ontario resource firm with no operating revenues, to acquire the Ridley Terminals coal-shipping facility from the federal government over the objections of the B.C. mining industry, Fortune's president said Tuesday.

"This is not an east-versus-west issue, which some people are trying to make it sound like," said Robin Goad, who added that the mystery company has experience in the area but doesn't want its identity publicized.

Fortune, in a news release Tuesday confirming The Vancouver Sun's report last week that it was the lead bidder for Ridley Terminals, said it was in fact bidding for Ridley through a private company called Northwest Bulk Terminals Inc.

"The other shareholder in NBTI is a British Columbia company with expertise in handling bulk materials," Fortune said in the release.

Goad said the company is a private firm that doesn't want its identity exposed. NBTI was incorporated last December in Ontario, and lists only two individuals connected to the company, both as administrators: Goad and Fortune chairman Georges Michel Doumet, a Vancouver businessman and president of Federal White Cement Ltd., an Ontario company.

Goad would neither confirm nor deny rumours that B.C. billionaire Jim Pattison is Fortune's NBTI partner, but Doumet said the billionaire isn't a shareholder in NBTI.

"He's not involved," Doumet said.

Pattison, who publicly declared his interest in buying the Crown corporation when the federal government began seeking buyers in 2003, is already a powerful player in the increasingly lucrative coal shipping industry.

The Jim Pattison Group is sole owner of Westshore Terminals, located at Roberts Bank near Delta. Westshore is the largest coal-handling facility on the North American west coast.

Pattison, speaking through administrative secretary Maureen Chant, said Tuesday: "We don't comment on those kinds of things."

A group of resource firms based in Calgary and Vancouver, including Teck Cominco, is lobbying the federal government to reconsider the sale to Fortune, based in London, Ont., and contemplate their bid to acquire Ridley.

The group, called the Ridley Shippers Coalition, wants to run the terminal as a kind of owners' co-operative that would charge discount fees to ship coal, sulphur, wood pellets, and other bulk commodities low enough to compete with shipper- or government-owned terminals in Australia, Canada's main competitor in Asian markets.

The Mining Association of B.C. publicly questioned federal Transport Minister Jean Lapierre last week for not considering the Western Canadian coalition's bid, noting that the federal and B.C. governments are openly pushing for ways to help exporters tap into red-hot Asian economies.

Ridley's management, described by Ridley chairman Mike Tarr as "rogue" in the eyes of the federal government, has been trying to sign long-term contracts with shippers over Lapierre's objections.

The minister took the unusual step this month of using a cabinet decree to prevent Ridley from signing deals longer than 18 months.

Lapierre needs cabinet approval before he launches full-scale negotiations to sell the facility at a price believed to be a fraction of the $250 million it cost to build in the early 1980s.

poneil1@hotmail.com

© The Vancouver Sun 2005

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Shippers have 'huge concern' about Ottawa's handling of coal terminal



Don Whiteley
Vancouver Sun
Wednesday, October 12, 2005

As the acting minister of natural resources, John McCallum, jets off to Beijing on an energy and lumber sales mission, he might want to drop in on Prince Rupert first to check out a management mess in the Ridley Island Coal Terminal.

Key to any future major sales of coal to Asian markets, this high-tech, state-of-the-art facility sits idling while Ottawa dithers over who should take it over and run it. What's worse, Transportation Minister Jean Lapierre recently issued an order preventing the current management team from signing any more contracts with shippers until the terminal's sale has been completed.

With China and others begging for coal, and coal prices at record levels, who in his right mind would stop management from doing deals? There are other potential coal suppliers in the world, and a prospective Asian buyer would move in a heartbeat if there was any whiff of turmoil over access to the coal.

As Vancouver Sun Ottawa reporter Peter O'Neil has explained in detail over the last few days, there's a very nasty catfight over the future of the facility and who will get to run it. After a bidding process that was launched three years ago, the federal government has selected a "preferred" bidder in the form of Northwest Bulk Terminals Inc. Fortune Minerals of Toronto is the only identified shareholder. Fortune has very little operating experience, but has an intriguing silent partner in this deal described only as "a British Columbia company with expertise in handling bulk materials." Jimmy Pattison maybe?

Apparently spurned in its bid to run the terminal is a shippers coalition that reads like a who's who of the mining business, including Teck Cominco, Western Canadian Coal Corp., Northern Energy and Mining Corp. -- all operating companies with oodles of experience. Backing the shippers coalition is the B.C. Mining Association, which argues that Ridley Island Coal is of such strategic importance to a number of B.C. coal producers that it shouldn't be run by one private company.

This fight will eventually result in a new owner, and whichever way it goes it should signal a new and very profitable era for a terminal that was built in the 1980s to handle the Northeast coal development, but has lost money consistently. It currently operates at only a fraction of its capacity.

But the federal government's decision to tie the hands of the current management team by prohibiting the signing of any new contracts threatens to derail the entire process.

Gary Livingstone, president of Western Canadian Coal Corp. (and a shippers coalition member), is beside himself over this move, and expressed concern over the fate now of a letter of intent he signed with Ridley for production from his company's new mine starting next July.

"The only point of that is to give a free hand to Fortune to go in there, rip up any commitments, and charge whatever they want," he said. "I recall seeing some quotes talking about the fact that the federal government admitted they directed Ridley based on a request from Fortune.

"That gives shippers like us a huge concern," he said. "We were the first ones to go through the port, and we're operating under what we believe is a long-term commitment. For them to make that statement -- we're now evaluating that to see what legal rights we have."

Livingstone said he signed a letter of intent with Ridley management a year ago and has been shipping some coal since last December.

"We're investing $300 million on a new mine we're bringing on stream next year," he said. "We're operating on the premise we have an agreement in place. If the feds do something that affects that, it will give us some very serious concerns."

Livingstone credited the current management team with doing an "outstanding job" of getting more product moving through the terminal and looking to the future. "When you read in the paper comments about 'rogue' management, it's unbelievable. To hear that from Ottawa, who are so far removed from what is happening in B.C. -- it's mindboggling."

When Fortune's silent partner is identified, it may become much clearer why Ottawa seems intent on giving the job to this small company instead of the high-powered consortium now in second place.

There is speculation that Jimmy Pattison is involved, and a Pattison spokesperson on Tuesday would neither confirm nor deny any involvement on his part. With his interest in Westshore Terminals, Pattison certainly fits Fortune's definition of a company with "expertise in handling bulk materials."

Another company mentioned as a possible partner is Salt Lake City-based Savage Companies, through its Canadian subsidiary Savage CANAC Corp. Savage operates large bulk terminals for coal, petroleum coke and sulphur in the U.S.

Savage spokesman David Wolach confirmed Savage's interest in operating the terminal, but said there was no agreement with anyone. "We've had discussions, and we're interested in participating, but nothing has been signed," he said.

But in the meantime, it seems ludicrous to handcuff an existing management team trying to drum up business for a taxpayer-owned terminal in a region of B.C. that has been depressed for more than a decade.

Ridley Terminals President Greg Slocombe says he can still accommodate growth and expansion in coal shipments on a spot basis, despite the handcuffs. But his ability to go after bulk commodities other than coal have been seriously impacted. That makes no sense whatsoever from a business perspective.

don_whiteley@telus.net

© The Vancouver Sun 2005

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Posted by Arthur Caldicott on October 12, 2005

Hunger For Natural Gas

By Stan Cox
www.alternet.org
October 12, 2005

The era of cheap natural gas, like that of cheap oil, is ending. We have barely begun to assess the drastic, worldwide changes that will ensue.

Two Gulf hurricanes and the approaching winter in the Northern Hemisphere have kept natural gas futures hovering near all-time highs. But with the accelerating depletion of reserves in North America, the intermittent gas crises we've been seeing since 2001 will start coming thicker and faster, finally merging into an era of permanent scarcity.

A chronic gap between supply and demand would mean plenty of hardship in the United States and Europe, which have come to rely on natural gas not only for heat, but increasingly for electricity generation and manufacturing. But the future looks even more grim in the global South, where the maintenance of human life itself has come to depend on the steady and reliable supply of natural gas that's needed to synthesize nitrogen fertilizer for food production.

Turn off the gas, and a lot of American families would have a hard time cooking dinner -- but a lot of families in places like Nepal and Guatemala would have nothing to cook.

Nitrogen and human existence

Crop plants assemble carbon, hydrogen, oxygen and nitrogen into proteins that are essential both to plant growth and to the diets of humans and other animals. Of those four elements, nitrogen is the one that's too often in short supply. If you see yellowish, stunted crops, whether they're in an Indiana cornfield or an Indonesian rice paddy, it's likely that you can blame it on a lack of nitrogen.

A world of 6.4 billion people, on the way to 9 billion or more, needs more protein than the planet's croplands can generate from biologically provided nitrogen. Our species has become as physically dependent on industrially produced nitrogen fertilizer as it is on soil, sunshine and water. And that means we're hooked on natural gas.

Vaclav Smil, distinguished professor at the University of Manitoba and author of the 2004 book Enriching the Earth: Fritz Haber, Carl Bosch and the Transformation of World Food Production, has demonstrated the global food system's startling degree of dependence on nitrogen fertilization. Using simple math -- the kind you can do in your head if there's no calculator handy -- Smil showed that 40 percent of the protein in human bodies, planet-wide, would not exist without the application of synthetic nitrogen to crops during most of the 20th century.

That means that without the use of industrially produced nitrogen fertilizer, about 2.5 billion people out of today's world population of 6.2 billion simply could never have existed.

If farming depended solely on naturally occurring and recycled nitrogen fertility, the planet's cropped acreage could feed only about 50 percent of the human population at today's improved nutrition levels, according to Smil. But absolute dependence on synthetic nitrogen is geographically lopsided -- it's largely in countries with a high human-cropland ratio that survival hinges on nitrogen fertilizer. This includes India, Indonesia, and China, where four in 10 human beings on Earth reside.

In contrast, those countries lucky enough to have ample cropland and relatively low population density could survive on far less synthetic nitrogen than they currently use.

The nation that ranks as the world's third biggest nitrogen fertilizer consumer could, conceivably, get by without the stuff. If that country, the United States, were to moderate its meat consumption, raise all livestock on pasture and rangeland instead of nitrogen-wasting grains, rely more on legume crops (plants like beans and alfalfa that obtain nitrogen from the air with the help of bacteria), curb waste and cut food exports, it could maintain its food supply without using any synthetic nitrogen at all, according to Smil's calculations.

The momentum of past population growth is expected to add two to four billion people to the world's population by 2050, even with concerted efforts to rein in growth. Almost all of the increase will occur in Africa, Asia, Latin America and the Middle East. That will double the demand for nitrogen fertilizer in those regions, and by that time, says Smil, 60 percent of their inhabitants will depend existentially (in the literal sense, not the philosophical one) on natural gas-derived nitrogen fertilizer.

Danger: Flammable

Ironically, in that vast volume between the earth's surface and the atmosphere's upper limits, nitrogen is the most abundant element. We're continuously bathed in nitrogen gas, which makes up 78 percent of the air we breathe. But in the air, nitrogen atoms are paired up, each atom linked to another by an extremely tight molecular bond. Those molecules can't be used by living organisms unless that bond is broken, and only a small number of single-celled species have developed a means to do that biologically.

To pry nitrogen atoms apart chemically requires intense energy; it happens, for example, around a bolt of lightning. So it was not until 1909 that humans developed an industrial-scale method, called the Haber-Bosch process after its German inventors, to reassemble nitrogen atoms into another molecule, ammonia, that is usable by crop plants.

The two essential inputs to the Haber-Bosch process are air, which is free, and natural gas, which is expensive and becoming more so. Therefore, to extend Vaclav Smil's reasoning, 40 percent (soon to be 60 percent) of the Earth's inhabitants owe their survival to natural gas, a non-renewable fossil fuel. And if Julian Darley is right, a species that can't survive without natural gas is a species in big trouble.

Darley is author of the 2004 book, "High Noon for Natural Gas," in which he argues that the era of cheap and plentiful gas, like that of cheap oil, is coming to a close. Humans began tapping the Earth's deposits of oil and natural gas a little over a century ago. We've been exhausting the planet's oil reserves more quickly than gas reserves, because oil is easier to pump, transport and use. The planet's gas endowment will last longer, but the world is now using more each year than is being discovered -- an ominous sign.

Accelerated consumption across the globe, says Darley, will continue to drive up natural gas prices, deplete reserves, and trigger chronic shortages. In a world where growing energy demand has begun to run up against environmental limits, gas is almost too good to be true, and, it seems, too good to leave in the ground. For instance:

* Countries trying to meet the greenhouse emissions limits set by the Kyoto Protocol are rapidly building natural gas-fired power plants, which emit much less carbon dioxide than do coal plants. Even in the United States, the world's number-one Kyoto deadbeat, most newly built power plants are gas-fueled, even as our domestic gas reserves dwindle.

* In response to criticism of its heavy coal burning, China intends to triple or quadruple its use of natural gas for power generation in the coming decade.

* The petroleum industry is pushing hard to build large numbers of liquefied natural gas (LNG) tankers, along with the requisite high-tech port facilities in the major producing and consuming nations. That will make it easier for a big energy-using nation like the U.S. to suck not only from gas pipelines on its own continent but from wells almost anywhere on the planet, as we currently do to feed our oil habit.

* Building and operating a global LNG system will require vast amounts of energy -- much of it supplied by gas, of course. To produce the power required to haul liquefied gas across oceans while keeping it cooled to about -260 degrees Fahrenheit, LNG tankers draw on their own cargo. And an explosion at a LNG terminal could produce a fireball a mile wide -- qualifying LNG as a potential WMD.

* The process of extracting oil from sands in the Canadian province of Alberta -- often looked to as a key new resource in a "safe" part of the world -- requires natural gas, and a lot of it. Darley predicts that if the oil sands are to satisfy even one-eighth of North America's demand, they will have to absorb a quarter to a half of Canada's natural gas production!

* Hydrogen is often hailed as a fuel of the future, but today, most hydrogen is manufactured from -- what else? -- natural gas. Hydrogen could be generated by, say, using solar energy to split water molecules, but don't count that happening on a large scale as long as gas is available. President Bush's well-hyped 2003 FreedomCar initiative relied mostly on gas-derived hydrogen.

Not everyone is as pessimistic about natural gas as is Darley. The U.S. Department of Energy, as usual, paints a much rosier picture of potential gas reserves. Vaclav Smil appears to expect future gas availability to end up somewhere between what Darley and the DOE predict. But on one point there seems to be universal agreement: Consumption of the world's natural gas will continue to accelerate, and in the rush, gas could prove even more volatile than oil, politically and economically as well as chemically.

The timetable for peak gas or plateauing natural gas production and an eventual decline is much harder to forecast it is for oil. But a perfect storm of long-term forces appears to be blowing demand in only one direction -- up -- and the greatest access to such a hard-to-transport, hard-to-store resource will likely go to those players with the most money and the strongest armies.

Why armies? Because the world's remaining natural gas reserves lie mostly in the Mideast, Central Asia and Russia, almost guaranteeing that a century of conflict and chaos lies ahead.

Natural gas reserves of the top 10 countries.

The slice of the pie labeled "Rest of World" includes a number of small countries, many of them in Africa. Their gas reserves could sponsor decades of domestic fertilizer production. But, as people from Kirkuk to Caracas to the Niger Delta can tell you, fossil fuel reserves also can attract a lot of unwelcome attention from more powerful, energy-hungry nations.

Empty Stomachs, Full Jacuzzis

As natural gas becomes both more portable and more essential to food production in much of the world, impoverished farmers in Bangladesh and Egypt will find themselves bidding for it against Kansas farmers, homeowners from sweltering Phoenix or frigid Buffalo, and appliance-makers from Shanghai.

Ask someone whose children's lives depend on getting nitrogen out of the air and into food crops, and she'll probably tell you there's no higher use for natural gas. But in affluent societies that take food for granted, gas ("one of the cleanest, safest and most useful of all energy sources") can provide a lot of options that, after a while, start looking like necessities: keeping the house cool in August, cooking a corn-fed pot roast, driving to the store when you're out of organic milk, or relaxing in a hot tub.

Fertilizer production currently uses only about 5 percent of the world's natural gas production, and nonagricultural uses are already asserting greater dominance over tightening gas supplies on this continent. The escalation of gas prices in recent years has made fertilizer production far less profitable; as a result, the U.S. has lost 30 percent of its nitrogen fertilizer production capacity. American farmers now obtain more than half of their nitrogen fertilizer from abroad, making them the world's biggest importers of the product.

Mainstream economists, as always, predict an easy resolution: as the price of natural gas goes up, they say, people and nations will get more serious about conservation. But natural gas, latched onto increasingly as a somewhat more benign substitute for other fossil fuels, is playing the role of methadone in humanity's vain attempt to ease its withdrawal from coal and oil. And market forces tend to go haywire when dealing with addictive substances.

Without a right to food, people have no rights at all. So when there's a worldwide rush on a mineral resource essential to the production of adequate food -- when the market is the problem, not the solution -- non-market measures are needed to ensure that farmers are free to raise essential food crops.

The Food and Agriculture Organization (FAO) of the United Nations has nonbinding "Right to Food" guidelines stating in part that,

States should consider specific national policies, legal instruments, and supporting mechanisms to protect ecological stability and the carrying capacity of ecosystems, to insure the possibility for sustained, increased food production in present and future generations, prevent water pollution, protect the fertility of the soil, and promote the sustainable management of fisheries and forestry.

A firm legal basis for ensuring that all people have access to the means of food production is the UN's 1976 International Covenant on Economic, Social and Cultural Rights, which recognizes "the right of everyone to be free from hunger." The treaty has been ratified by more than 150 nations. The United States is not among them.

Americans cannot expect to support a universal right to food by the roundabout and inadequate practice of importing natural gas and fertilizer, using them to produce surplus grain, and then exporting the grain to countries with food deficits. Every nation must have the means to grow its own food sustainably, with efficient recycling of crop, livestock and human wastes. And when those nutrients aren't sufficient, farmers need guaranteed access to fossil fuels and fertilizers as well.

Nitrogen fertilizer made it possible for us to overpopulate the Earth, and now we're hooked. Someday, as reserves of fossil fuels dwindle, our descendents will come to inhabit a less crowded planet, on crops fed entirely by sunlight and natural fertility. Whether that future population decline happens humanely through planning and restraint or cruelly through catastrophe depends largely on how we manage nonrenewable resources, especially natural gas.

Stan Cox is senior scientist at the Land Institute in Salina, Kansas and a member of the Institute's Prairie Writers Circle. The assistance of Prof. Tim Crews of Prescott College is much appreciated.

Posted by Arthur Caldicott on October 12, 2005

October 11, 2005

Fort St. John leads parade of B.C.'s oil and gas boom

By Gordon Jaremko
Times Colonist (Victoria)
11-Oct-2005

FORT ST. JOHN -- Alberta industrial expansion into northeastern British Columbia startles even welcoming local boosters with its power.

"Right now it's almost overwhelming," said travel agent Marva Kosick, president of the Fort St. John Chamber of Commerce. "It's hard to keep up. We're getting new highways, roads, houses, apartments, stores -- anything you can name, it's being built," she said.

About 20 Alberta companies are spending $4.5 billion a year developing natural gas in the region, said Steve Spalding, B.C. manager for the Canadian Association of Petroleum Producers (CAPP). EnCana Corp. alone has long-range commitments averaging $1 billion a year.

In the industry's North America-wide quest for new gas supplies, "B.C. has a key role to play," Spalding told an annual oil and gas conference held by Fort St. John, the industry's regional capital 700 kilometres northwest of Edmonton.

The B.C. gas investments equal about half of annual spending on Alberta's oilsands, based in a community that likes to call itself "the energetic city" with one-third the population of the Fort McMurray region. The B.C. activity is less visible because it spreads conventional drilling, pipelines and plants across vast northern bush country, but signs of strain are everywhere.

All 1,000 motel and hotel rooms in the Fort St. John area routinely fill up every night, thanks to forest products mill construction on top of the gas development. The nearest vacancies are 70 kilometres south in Dawson Creek, and are scarce there. Recreational vehicle camps are full of blue-collar workers' heated trailers and vans. Roads are crowded well before dawn.

And there are still not enough people for all the work available. "There's a shortage of virtually every skill set you can think of," said Fort St. John Mayor Steve Thorlakson. "Unemployment is too low to calculate."

A $12-million oil and gas trades training centre is being built in Fort St. John, with energy companies covering half the cost. By the end of this month, an oil and gas service sector support and recruitment team led by the B.C. Energy Ministry will have held job fairs in 14 communities across the B.C. since the start of the year.

Enthusiasm for energy development has spread into the aboriginal population, which is demanding trade and business training as well as environmental standards and compensation.

"We too are very interested in becoming wealthy," said Liz Logan. As deputy chief of the regional Treaty Eight First Nations coalition, she echoes leaders in the Alberta oilsands region's aboriginal capital of Fort McKay, home base for a growing community-owned business conglomerate.

In the Fort St. John area Doig River First Nation's DRE Oilfield Services is one of the biggest locally owned employers, fielding about 100 staff during winter drilling seasons.

As in the oilsands, where royalty and tax deferrals tailored to industry requests feed the development wave, the B.C. gas boom is fuelled by government co-operation. In B.C. the collaboration started during construction of the $5-billion Alliance Pipeline from the Fort St. John region to Chicago in the late 1990s via a route across Alberta past the northern outskirts of Edmonton.

B.C. policy includes royalty breaks for deep drilling and costly field developments, road and pipeline construction partnerships with energy firms, and a grant scheme called Fair Share that taps provincial royalties to help northern municipalities build services for industrial growth.

The current highly favourable regime came together quickly that in early 2003 after talks between B.C.'s then newly elected Liberal government and CAPP, energy ministry oil and gas policy director Cameron Lewis recalled.

"This is one of the few jurisdictions in North America that is increasing its gas reserves," Lewis said.

The energy ministry will this fall ask the cabinet to make gas development incentives that were initially granted for a three-year trial period into a permanent fixture of B.C. policy, Lewis said.

The package will be sweetened by a fresh royalty plum which makes rates reflect net profits on new fields rather follow traditional practice of taking shares off gross revenues, he predicted.

A 33-year-old environmental moratorium will continue to prevent oil and gas drilling offshore of British Columbia, with the pro-development provincial government blaming Ottawa for indecision on plans to lift the ban.

"The biggest hurdle is to get the federal government moving," B.C. Energy Minister Richard Neufeld said in an interview. "I don't expect much movement until after the next election."

But Neufeld acknowledged popular opposition, encountered by federal and provincial public inquiries, against throwing open drilling targets in some of Canada's most gorgeous and best-preserved coastal areas including the Queen Charlotte Islands region.

"It will come in time," Neufeld said, inspired by visions of wealth in geological surveys projecting eventual discoveries of oceans of energy -- eight billion barrels and 40 trillion cubic feet of natural gas.

"The quickest way for us not to make it happen is to move too fast," he said, adding that his government may have to settle for preliminary seismic exploration as fulfilling its declared objective of a thriving B.C. offshore oil and gas industry by 2010.

Posted by Arthur Caldicott on October 11, 2005

October 10, 2005

In Canada's Wilderness, Measuring the Cost of Oil Profits

By CLIFFORD KRAUSS
New York Times
October 9, 2005

sqwalk.com
I've flown over one of those so called tailing ponds really lakes. They are a black glimmering abomination held like the sword of doom over all the waters of the Athabasca Delta and the Arctic. No one is talking about this in Canada. Ever wonder why?

Phil Carson
ScreenWeavers
Digital Tapestries
http://www.screenweavers.com
250-740-0943

sqwalk.com


FORT McMURRAY, Alberta - Just north of this boomtown of saloons and strip malls, a moonscape is expanding along with the price of oil.

Deep craters wider than football fields are being dug out of the pine and spruce forests and muskeg swamps by many of the largest multinational oil companies. Huge refineries that burn natural gas to refine the excavated gooey sands into synthetic oil are spreading where wolves and coyotes once roamed.

Beside the mining pits, propane cannons and scarecrows installed by the companies shoo away migrating birds from giant toxic lakes filled with water that was used in the process that separates oil sands from clay and dirt.

About 82,000 acres of forest and wetlands have been cleared or otherwise disturbed since development of oil sands began in earnest here in the late 1960's, and that is just the start. It is estimated that the current daily production of just over one million barrels of oil - the equivalent of Texas' daily production, and 5 percent of the United States' daily consumption - will triple by 2015 and sextuple by 2030. The pockets of oil sands in northern Alberta - which all together equal the size of Florida - are only beginning to be developed.

Because the oil sands region is so remote, the environmental damage receives little attention from the Canadian news media or public comment from Prime Minister Paul Martin's government. But industry leaders acknowledge that they face an enormous challenge because refining oil sands is several times more energy intensive than conventional oil production. In addition, the process is a major source of heat-trapping gases and far more destructive to the landscape than traditional drilling.

"There is a significant environmental footprint associated with the development of the resource, and that could become a potential constraint to growth," Gordon Lambert, vice president for sustainable development at Suncor Energy Inc., said in an interview. But he added that with technological improvements in extraction and refining, "we're bending the curve on a number of these historic environmental issues."

Oil sands development was once considered a crazy dream, too expensive and polluting to be profitable. But with oil prices exceeding $60 a barrel, companies like ExxonMobil, Royal Dutch Shell and Chevron Texaco are committing large investments to new projects, and some companies are offering record-breaking bids to lease growing amounts of land for future development. Energy-hungry China has noticed, and Chinese companies are investing in oil sands projects and a pipeline to take the fuel to the Pacific coast for export.

In a neighboring and politically stable country, the oil sands are destined to become an increasingly important source of energy for the United States market for decades. The industry and government say the northern Alberta sands hold proven reserves of 175 billion barrels, a claim some experts dispute. But if it is true, only Saudi Arabia may have more oil.

But environmentalists have a list of warnings, starting with the energy costs of extracting the oil.

"What bugs me about oil sands is that it is a resource that is being inefficiently used," said Marlo Raynolds, executive director of the Pembina Institute, an environmental research group based in Calgary. "We're using natural gas, which is the cleanest fossil fuel, to wash sand and make a dirtier fuel. It's like using caviar to make fake crabmeat."

The environmentalists also warn that the growing oil sands industry threatens to tear up a huge stretch of Canada's boreal forest, which is a nursery for hundreds of bird species and where bogs filter water and store carbon that would otherwise be released into the atmosphere. They say the enormous volume of water the industry needs threatens fish in the Athabasca River, the principal water source. They predict that increases in emissions of sulfur dioxide and nitrogen oxide will increase levels of acid rain and destroy lake fish across northern Canada.

They also say that Canada, already behind in its commitments to reduce greenhouse gas emissions under the Kyoto Protocol on climate change, will not be able to reach its Kyoto targets if production of oil sands keeps rising at the current rate.

Few Canadians seem to be complaining. This year, every Albertan - even children - is receiving a $400 check in the mail from the provincial government, whose budget surplus has exploded from oil revenue. While Fort McMurray is among the fastest-growing cities in Canada, real estate prices are climbing across the province.

The few protesters tend to be local Indians, although many of the local bands are getting into the oil sands business or supplying projects with services.

"There are no moose, no rabbits, no squirrels anymore," complained Howard Lacorde, 59, a Cree trapper whose trapline has been interrupted by a new oil sands project developed by Canadian Natural Resources. "The land is dead," he added, shaking in anger, as he walked through a construction site that was once his trapline.

Suncor, the EnCana Corporation and Shell Canada Ltd. are talking about setting up a cooperative effort to capture, transport and sell carbon dioxide that otherwise would be released into the air from oil sands production. Total S.A. is considering building a nuclear power plant here to extract the oil sands without having to use increasingly expensive natural gas and reduce emissions of heat-trapping gases, which many scientists associate with global warming.

The companies say they are committed to restoring the lands they drill and mine to a state as close to natural as possible, and they note that advanced technologies are decreasing the amounts of gas released per barrel of oil they produce.

So far they have reclaimed 13,000 acres of forest and wetlands, about 15 percent of the land disturbed. But the provincial government has approved oil-sand work on more than 230,000 additional acres over the next 60 years, and applications for new projects are proliferating.

Suncor, the earliest major operator and still one of the biggest, has made a public commitment to environmental responsibility. It has planted 3.1 million trees, taking cuttings from shrubs and native vegetation. The company says it is recycling 90 percent of the water it uses, and it boasts that one species of toad considered at risk is thriving in its reclaimed ponds.

On a new production site using steam injection to liquefy rather than mine the raw material of oil sands and raise it to the surface, Suncor will reuse water from the mining operation instead of using fresh river water.

"With concerted effort and the technology in play, we will be taking on the environmental challenge aggressively," Mr. Lambert of Suncor said. But he conceded that "the economic growth we are experiencing means a rising greenhouse gas production profile."

The only thing likely to slow production is a sustained decline in oil prices, something few energy specialists predict.

"There is no environmental minister on earth who can stop the oil from coming out of the sand, because the money is too big," said Canada's environment minister, Stéphane Dion, in an interview. "But we have to be very strict on environmental impact."


Posted by Arthur Caldicott on October 10, 2005

Federal government chronically unable to sustain its own environmental initiatives

Commissioner finds federal government chronically unable to sustain its own environmental initiatives
2005, 2005 Report of the Commissioner of the Environment and Sustainable Development, 29-Sep_2005
Environmental lethargy is one more example of a worn-out government
Editorial, Vancouver Sun, 10-Oct-2005



Commissioner finds federal government chronically unable to sustain its own environmental initiatives

News Release
The Commissioner's Perspective—2005, 2005 Report of the Commissioner of the Environment and Sustainable Development
Ottawa, 29 September 2005

While the federal government has announced many initiatives to put Canada on a path to environmental sustainability, it rarely sees them through to completion, says Johanne Gélinas, Commissioner of the Environment and Sustainable Development, in her Report tabled today in the House of Commons.

“When it comes to protecting the environment, bold announcements are made and then often forgotten as soon as the confetti hits the ground,” said Ms. Gélinas. “The federal government seems to have trouble crossing the finish line.”

The Commissioner's most recent Report details urgent examples of unfinished environmental business in areas such as Canada's deteriorating oceans, the protection of biodiversity, and the safety of drinking water in First Nations communities, as well as in other areas of federal responsibility.

The Report also looks at the government's efforts to protect national parks and to follow through on its commitment to “green” federal purchasing. As well, it includes the results of three audits of environmental petitions submitted to the government by Canadians—one of which deals with the government's promise to update requirements for nuclear liability insurance coverage to meet international standards.

“The issues we raise this year pose concrete risks to the environment and well-being of Canadians,” said Ms. Gélinas. “Federal performance must improve markedly if vital initiatives are to achieve their goals.”

The Commissioner of the Environment and Sustainable Development and her audit team are part of the Office of the Auditor General of Canada. Her mandate is to audit and report to Parliament and Canadians on significant environmental and sustainable development issues.

- 30 -

The Report of the Commissioner of the Environment and Sustainable Development is available on the Office of the Auditor General of Canada Web site (www.oag-bvg.gc.ca).

Information:
Julie Hébert, Communications
Tel.: (613) 952-0213, ext. 6292
E-mail: communications@oag-bvg.gc.ca

TOP



Environmental lethargy is one more example of a worn-out government

EDITORIAL
Vancouver Sun
Monday, October 10, 2005

The federal government is blowing a lot of hot air on environmental issues and its lack of action is threatening Canadians' well being. That finding comes through loud and clear in the lengthy report of the commissioner of the environment and sustainable development, an arm of the Auditor-General's office.

And whether you think the concept of sustainable development is as important in human history as the industrial revolution or is junk science peddled by an international cadre of social engineers, the criticism of political inertia stands up.

The report takes the government to task for making bold announcements, which are often forgotten "as soon as the confetti hits the ground." Commissioner Johanne Gelinas accuses her political masters of failing to sustain their initiatives with policies, plans and structures that would allow departments to implement the programs, or track their progress when they do.

In some cases, the matters in question are of grave consequence to human health, such as safe drinking water. Ottawa has been slow to update quality guidelines, which set limits for contaminants, and has not lived up to its responsibilities to inspect water on aircraft, putting thousands of travellers at risk.

The audit found that as many as half a million people living in 600 first nations communities have no assurance that their drinking water is safe because there are no federal laws or regulations in place. Despite $2 billion spent to address the problem, the situation has deteriorated. The report warned further that a five-year, $600-million water management strategy approved in 2003 won't improve quality or safety on a continuing basis.

The report says Ottawa has done little to protect Canada's oceans and reverse dwindling fish stocks, or to address the problems of pollutants, invasive species or declining biodiversity.

It found that insurance coverage carried by operators of nuclear facilities is at levels established 30 years ago and no longer meets international standards.

The report says Parks Canada must upgrade its parks management plans -- half of those examined in the audit were outdated.

It also complained that the government has no policy on "buying green." Given its annual $13-billion procurement budget, that could make a dramatic difference to fledgling industries involved in environmentally sensitive manufacturing, recycling, alternative energy and conservation.

Gelinas blamed bureaucratic infighting and turf wars for the lack of coordination on programs that cross departmental boundaries. Programs and staff are often changed without regard for results and senior bureaucrats aren't held accountable, she added.

In other words, it's business as usual in Ottawa.

The report's wide-eyed surprise that politicians don't do what they say they'll do must be disingenuous. Liberal commitments to environmental action aren't meant to protect the environment; they are meant to win the votes of those who care about such things. Once the votes have been cast, there is no imperative to follow through.

It's a flaw in our system that governments too long in power see perpetuation of their privilege to be their over-riding purpose. The environment is only one of the many issues of concern to Canadians that are subservient to the Liberal priority of preserving the status quo.

What little governments do accomplish is typically limited to the early years of their mandate. After that, the pledge to public service mutates into a sense of entitlement. That happened long ago to the Chretien-Martin Liberals.

Unless there are political points to score, there probably will be no action taken on the commissioner's report, which will join dozens of others the government has ignored over the years. Canadians must come to understand that, in a vibrant democracy, they must not let government cynicism, greed and political opportunism supersede the public interest.

© The Vancouver Sun 2005

TOP

Posted by Arthur Caldicott on October 10, 2005

October 08, 2005

The Clusterfuck Nation Chronicle: Calgary

by Jim Kunstler
The Clusterfuck Nation Chronicle
Commentary on the Flux of Events

October 3 2005

for previous chronicles click on
Clusterfuck Nation Archives

I was way out in Calgary, Alberta, last week, the tar sands capital of western Canada. I was there to yak on camera for a CBC-sponsored documentary about suburbia, and the city itself proved to be a strange and interesting case of immersive delusional behavior.

Calgary started out, of course, as the railhead for western ranching and a jump-off for various gold rushes in the late 19th century. Now it has become an archetypal city of immense glass boxes in a sterilized center surrounded by an asteroid belt of beige residential subdivisions -- sort of what Rochester, New York, would be like if it had an economy. The vast suburbs ooze out onto the prairie to the east, along with their complements of strip malls, power centers, car dealerships, and fry-pits, and on the west they bump up against the foothills of the Rockies.

The real estate scene in Calgary is rip-roaring because newcomers are flooding in to work the tar sand angles. No doubt the tar sands will generate a lot of wealth in the years ahead. But those who think they will save western civilization from a Peak Oil clusterfuck are going to be very disappointed. We are not going to run the interstate highway system, Walt Disney World, and WalMart on the Canadian tar sands.

These days, a lot of people (including news reporters) are saying that the tar sands contain the equivalent of a trillion barrels of oil, which is just plain nonsense. It's more like the equivalent of 180 billion barrels -- with world consumption at 30 billion annually (do the math). But the word equivalent is tricky, too, because it's only the equivalent in volume, not in the cost of recovery, since the stuff does not flow out of the ground at room temperature like Texas sweet light crude. The process requires a huge up-front mining operation on top of everything else, conducted in a climate so cold that the 13-foot-diameter tires of giant dump trucks crack regularly. The Achilles heel of the operation is that it requires hundreds of millions of dollars a year worth of natural gas to melt the stiff goop out of the sand, and that Canada's natural gas supply is verging on depletion just as ours is. They'll have a gnarly choice in a few years: either heat their homes or power the tar sands operation.

Another catch is that even in the short term, the petroleum that is recovered is not going exclusively to the United States or even Canada. The Chinese have been very busily inking contracts for substantial gobs of it. Is George Bush going to send the 82nd airborne into Alberta to secure access to the tar sands?

But this blog entry is not really about the tar sands, it's about the expectations of the people working off of them, which is that they assume the easy motoring utopia will continue indefinitely and are madly busy building a suburban infrastructure for it to dwell in, even while Canadians themselves are now paying the equivalent of $4 US a gallon for the privilege to commute forty miles a day.

What's going on in Calgary, with new subdivisions of half-million dollar houses opening every month, is the North American tragedy in microcosm. Because every new suburban house built, every new Target store opened, every new parking lot paved, every highway widened will be a project in the service of a living arrangement with no future. It is a true madness that beats a path to historic tragedy.

And this is what you have to think about, wherever you live in the US or Canada: what kind of projects and proposals are moving right now in the permitting pipeline of your own municipal planning boards? Things waiting to be built in the next year or two. Chances are they're the same suburban furnishings we've been getting for half a century, in the latest state-of-the-art releases. Each one is a tragedy. Each one will carry us further into darkness.

How do you stop such suicidal behavior? Probably not by persuasion or exhortation. People change what they are doing when circumstances compel them to and not before. The American public barely even thinks about these things. The Sunday New York Times news section contained not one story this week bout the current state of oil-and-gas operations in the Gulf of Mexico. The fact is that Hurricanes Katrina and Rita destroyed more than 90 production platforms as well as pipelines and drilling rigs. The implications are so obvious and we are not getting them.

The Clusterfuck Nation Manifesto


Eyesore of the Month: September 2005

The Golden Arches still stand in Biloxi, Missisippi, following the wrath of Katrina, but just about everything else lies shredded across the landscape. The people of Mississippi face a critical crossroads as they contemplate rebuilding. Will they simply restore the suburban pattern that was wiped clean by the hurricane? Or will they change the rules to encourage compact redevelopment in recognition that the age of easy motoring is over? To rebuild suburbia as it was will be exactly the kind of tragic misstep that this nation can't afford.

Read more Jim Kunstler at www.kunstler.com

Posted by Arthur Caldicott on October 08, 2005

Race for Arctic pipeline heats up for Canada, U.S.

By BARRIE MCKENNA
Globe & Mail
Saturday, October 8, 2005

WASHINGTON -- The race is officially on to deliver the Arctic's vast reserves of natural gas to energy-hungry markets in Canada and the United States.

Alaska Governor Frank Murkowski says he's just days away from striking a royalty deal with Exxon Mobil Corp., British Petroleum and ConocoPhillips Co. that would pave the way for the $20-billion (U.S.) pipeline megaproject.

"I anticipate receiving an affirmative response from the producers within the next few days," Mr. Murkowski said, adding that today's lofty natural gas prices have finally made the long-planned project economic.

The pending deal comes as Exxon subsidiary Imperial Oil Ltd. and other producers are at loggerheads with Ottawa over the fiscal terms of a second shorter and cheaper northern pipeline -- a $7-billion (Canadian) line to tap into natural gas in Canada's Mackenzie Valley.

A deal on the Alaska pipeline could put pressure on Ottawa to come to terms with Imperial Oil on the all-Canadian line. Imperial chief executive officer Tim Hearn warned this week that the Mackenzie pipeline might never get built if it can't reach a deal soon with Ottawa and native groups.

"If this thing drags out and drags out, I believe Alaska will get built and we might as well just take a back seat for a long period of time," he told reporters in Calgary.

And some analysts agree.

"If the Alaskans are going, the bigger line will be the one that gets all the attention," said Calgary-based energy analyst Ian Doig. "I don't think Ottawa can move that quickly."

The two projects are so ambitious that there may not be enough capital, manpower, expertise and pipe steel in North America to build both routes at once, Mr. Doig said.

At least two companies are involved in both projects -- Exxon and ConocoPhillips. Shell Canada Ltd. is also involved in the Mackenzie Valley project. Alaska officials insist they aren't in competition with the Mackenzie Valley project. Indeed, Mr. Murkowski has said both projects should go ahead.

Exxon and the other producers on Alaska's North Slope were tight-lipped about the state's offer on royalties, jobs and access to the gas -- the culmination of 18 months of intense negotiations between the state and the companies.

"We will evaluate the State of Alaska's fiscal contract and will respond when our assessment is complete," said Exxon spokeswoman Susan Reeves from Houston.

Even with a royalties deal, Alaskan officials conceded it will be four or five years before construction can begin. "If we get an agreement this would be an important step in getting North Slope gas to market," said Chuck Logsdon, gas line adviser to Mr. Murkowski.

Mr. Logsdon said the state hasn't given producers a deadline to respond, but it anticipates a deal "pretty soon."

Buoyed by the recent price surge, which has pushed the cost of natural gas to about $14 (U.S) per thousand cubic feet, Alaska insists its project is now clearly economic.

Meanwhile, Imperial Oil, eager for guarantees from Ottawa to help it recoup the massive investments needed, said the pipeline remains uneconomic.

But analysts and industry insiders said Imperial is using an artificially low $2.50 per thousand cubic feet estimate of the future natural gas price in its modelling to extract a better deal from Ottawa.

"No one is using that number," said Wilf Gobert, vice-chairman and head of research at Peters & Co. Ltd. in Calgary. "Imperial Oil is trying to protect their downside."

"Nobody has a $2.50 gas price," echoed an oil and gas industry executive, who asked not be named.

Mr. Gobert said most producers are using a long-term forecast of $4 per thousand cubic feet, still well below the current price. Most investors, on the other hand, are betting that gas prices will retreat from their current peak, but remain above $5 for several years.

The 5,500-kilometre Alaska pipeline, running south through British Columbia and Alberta, would take at least a decade to build and would rank as one of the largest construction projects ever. The proposed pipeline would deliver 4.5 billion cubic feet of gas a day, or about 7 per cent of average U.S. consumption.

The U.S. Congress has already approved $18-billion in loan guarantees. But the producers are apparently seeking additional concessions to help with project financing.

Posted by Arthur Caldicott on October 08, 2005

October 07, 2005

Municipalities pursue own energy projects

By Charlie Smith
The Georgia Straight
Publish Date: 6-Oct-2005

Thomas Osdoba is working on a sustainable energy precinct for Vancouver.
While senior governments have mostly ignored the impact of a global peak in oil production (see previous story), some municipal and regional governments have decided to generate their own energy. The City of Vancouver, the City of North Vancouver, and the District of West Vancouver have created or are developing their own projects within their communities.

Meanwhile, the Greater Vancouver Regional District collects approximately $5 million each year by generating electricity at its Burnaby waste incinerator and selling it to B.C. Hydro. The GVRD is also examining the possibility of generating wind power at the Iona Jetty and at Pitt Lake. In addition, the GVRD is considering installing a microgenerator to generate electricity from water flowing through pipes linking the Capilano and Seymour reservoirs.

Tom Osdoba is the manager of the City of Vancouver’s sustainability group, which is working on the creation of a 200-hectare energy precinct covering much of False Creek Flats and southeast False Creek. Osdoba told the Georgia Straight that it’s very difficult to create new energy systems one parcel at a time, which is why the city is examining the concept over a large area.

“You get economies of scale and better opportunities not only to reduce energy use but to identify sources of energy that are greener and cleaner and less dependent on fossil fuels,” Osdoba said.

The city has hired a consultant to examine the business case and capital costs of creating a new utility for the area.

This “community energy system” would share heat and power loads in a connected loop of pipes. Power could be fed into the system from solar, wind, or hydrogen sources.

The City of North Vancouver owns the Lower Lonsdale Energy Corporation, which has a partnership with Terasen Utility Service to distribute steam heat created by burning natural gas. The District of West Vancouver is offsetting some of its municipal costs with a microturbine at Eagle Lake.

Osdoba said the City of Vancouver is also trying to reduce emissions by both downsizing the civic fleet of vehicles and obtaining energy-efficient “smart cars”. On September 22, the sustainability office also launched the city’s “One Day” initiative with a car-free celebration in Gastown. He said that the city is encouraging residents to reduce energy consumption by starting with small steps. “If you drive to work every day, try to take the bus or try to bike just one day a week. Or car pool,” he said.

Osdoba said that the impetus for “One Day” and other sustainability initiatives have come from Mayor Larry Campbell and city council. Vancouver COPE Coun. David Cadman was one of the first politicians in the country to anticipate the potential consequences of a global peak in oil production. Cadman, former president of the Society Promoting Environmental Conservation, also appeared on the Vancouver Planetarium stage with Richard Heinberg, Julian Darley, and Bill Rees to discuss this topic in May 2003.

Cadman told the Straight that he thinks every new building in this city will have to be as energy-efficient as possible. He also said that Cool Vancouver—a citywide initiative to address climate change, which he quarterbacked—was designed to ratchet down energy consumption to ensure costs remained neutral for taxpayers.

“Obviously, with rising prices, the less you consume, the more you can begin to flatline your costing,” Cadman said. “We’re going to have to be even more rigorous about that in the years to come.”

The city’s three TransLink directors—Cadman, Campbell, and Vision Vancouver Coun. Raymond Louie—also voted to buy natural-gas buses for the regional transit fleet over the objections of staff and TransLink chairman Doug McCallum.

Perhaps the most ardent environmentalist on council, however, is COPE’s Fred Bass. He told the Straight that he entered municipal politics because he believes that local governments can change the world. He claimed that it happened during the 1980s, when local peace movements and civic bodies around the globe brought pressure on national governments. This resulted in a landmark disarmament agreement between then–U.S. president Ronald Reagan and Soviet leader Mikhail Gorbachev.

Bass noted that in the 1990s, local governments were the first to ban tobacco use inside buildings and in bars and restaurants. Senior governments followed. More recently, the City of Vancouver has pioneered the four-pillars drug-addiction strategy, which viewed drug addiction as a medical issue and led to the creation of the country’s first supervised injection site. Bass said municipal governments can also lead the way in dealing with emissions that contribute to global warming. He also noted that there is a limited supply of oil, which will lead to higher prices in the future. “On top of that, it is a totally nonrenewable resource,” Bass said. “When our great-grandchildren hear that we took oil and burned it in cars and generated CO2 and pollutants into the sky—and didn’t get more out of this nonrenewable resource—they’re going to be very disappointed with what we did.”

He emphasized that the reason he became a city councillor was to reduce the uncontrolled emission of greenhouse gases, which he described as an “emergency” for the world to address.

The Georgia Straight

GVRD Green Energy

GVRD's Waste-to-Energy Factsheet
The Burnaby Waste-to-Energy Facility, built in 1998, generates 15 MW of electricity and provides steam to an integrated co-generation facility and an adjacent paper recycling mill.

GVRD Cache Creek Landfill gas collection
(gas is collected and flared, but projects to utilize the gas cannot be explored due to lack of funding.)

Vancouver Energy Precinct
Vancouver South East False Creek
VancouverSEFalseCreek_200.gif

Vancouver Sustainability Precinct
VancouverSustainabilityPrecinct_200.gif

Lower Lonsdale Energy Corporation

West Vancouver's Green Energy Project (Eagle Lake)
BC Hydro's Eagle Lake micro hydro page

Posted by Arthur Caldicott on October 07, 2005

Running on empty

By Charlie Smith
Georgia Straight
Publish Date: 6-Oct-2005

Why everyone should worry about gas prices

Julian Darley is director of a Vancouver think tank called the Post Carbon Institute. He says people should focus on finding local solutions to the looming energy crisis.

Two-and-a-half years back, author Richard Heinberg gave local residents a glimpse into the future. Heinberg, a California writer and instructor, had come to the Vancouver Planetarium for a panel discussion on energy. The price of oil was hovering at about US$25 per barrel, but he predicted a sharp increase before the end of the decade.

“At this point, we’re discovering about one barrel of oil for every three or four that is pumped and burned,” Heinberg said. “So, clearly, a production peak is inevitable at some point.”

This thin, middle-aged, and casually dressed intellectual seemed an unlikely prophet. Sure, he said all the right things. His car ran on biodiesel, which is a chemically altered vegetable oil. He also mentioned that he placed photovoltaic panels on his home’s roof to generate electricity from sunlight. But Heinberg was so unassuming, so cerebral, and so completely lacking in evangelistic fervour. He seemed hardly the type to trigger a cataclysmic change in the way people perceive the world around them.

But that evening at the planetarium, Heinberg had a profound impact on the audience. Two other panelists—UBC professor Bill Rees and Vancouver environmental philosopher Julian Darley—provided equally chilling commentaries. Rees noted that for more than 20 consecutive years, the world had consumed more oil than had been discovered. Darley, director of the Vancouver-based Post Carbon Institute, emphasized a looming crisis with natural gas.

“I call this the carbon chasm,” Darley told the audience.

Since that evening, the international price of oil has shot up by 160 percent. Vancouver motorists now routinely shell out $1.20 per litre of gasoline at the pump. The cost of natural gas has almost tripled.

The International Energy Agency has reported that Hurricane Katrina shut down 1.4 million barrels of daily oil production and curtailed activity at 14 refineries. This caused retail gasoline price hikes of more than 30 percent in Europe and 13 percent in Asia, according to the IEA. Since then, Hurricane Rita has wiped out more oil and gas production in the region.

Darley and other analysts claim that a looming global shortage of oil could cause gasoline prices to spike even more sharply in the coming years. Darley told the Georgia Straight that this could cripple the world economy, which is mostly based on moving goods and services around the globe.

“It’s like saying to a person, ‘You’ve got to become an argon breather tomorrow because we’re switching away from this oxygen stuff,’” Darley said.

Matthew Simmons, a former advisor to George W. Bush and a Houston energy investment banker, wrote a book earlier this year suggesting that Saudi Arabian oil production may have already peaked. The Saudis claim to have a quarter of the world’s proven reserves: 262 billion barrels. Saudi Arabia has been the world’s largest oil producer for many years. Simmons told the Straight in a phone interview that 90 percent of this production has come from five aging oil fields on the eastern edge of the Saudi peninsula.





According to Simmons, 60 percent of all Saudi oil has come from just one field, Ghawar, since it began producing in 1951. He said the northern portion of Ghawar is almost depleted. He also claimed that the quality of the oil isn’t nearly as high in the southern portion of Ghawar.

“In the last couple of years, there have been so many ‘supply additions’ coming on that we don’t have any idea whether Ghawar is producing five million barrels a day or three-and-a-half million barrels a day,” Simmons said. “The fact that we don’t [know] should scare the bejesus out of people.”


Greatest “Proved” Oil Reserves
by Country (barrels)

Saudi Arabia 261.9 billion
Canada 178.8 billion
Iran 125.8 billion
Iraq 115.0 billion
Kuwait 101.5 billion
United Arab Emirates 97.8 billion
Venezuela 77.2 billion
Russia 60 billion
Libya 39 billion
Nigeria 35.3 billion

Simmons, author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (John Wiley & Sons, $31.99), said that the second-largest Saudi field, Safaniya, can theoretically produce two million barrels per day of very heavy oil. “I think its peak production was 1.2 million barrels a day, and it’s about 600,000 barrels a day now,” he said. “Therein lies all the world’s spare capacity. That should scare people.”

The IEA forecasts demand for oil this year to average 83.5 million barrels per day. This means that more than 30 billion barrels of oil will be consumed in 2005. Total supply will average 84.85 million barrels per day.

Last July, a top Saudi official, Adel Al-Jubeir, dismissed Simmons’s claims during a live on-line question-and-answer session sponsored by the Washington Post. Al-Jubeir asserted that his national oil company, Saudi Aramco, is “very conservative when it comes to reservoir management”.

“The data he uses is outdated,” Al-Jubeir claimed. Simmons, however, told the Straight that the Saudis have not released any data to him to contradict his conclusions.

During that evening at the planetarium in 2003, Heinberg explained that the United States was once both the world’s largest oil producer and largest oil exporter. In effect, he said, it was the Saudi Arabia of the latter 19th century and early 20th century.

Heinberg, author of The Party’s Over: Oil, War and the Fate of Industrial Societies (New Society, 2003), noted that U.S. oil exploration peaked in the 1930s. This came after discoveries in East Texas and Oklahoma. Overall U.S. oil production peaked in 1970.

Since then, America has increasingly relied on imports. The nation consumed an average of 21.4 million barrels of oil per day during August, according to the U.S. Energy Information Administration. About 58 percent was imported.

Heinberg claimed that the U.S. experience as a producer has been repeated in many other oil-rich nations. After reaching a peak, oil production has often gone into a downward spiral. Heinberg forecast that the global peak in oil production would likely occur between 2004 and 2010.

“Whatever happens in the U.S. is the precursor for what is bound to happen in the rest of the world as far as oil is concerned,” he predicted.

It’s a controversial theory with plenty of detractors. In a September 22 news release, IEA executive director Claude Mandil claimed there is no shortage of oil and gas in the ground, just a shortage of technology to recover it. The same news release suggested there was more oil in the Canadian tar sands than all the world’s current reserves combined.

Canadian author David Frum, a former speechwriter to President Bush, wrote a column in the National Post last January ridiculing the notion that the world is running out of oil. He claimed that consumers will respond to price signals and switch to alternative fuels. “The world will never run out of oil,” Frum wrote in his article.

The B.C. Liberal government still plans to twin the Port Mann Bridge and widen Highway 1 to eight lanes, which indicates that Heinberg’s message hasn’t registered with the premier. Meanwhile, the Vancouver International Airport Authority is proceeding with a $1.4-billion plan to accommodate more fuel-guzzling airplanes.

Heinberg emphasized in his book that when more than half the petroleum is withdrawn from a reservoir, the cost of recovering oil increases sharply. That’s because more energy is required to extract the resource. When this occurs in a majority of fields around the world, it marks the end of cheap oil.

Heinberg’s message seems to have penetrated the Washington, D.C., establishment. He appeared on a panel late last month hosted by U.S. Congressman Roscoe Bartlett. Last February, the U.S. Department of Energy released a report on the peaking of world oil production, describing it as “an unprecedented risk-management problem”.

The numbers are astronomical. BP has claimed there are 1.2 trillion barrels of proven reserves in the world. But some doubt the validity of this number. In 1998, retired petroleum geologists Colin Campbell and Jean Laherrčre wrote an article in Scientific American claiming that OPEC (Oil Producing and Exporting Countries) members had exaggerated their proven reserves. By switching to higher numbers, they were allowed to export more oil under OPEC’s quota system.

“There is good reason to suspect that when, during the late 1980s, six of the 11 OPEC nations increased their reserve figures by colossal amounts, ranging from 42 to 197 percent, they did so only to boost their export quotas,” Campbell and Laherrčre wrote.

Simmons said that after the Saudis nationalized their oil industry, they jacked up their proven reserves by 100 billion barrels. Simmons also noted that Kuwait, United Arab Emirates, Iraq, and Iran had earlier boosted their proven reserves by larger percentages than the Saudis.

“There weren’t any new discoveries,” Simmons said. “There wasn’t any technology going on, and there wasn’t any drilling going on.”

He claimed that Canada also fudged the numbers when it suddenly increased its proven oil reserves from five billion to 180 billion barrels in 2003. It accomplished this feat by including bitumen resources in the Alberta tar sands.

Simmons said that comparing bitumen to light sweet oil is akin to comparing a 1947 Plymouth to a Maserati. “What you have in the tar sands is a slightly different carbon grade than coal,” he said. “It has nothing to do with oil. The energy intensity of turning it into synthetic crude is enormous.”

For western economies, the Saudi situation probably deserves the most scrutiny. Simmons wrote that one sign of potential trouble is the fact that billions of barrels of water have been injected into Saudi oil fields to maintain pressure.

He claimed that one giant oil field, Abu Sa’fah, has gone to “artificial lift”, which likely means the pressure is dropping. He said there are indications that Berri, another giant, is probably approaching the end of its life. Simmons also claimed that Abqaiq, a 65-year-old giant Saudi field, has pretty much been depleted.

“Five years ago, nobody mentioned the fact that Abqaiq could ever deplete,” Simmons said.

How high can oil prices go from here? Jeff Rubin, chief economist of CIBC World Markets, recently predicted in his Globe and Mail column that the cost will soon reach US$100 per barrel. Last March, investment-banking firm Goldman Sachs suggested it could reach US$105 per barrel. Simmons, the Houston energy investment banker, told the Straight that he thinks the price could eventually top US$200 per barrel—three times the current level.

He explained that at US$65 per barrel, gasoline costs 20 cents per cup. Simmons pointed out that petroleum companies have not found any massive new oil fields in decades. The last giant discovery was Mexico’s Canterell field in 1975. He also claimed that oil companies don’t want to spend money on refineries or to replace old pipelines.

“In three more weeks, they’re going to report the third-quarter earnings,” Simmons said. “The top five are going to report between $30 and $35 billion dollars. It will be more money than any group of five companies have made in the history of the world.”

On September 29, the Canadian Centre for Policy Alternatives released a three-page report claiming that consumers are being gouged by the oil companies. But for Darley, the more pressing long-term issue is how the world will cope with a sharp reduction in its supply of fossil fuels in the coming years. During an October 1 presentation to students at UBC, he predicted that it could lead to more warfare as nations jostle for control over resources.

“Almost anywhere where there is oil and gas, you can see a heightened military buildup there,” Darley said, echoing the views of U.S. author and military analyst Michael Klare. “This total militarization of energy policy is a very unfortunate move, but I’m afraid it’s what we can expect.”

Darley’s message was bleak, but he offered a hopeful alternative at the end of his lecture. The best antidote to sky-high energy costs was something he called “global relocalization”, taking care of basic needs within local communities. He harked back to the days before the oil economy was created in the 19th century, a time when people often entertained each other with music and live theatre.

Some students in the audience responded enthusiastically, breaking into a song with environmental lyrics. It was a festive moment punctuating an often gloomy presentation.

One of the student singers, 20-year-old Sara MacLennan, later told the Straight that she had never had the peak-oil scenario laid out in such a stark manner. “It is a scary thought,” she said.

MacLennan added that in her native country of Scotland, there is a great deal of emphasis on alternative energy sources, such as wind and tidal power, which might pick up the slack. Chris Borstad, a 27-year-old civil-engineering student, told the Straight that Darley’s message impressed upon him the need for action.

“The fossil-fuel institution was never really questioned by the older generation,” Borstad said. “It was sort of handed to them as a great way to improve life.”

Borstad said that when he uses the term peak oil in conversation with friends and acquaintances, some don’t know what he means. “It’s a minority of people here at UBC right now that can really understand the implications,” he said.

However, if gas prices continue rising, and Darley, Heinberg, Simmons, Rees, and others get their message across in major media outlets, that probably won’t be the case for very much longer.

The Georgia Straight

Posted by Arthur Caldicott on October 07, 2005

`Caribou People' wage last stand in the Arctic

BY PAUL SALOPEK
Chicago Tribune
Fri, Oct. 07, 2005

THE PORCUPINE RIVER, Canada - (KRT) - Old Stephen Frost is preparing to kill a caribou.

The Gwitchin Indian elder stands in his skiff on this silver-skinned stream in Canada's vast and wild Yukon Territory. He shoulders a heavy .30-.30 rifle. And he fires twice at eight of the deer-like animals swimming the sparkling currents - Whang! Whang!

The herd is only 20 feet away. But, inexplicably, the bullets go high. The caribou scramble ashore unscathed.

Peering back at Frost with the large, frank eyes of children, the animals vanish into a maze of willow branches dense as basketry.

"Lousy luck," Frost rasps.

The 72-year-old woodsman, a weather-beaten crag of a man who likes to come across as hard-boiled, mutters excuses. He blames the rocking boat. He curses his aging, unsteady legs. But he is a bad actor.

Later, he will pass up more opportunities to kill caribou. And, forgetting his lousy luck altogether, he will shoot other game with heedless skill - plugging a beaver through the eye and blasting a duck out of the water at 40 yards.

"Them caribou ain't got much of a future," he finally admits, uneasily. "To be honest, I'm glad to see 'em get out of rifle range."

Frost is referring to the central catastrophe facing his obscure tribe of Arctic hunters: The once-mighty Porcupine caribou herd, which has been the main food source of his people since the last Ice Age, is dwindling, nobody knows exactly why. And now, controversially, the U.S. government wants to drill for oil in the caribous' calving grounds in the Arctic National Wildlife Refuge, or ANWR, just across the Alaskan border.

Like many traditional Gwitchin, Frost fears that oil rigs in the refuge will deal a knockout blow to the ailing herd and herald the slow death of his tribe's 13,000-year-old subsistence culture, the last of its kind in North America.

Frost doesn't dwell on this crisis. Nor does he talk much about his wife, Ethel, who is ill with cancer. Nor, aside from a few crusty jokes, does he complain about his own creaking body, which is starting to fail him, with pains stabbing his arthritic knees and neck.

Instead, the stoic old hunter betrays his sorrows by what he withholds.

On days that follow, Frost loads two rifles and a shotgun into his boat. Tying on his greasy marten-fur cap, he stalks the waters of the Porcupine River as he has for more than 60 springs. But he doesn't take an animal. He misses. He holds his fire. He displays a forlorn quality of mercy that no subsistence hunter can afford.

---

Sometime later this month, Congress is set to decide, after almost 30 years of contentious debate, whether to allow oil exploration to proceed in ANWR, the country's premier wildlife refuge.

Hurricanes Katrina and Rita blew new life into the dispute after ripping through the nation's oil infrastructure and boosting gasoline beyond $3 a gallon. Now, drilling proponents are seizing on that price spike to push for more domestic oil production.

"When Katrina and Rita come into it, the American people know what to be scared of," says Sen. Ted Stevens, R-Alaska, who is helping shepherd the Arctic drilling plan through an omnibus budget bill. "I think the American people are asking: `Why don't we have enough energy?' And they're not susceptible anymore to misrepresentations that ANWR is some kind of pristine wilderness. It's empty. It's ugly."

To environmentalists, that's sacrilege.

Many activists regard the Alaskan refuge - christened by some a "precious jewel of the circumpolar north" - as a cross between a cathedral and the Alamo: a symbolic last stand to protect not only a vast Arctic ecosystem but the sacred idea of American wilderness itself. The remote 19.6 million-acre sanctuary teems seasonally with caribou, polar bears, wolves and some 150 species of birds. If this holy of holies is pried open for oil, they warn, few protected areas in the country would be safe from development.

The Bush administration, which has made ANWR the centerpiece of its energy policy, calls these claims fear-mongering. Government officials point out that only an eighth of the refuge - some 1.5 million acres of coastal plains dubbed the "1002 area" - would be subject to exploration. Moreover, they say ANWR's untapped petroleum reserves are a necessary antidote to the crippling U.S. addiction to foreign oil. Five billion to 11 billion barrels of black gold are thought to lie pooled under the tundra, or enough oil to power the entire U.S. economy for six months to a year.

But largely lost in all this acrimony is another, older conflict altogether: an improbable human-rights struggle with echoes from the frontier wars of another century.

The Inupiats, or Eskimos, generally support drilling in ANWR for the jobs and revenues it will bring to Alaska's frozen North Slope. But further south, among the immense spruce barrens of central Alaska and the Canadian Yukon, the Gwitchin Indian tribe sees the appearance of new oil rigs in the same ominous light as Plains Indians watching immigrant wagons trundle over the prairie horizon.

For the Gwitchin - "Caribou People" whose population of 7,000 is divided between Canada and Alaska - the stakes couldn't be higher.

Because of its geographical isolation, and the high cost of flying food into its tiny communities, the tribe maintains one of the last true subsistence hunting traditions on the continent. Today, every Gwitchin still consumes an average of 250 meals of caribou meat a year.

Yet by cruel coincidence, in the 100,000-square-mile patch of Alaskan and Canadian wilderness that the caribou call home, oil abounds in just one spot: directly under the animals' sensitive ANWR calving grounds.

"The big oil corporations say they can drill there without harming the land or the wildlife," says Joe Linklater, chief of the Canadian village of Old Crow. "Well, that's like our tribe telling Americans to trust us with an experiment that may end up taking away all their cars.

"We didn't ask for this fight," Linklater adds. "This is about our survival as a people."

The Gwitchin effort to safeguard their caribou-based culture isn't new. Their fight began back in 1988, when worried tribe members from Canada and the United States (the American tribe spells its name "Gwich'in") gathered for the first time in generations at Arctic Village, Alaska, to coordinate a common defense against both the global oil industry and the most powerful government on the planet.

Since then, this little-known war of resistance, planned in log cabins at one of the uttermost ends of the Earth, has taken some bizarre turns.

Tough hunters who had never set foot on a plane have donned cheap business suits and jetted to Washington, where they have stalked the halls of Congress on behalf of the caribou. Some have carried bags of dried caribou meat on their lobbying trips because restaurant food makes them ill. Others have gotten hopelessly lost on the capital's subway system.

Along the way, the rustic tribe has pressured the Canadian government to protest ANWR drilling on environmental grounds. They have recruited Jimmy Carter and Robert Redford as allies. And, collectively, their handful of villages have scraped together hundreds of thousands of dollars - squeezed from cash-strapped tribal councils or solicited from U.S. and Canadian environmental groups - to broadcast the Indian perspective of the ANWR crisis.

Old Crow, Canada, population 245, is a typical front-line community in this small, cold war.

Hunkered on the gravelly banks of the Yukon's wild Porcupine River, the village is an absurdly remote and beautiful place. Still untouched by roads, its cluster of 50 or so frame houses is accessible by bush planes that jounce over the ice-smeared Ogilvie Mountains from the faded gold rush town of Dawson City. Other visitors travel two rugged days cross-country, by riverboat or snowmobile as the season dictates, to reach the village from the nearest Canadian highway.

Old Crow's branch of the Gwitchin tribe, the Vuntut, or "Lake People," isn't necessarily opposed to industrial development. They once allowed oil exploration on federal holdings in their tribal lands, noting that it wasn't in the critical caribou calving areas. And they have invested their funds shrewdly in a local airline and in real estate in Whitehorse, the distant territorial capital.

But few other Arctic villages have undertaken the quixotic step of earmarking $250,000 of their $8 million annual budget to block the world's last superpower in its tireless quest for oil.

Among the tattered notices pinned to the village bulletin board - hand-scrawled requests to buy babiche, or caribou rawhide, and terse announcements for shooting matches at the local dump - there is a crisp memo "encouraging all residents to come hear the latest report from our neighbors who carried our message to the United States Congress."

"People outside just don't realize how much we depend on these damned caribou," says Stephen Frost, the caribou hunter who lives in Old Crow. "What are we going to do if they disappear? Close up shop and move to Washington? Are the politicians or the oil companies going to buy us a lifetime supply of hamburgers?"

As a village elder, Frost tries to project a cranky optimism around Old Crow.

He does this even in his cramped home, where his wife, Ethel, a heavyset woman with artificially curled hair, shuffles from the room whenever the rare visitor arrives. Frost teases her gently about her shyness. Or he cracks profane jokes. But in quiet moments a certain melancholy drapes his coppery features. He quietly shoves grains of sugar around his kitchen tabletop with a work-gnarled thumb. Or gazes for long, silent stretches out his windows at the Porcupine River, where he was raised unschooled except in the harsh lessons of trap lines and fishing camps.

Beyond the sparkling river jut billions of cold-stunted spruce trees. It's springtime 75 miles north of the Arctic Circle. And there are caribou out there, moving through the forests like smoke.

---

A few facts about barren-ground caribou:

They are biological putty - creatures so warped by the extremes of environment that they seem afflicted with a multiple personality disorder.

During the lush Arctic summers, when caribou turn into mowing machines, their stomachs balloon in size by almost 50 percent. Stuffing themselves with grass and lichen, many gain half their body weight in fat. Their coarse dark hairs, hollow for insulation and to improve buoyancy on river crossings, turn pale and shaggy in the winter. Bulls sprout baroque, 5-foot antlers to joust over females. Then, a few months later, they drop them. No feature is immune from this shape-shifting. Even their hooves elongate in the cold, to better dig through winter snow. The same caribou sighted in January and June might easily be mistaken for two different species.

They are constant strangers.

In the spring, caribou herds can trudge hundreds of miles north to the treeless Arctic shoreline, where open vistas and sea breezes foil predators and biting insects. There, they give birth to their young in scenes of wild abundance and untrammeled beauty that rival Africa's Serengeti. By late summer they are on the move again, back to the shelter of the boreal forest. Tens of thousands of caribou die on these annual migrations. As evidence, a grim confetti of caribou bones litters the tundra, the leftovers of hungry grizzlies, wolves, eagles, foxes, ravens and human beings.

"Pretty much everything eats, scavenges or parasitizes the caribou," says Dorothy Cooley, a Yukon government biologist. "A big chunk of the northern ecosystem rides on their backs."

The crucial question, of course, is how a new oil field in ANWR would add to that heavy burden. And because science can't provide a mathematical reply, the answer has been hijacked by rhetoric on all sides.

A computer-modeled study recently released by the U.S. Department of the Interior, for instance, suggests carefully that calf survival in ANWR would plummet if the caribou are spooked from their grass-rich calving grounds. And here the oil industry scoffs, citing positive wildlife trends at Prudhoe Bay, the largest oil field on Alaska's North Slope.

"Clearly, from the central caribou herd experience at Prudhoe, oil infrastructure does not chase away the herd and does not decimate it as the greens claim," says Adrian Herrera, a spokesman for Arctic Power, a pro-drilling lobby group funded largely by the state of Alaska. "This isn't an either-or situation. You can have development and preserve the environment at the same time."

Herrera invokes a mantra that has helped smooth the passage of the drilling agenda through Congress: "Clean" new oil technology, such as lateral drilling - where one wellhead can tap huge areas - means that just 2,000 acres of ANWR's calving grounds will be disturbed by the roughnecks and their machines.

Still, a majority of U.S. and Canadian biologists remain skeptical.

Years of research demonstrate, they say, that pregnant cows have in fact shied from the pipelines and gravel roads at Prudhoe; they have retreated to less disturbed habitat - a luxury not available to the Porcupine herd because its coastal plain is small by comparison, and hemmed in by inhospitable mountains. (Bulls are less sensitive and have been known to enjoy the breezes atop drilling pads.)

Such nuanced arguments frustrate the Gwitchin.

Any tinkering with their herd, they insist, is like gambling with the air they breathe. If the animals are merely frightened away to more-distant migration routes, they say, communities like Old Crow, which straddles ancient caribou river crossings, could simply cease to exist.

"The ancestors warned us about this bad time coming," says Randall Tetlichi, a traditional healer in Old Crow. "I think the caribou know what's happening in this world, and they have decided to leave, to go back to the spirit world."

Tetlichi offers this bleak assessment atop Old Crow Mountain, 5 miles from the village. He has just killed a bull caribou. It is one of five he will shoot this season to feed his family - a perfect animal lying in the snow under an electric blue sky. Panting with exertion, Tetlichi chops off the bull's head and scoops out the finger-size botfly maggots that infect most caribous' throats. The eyes in the decapitated head are huge. Even dead they shine like molten tar. Occasionally, from certain angles, they catch the Arctic sunlight and reflect it back pale green, the color of lightning.

---

Gale Norton, the U.S. secretary of the interior and the senior government official responsible for ANWR, once visited Gwitchin country in Alaska and responded to elders' anxieties over oil drilling in the refuge by urging the Indians to "expand your worldview."

What Norton implied was: The needs of the industrial majority trump the needs of the aboriginal few. Her advice, though, fundamentally misreads the nature of modern Gwitchin life. It isn't narrow. It straddles millenniums.

According to archaeological evidence found in caves in the Yukon, the Gwitchin may be the oldest native culture in the Americas. The tribe's ancestors arrived from Siberia at least 13,000 or 14,000 years ago, long before the more famous Eskimo.

Shadowing herds of migratory animals, they dragged moose-hide tents with the aid of harnessed dogs. Their shamans conversed with animals through dreams - particularly with the vutzui, or caribou. The tribe, linguistically related to the Navajo, was fond of tests of strength, such as wrestling matches for men and women. And having reached what is now central Alaska and the Yukon, they settled down to gorge on wild berries, salmon and a cornucopia of game.

Few modern Gwitchin sugarcoat this past: They are still too close to the land for that. In famine times, infant girls were killed to save food, and crippled elders would ask to be left behind to starve.

Today, willow bows and dog sleds have given way to high-powered rifles and motorboats in Old Crow. But because of the tribe's profound seclusion, the pace of modern assimilation still feels jarring, raw.

Junked snowmobiles and plastic lawn chairs crowd yards alongside gory piles of decapitated caribou. Inside the cramped little homes - simple frame structures that cost the tribe an average of $120,000 to build because every nail must be flown in - hanks of jerked caribou meat, rifles of all calibers, antlers, skin blankets and other frontier artifacts jostle with satellite televisions that rarely seem to be switched off.

Teens sporting baggy hip-hop pants and eyebrow rings now monitor the caribous' migration on a Web site that tracks collared animals by satellite. Meanwhile, at the village store, a relic of the famed Hudson's Bay Company fur-trading empire, Indian elders scratch their heads over cans of Pringles-brand potato chips. A single air-freighted cucumber costs $4.10.

"Too much white man's stuff too fast," says Tetlichi, the village healer. "It's like eating a lot of Kentucky Fried Chicken. Heartburn avenue."

Tetlichi, 53, is deeply worried about the Americans' plans for ANWR. But he sees it as just the latest blow to a way of life already reeling under the combined assault of television, alcohol and the wage economy.

Old Crow is a relatively healthy Arctic community. It isn't plagued to the same terrible degree as other native settlements by problems like drug abuse or teen suicides. (In Alaska, the suicide rate among Indian youths is three times the national average.) Still, the Gwitchin aren't completely immune from the effects of cultural erosion.

The village school teaches up to ninth grade. Half the kids who leave for a boarding school in Whitehorse never return. And those who do often end up working low-paid tribal jobs. Very few live completely off the land anymore, as their parents did. Many feel adrift, caught between worlds, and seek solace in drugs or alcohol. Though Old Crow is officially "dry," liquor is smuggled into the village, most recently in a shipment of dog food. A bootleg pint of vodka sells for $150.

"That's what makes saving the caribou even more important," says Tetlichi, who has the cautious step of an alcohol survivor. "They are - what's the English word? - the anchor."

Tetlichi wears his long braids tucked up under a baseball cap. He is munching happily on dried caribou in his house. He slathers the dark jerky, which he eats all day, with butter - like toast - while his wife, Mabel, hunches over a table, tenderizing red caribou steaks with the butt of a butcher knife. Overhearing mention of ANWR, she declares, "We are very" - WHACK - "angry with" - WHACK - "President Bush!"

Their son Randy Jr. isn't listening.

He's mesmerized by the MTV show "Pimp My Ride," which features an auto shop that tarts up jalopies. "Lady, you ain't gonna recognize this Mustang!" the host is promising from the set in faraway Los Angeles.

A few pickup trucks have appeared in Old Crow in recent years, brought in on temporary ice roads or barged to the otherwise roadless village on the Porcupine River. Randy Jr., 11, has never seen a real sedan.

---

By early summer, the sun never sets in the Arctic. The quality of light is hallucinatory. For about three months it drenches the world continuously, giving the impression of a landscape without secrets. Even the deepest tree shadows are a pale, watery blue - a hue that, if it had a taste, would chill the palate like spearmint.

This sunny simplicity, however, is deceptive.

ANWR may well be, as many activists say, the biggest environmental battle in a generation. And it probably has spawned the most organized and focused Native American resistance campaign since the Red Power movement of the 1960s. But all this human drama is unfolding against a backdrop of complex and troubling environmental change.

According to the U.S. Arctic Research Commission, today's Arctic temperatures are the highest in 400 years. Canadian data suggest that the Yukon alone has warmed by 3 degrees since the 1960s. Glaciers are in retreat. Arctic seas have heated up, changing fish distributions. And spruces and grizzlies are advancing poleward into the once treeless tundra.

The effect of climate change on caribou has been perplexing.

In some regions, according to wildlife experts, the early-greening tundra has provided a bumper crop of caribou food, and the herds have boomed. This fact is recited often by the oil companies working on Alaska's North Slope. (At Prudhoe Bay, the largest oil patch in the United States, the caribou herd has grown fivefold since 1978.)

Yet 100 miles to the east, the Gwitchin's beleaguered Porcupine herd has plummeted from 178,000 to 123,000 animals in the past 16 years. Researchers think that erratic thaws and freezes in the wintering grounds may be the culprits. This creates an icy armor over the snow, preventing hungry caribou from reaching the forage beneath.

"You used to see 500 animals at a time crossing this river, like one big stampede," Frost the hunter recalls, standing on the gravel riverbank of Old Crow. "Today, you're lucky to see 50 at a time."

It's a luminous May afternoon in the village. Gunshots echo in the distance. Hunters are bringing in dead caribou on boats and on four-wheeled buggies. But old Frost has stayed home. His legs ache - new aging pains. And his wife, too, isn't feeling well today.

Upstream, a tributary of the Porcupine has thawed and broken up, and chunks of ice slide down the currents. Mini-bergs the size of pianos collide, tinkling musically on the waters like falling glass. The river sounds like a crystal chandelier swaying in a breeze.

"This is how the land wakes itself up, renews itself," Frost explains, squinting poker-faced from the shore, his hands balled in his pockets. And given his burden of woes, it's a measure of the man that he says this without the least self-pity.

---

Dorothy Frost is crying.

It's the last weekend in May - Big Caribou Days, a homespun festival celebrating the annual spring migration in Old Crow. And Dorothy, a tribal administrator and one of Stephen Frost's numberless relatives, is supposed to be giving a pep talk. She fidgets in the log community hall before a crowd of villagers clad in rubber boots and fleece jackets, outlining the Gwitchin's caribou crusade. But her voice trails off. Normally a jovial woman in glasses, she covers her eyes with her hand and sobs. Later another speaker, an elderly man just returned from lobbying in Washington, also breaks down. So does a young woman who stands in the audience to offer reassurance. It's hard to watch.

"Everybody's emotional right now," says Dorothy Frost, recovering her composure. "Things are coming to a head."

The Gwitchin people have no legacy of armed resistance to European invasion, no mythic or bloodstained Wild West to draw grim inspiration from. There was no Gwitchin Geronimo. No northern Sitting Bull. Like most Canadian Indians, the usually peaceful tribe was incorporated into a tumultuous world the invaders called "New" through commerce, when the Scottish explorer Alexander Mackenzie first showed up on the Porcupine River in the 1790s, paddling a bark canoe packed with furs and trade beads.

"Nearly all European travellers who have visited the (Gwitchin) refer to their fine physical appearance and pleasant dispositions," wrote an anthropologist studying Old Crow as recently as 1946. "I found them to be self-confident and forthright, kindly, generous, intelligent, and honest."

The great irony of their long battle against the United States is that, win or lose, this very act of defiance has opened the door to change. And now, an alien new bitterness simmers in Old Crow. If Congress approves oil development in ANWR, some tribe members are vowing to meet the bulldozers at the refuge boundary with their hunting rifles.

"I've got news for the Americans," an angry young lobbyist named Shawn Bruce tells the somber community hall crowd. "If it comes down to it, we will become militant over that herd. We got Gwitchin men over in Iraq now. We got Vietnam vets. We will train warriors. We won't let them in the calving grounds. I burn. I am mad."

Stephen Frost, the master hunter, is more philosophical.

"I think what upsets people most isn't that them Americans will drill, but that they'll drill without even knowing we goddamned Indians exist," he sighs. "They'll get the oil for their cars. That'll be it."

Surveys taken since Hurricane Katrina jacked up gasoline prices tend to bear him out. According the Pew Research Center for the People and the Press, public support for oil development in ANWR has risen from 42 to 50 percent over the past six months.

Back in Old Crow, Big Caribou Days ends on a down note. Almost nobody joins the late-night jigging contest - a dance competition set to fiddle music inherited from 18th century European trappers. Frost walks home early, complaining about his knees.

A man of habit, he had gone out caribou hunting the day before, one last time for the season.

Ethel was away in Anchorage, undergoing a checkup at the cancer clinic. And the Frost household, long since emptied of its 11 children, had been unbearably silent.

The old man had sat on the banks of his beloved river, feeding willow sticks into a small fire. He never took a shot. Only a few straggling bulls were fording the Porcupine by this late date; the cows were already up north, leading the migration to their embattled Alaskan calving grounds some 200 miles away.

Frost passed the time calling to the birds. He did this uncannily, mimicking the squeal of field mice in distress. Again and again, Arctic owls in their snowy winter plumage swooped low. And ravens diverted from their high tangents in the sky to investigate.

He smiled. For a little while at least, all his troubles seemed like a dream. And for the first time in weeks, Frost seemed truly happy.

---

© 2005, Chicago Tribune.

Posted by Arthur Caldicott on October 07, 2005

Mackenzie pipeline uneconomic, Imperial CEO says

By DAVE EBNER
Globe and Mail
Friday, October 7, 2005

CALGARY -- The proposed $7-billion Mackenzie Valley natural gas pipeline doesn't make economic sense unless Ottawa signs another special fiscal deal for the backers, the chief executive officer of Imperial Oil Ltd. says.

"We're not asking for handouts, we're not asking for giveaways," Tim Hearn, Imperial president and CEO, told reporters after a speech yesterday at the Calgary Chamber of Commerce.

"That is not what we're working on. We're trying to find a framework, because today, under current conditions, we don't have an economic project, and we're working to make sure we can find one."

Mr. Hearn wasn't specific about what Calgary-based Imperial wants, though he did mention "how various costs are recovered."

"We're looking at cash flow timing things, and how we may construct the framework in such a way that it will make it economic."

While Mr. Hearn says he doesn't believe Imperial can make money on a Mackenzie line under current fiscal rules, others suspect the line could be quite profitable, especially compared with the project's competition.

Mackenzie Valley would be more profitable than a proposal for a gas line out of Alaska and other projects looking to import liquefied natural gas (LNG) to North America from Qatar, said brokerage Tristone Capital Inc. in a lengthy report in May on the subject.

"Pipelines appear economic," Tristone concluded, noting that Mackenzie would recover costs and produce a 10-per-cent return with natural gas at about $3.10 (U.S.) gas a thousand cubic feet.

Imperial -- majority owned by Exxon Mobil Corp. of Irving, Tex., the world's largest public oil company -- is using a long-term natural gas projection of $2.50 a thousand cubic feet. In the 1990s, gas averaged $2, which rose to $6 this decade before hurricane Katrina. It is now about $14.

"The world is not short of natural gas," Mr. Hearn said. "I'll guarantee you that if LNG comes into North America, you won't find $14 gas. I don't know where it'll be but it won't be $14."

Many market outlooks suggest that while LNG will probably pull down gas prices in North America, $5 a thousand cubic feet has been suggested by a majority of prognosticators as a reasonable long-term forecast.

Though Mr. Hearne said the project is not economic under current rules, he noted the company is committed to building the Mackenzie line and almost $400-million has already been spent.

Asked about Imperial's gas forecast, Mr. Hearn said: "I'm not going to comment on it." Asked why he believes the pipeline is not economic, Mr. Hearn said: "I'm not going to answer your question."

The Globe and Mail reported last week that Imperial is asking for significant breaks from Ottawa, requests that follow the federal government's offer in July of $500-million (Canadian) in social and economic funding for northerners.

Research conducted by the Sierra Club of Canada, an environmental lobbyist, indicated last week that Imperial's requests amount to a dollar tally of $2-billion.

However, several government sources said it is hard to quantify, given various natural gas price forecasts.

Imperial is the lead proponent of the Mackenzie pipeline, a group that includes Shell Canada Ltd. and ConocoPhillips Canada, among others.

In mid-September, Paul Smith, a senior vice-president at Imperial, said issues the company wants to negotiate with Ottawa included royalties.

"We didn't ask for royalty breaks," Mr. Hearn said yesterday.

Posted by Arthur Caldicott on October 07, 2005

Oil tankers in Juan de Fuca Strait:
1977 rules on oil ports stay intact

By Kimberly Wetzel
Medill News Service
Seattle Times
7 October 2005

WASHINGTON - A House committee yesterday struck down a portion of an energy bill that Washington state lawmakers warned would increase the risk of an oil spill in Puget Sound.

The House Rules Committee removed proposed changes to the Magnuson Amendment, a 1977 law that caps oil-refinery expansion and the number of oil tankers moving through the Strait of Juan de Fuca and Puget Sound.

"This is a big victory for Puget Sound," said Rep. Jay Inslee, D-Bainbridge Island, who testified against the bill before the committee. "We really dodged a bullet on this. We're very happy with the outcome."

Legislators were concerned that changing key portions of the Magnuson Amendment would have meant more tanker traffic in the Sound, increasing the danger of a spill. More than 600 tankers entered Puget Sound last year.

The amendment, written by the late U.S. Sen. Warren Magnuson, D-Wash., prevents oil companies from expanding their Puget Sound operations beyond what's needed to serve the growing energy demands of Washington residents.

The bipartisan effort to keep the amendment intact was led by Inslee, Rep. Norman Dicks, D-Bremerton; Rep. Dave Reichert, R-Auburn; and Democratic Sen. Maria Cantwell, who had vowed to fight the provision if it made it to the Senate.

The broader energy bill would streamline refinery expansion in response to the damage of Gulf Coast oil-production facilities by hurricanes Katrina and Rita. It was to go to the House floor today without proposed changes to the Magnuson Amendment.

Washington legislators said they were upset the provision was included as part of the bill, noting they weren't consulted or even told about it until three days ago.

"Since the provision had little impact on the ability to increase refining capacity in our state, we were concerned that it should not set a future precedent," Dicks said. "This is a great victory for our delegation."

The bill's sponsor, Rep. Joe Barton, R-Texas, agreed to remove the provision at yesterday's hearing. Barton's staff members declined to comment yesterday.

Both Inslee and Dicks said committee members probably were swayed by Reichert, the sole Republican in the state delegation opposing the change.

Reichert is in his first term in the House, representing a district that has become more concerned about environmental issues over the years.

Mike Shields, Reichert's chief of staff, said the congressman was pleased with the effort.

"It was a triumph of bipartisanship," Shields said. "In a short amount of time, these congressmen were able to work together."

Earlier yesterday, Reichert, Inslee and Cantwell wrote congressional leaders, asking that the provision be removed.

Posted by Arthur Caldicott on October 07, 2005

October 06, 2005

Hydro to reveal plans for upgrade

By Scott Simpson
Vancouver Sun
06-Oct-2005

BC Hydro will reveal plans later this month for British Columbia's biggest electricity system upgrade in a generation.

Hydro has been looking at every plausible power option except nuclear energy -- the list includes hydro, wind, gas and coal generation -- in a plan to head off and eventually eliminate B.C.'s dependence on foreign electricity imports.

"This is the next 20 years we are looking at here, and we haven't done anything this significant since maybe 1995," Stephen Bruyneel, director of corporate communications and public affairs for Hydro, said in an interview Wednesday.

"Overlaying all this work is a goal of making British Columbia energy self-sufficient over the next 20 years. We'd like to get to a point where we would be able to rely on our own resources."

The plan may open a Pandora's box.

Electricity production options are set out in a series of briefing papers provided in late September to members of a provincial "integrated electricity planning" committee.

The committee was struck to provide input to Hydro on the best combination of options.

The briefing documents say the cheapest source of power is conservation through energy efficiency projects such as Power Smart.

Hydro ranks the Site C dam No. 1 for lowest cost electricity generation behind conservation -- followed by geothermal, wind, small hydro, coal, and a re-powering of the aging Burrard Thermal gas-fired generating plant in Port Moody.

Bruyneel cautioned that the list is more of a "snapshot" than an authoritative financial study, using numbers provided by industry, and was intended to facilitate discussion.

"They are just preliminary estimates. Obviously until somebody went and bid it into a call you wouldn't know exactly what they were willing to spend on it or how much it's going to cost," Bruyneel said.

Factors complicating those estimates include the future price of natural gas and any surcharges that may apply to greenhouse gas emissions produced by coal- or gas-fired generating plants.

Recent Hydro planning documents examine everything from "controversy" over the proposed $3.5-billion Site C dam on the Peace River to "NIMBYism" in regions of the province that don't produce as much electricity as they consume.

For example, Hydro documents report that there is support around the province for requiring the Lower Mainland and Vancouver Island to take a bigger role in new power generation since both are net consumers of electricity.

Alternatively, Hydro suggests that pulling Site C out of a portfolio of new projects could raise the overall cost of energy independence by $200 million and would effectively put responsibility for all new electricity supply into the hands of the private sector.

Bruyneel said a decision by Hydro's board of directors will be announced later this month.

It will likely be a political football, as the final decision on power options rests with the Hydro board and B.C. Energy Minister Richard Neufeld.

ssimpson@png.canwest.com

POWER PLAY:

Some of the power generation options being examined by BC Hydro:

- Site C Peace River dam

- Repowering Burrard Thermal

- South Meager Geothermal Project

- Pulverized coal

- Wind power

Posted by Arthur Caldicott on October 06, 2005

Natural gas may hit $20

Geoffrey Scotton
Calgary Herald
Thursday, October 06, 2005

GSX_GasPrices_2005-09-30_small.gif

'It's not a possibility. It's going to happen'


Natural gas prices could top $20 US this winter, analysts warned Wednesday -- as traders in New York sent the price of the critical heating, cooling, cooking and electrical generation fuel into record territory.

Natural gas contracts for December climbed as high as $14.75 US per million British thermal units (mmBTU) on the New York Mercantile Exchange (NYMEX) before closing down slightly from Tuesday's record of $14.22 US. Experts say the soaring prices -- which include a record $15.13 US Wednesday for January gas -- are just a taste of things to come.

"If we have a colder-than-normal winter this winter I think we are going to be in a real crisis," said Tristone Capital Corp. managing director of research, Chris Theal. "We're going to see NYMEX gas clearly through $20 US in that scenario."

Theal and other analysts warned a meeting of chartered financial analysts Wednesday morning that conditions are forming that could see U.S. gas prices skyrocket, a scenario that could take the price for Calgary consumers into the low-$20s per gigajoule (GJ) range.

That possibility would not only wallop Calgary consumers, it could cost the province hundreds of millions of dollars as its winter natural gas rebate program -- just expanded to include the month of October -- is open-ended at gas prices above $12 per GJ.

This month, the province will pay consumers $3.51 for every GJ of gas after consumer rates rocketed to $12.26 per GJ. The addition of October to the rebate program will cost the province $45 million and if gas prices stay between $9 and $12 per GJ the rebate tab for the heating season will hit $615 million.

"Gone are the days of cheap natural gas," said Theal.

Multiple market threats of inadequate natural gas storage, shut-in production from U.S. Gulf coast hurricanes, climbing consumption, flat or declining continental supply and cold winter weather have the potential to combine and push natural gas prices into the stratosphere, Theal and other say.

"It's the perfect storm," said Peter Linder, president of DeltaOne Capital Partners Corp., who told the Herald he's certain prices will top $20 US per mmBTU in any event, likely by December.

"It's not a 'possibility.' It's going to happen . . . probably before Jan. 1," said Linder, adding he predicts U.S. gas prices averaging $15 US per mmBTU in 2006.

He forecast Calgary consumers will pay two to 2.5 times for gas this winter what they paid last winter, when natural gas rates topped out at $7.31 per gigajoule, but that prices could go higher, even into the low-$20s. (A gigajoule, or GJ, and an mmBTU are roughly equivalent measures.)

"Enjoy the rebates," said Linder. "Accept the fact that we're in a new environment, adjust your spending accordingly and learn to live with it."

Gordon Singer, chairman and chief executive of QVGD Investors Inc., said winter temperatures are key, but the stage will be set within weeks by efforts to store three trillion cubic feet (tcf) of winter gas by Nov. 1, the end of storage season. Those efforts have been severely hampered by massive U.S. Gulf coast storms such as hurricanes Rita and Katrina, which have impaired 30 per cent of long-term production, shut in eight billion cubic feet of daily gas production -- and created more than 226 billion cubic feet of lost production.

"If we can't meet that three tcf and it's a cold year, all bets are off on prices," said Singer. Theal noted, "The market's struggling to get to three tcf by the beginning of the heating season."

gscotton@theherald.canwest.com

© The Calgary Herald 2005


The History of GSX Pipeline in gas prices


GSX_GasPrices_2005-09-30.gif

Posted by Arthur Caldicott on October 06, 2005

Coal burning riles Cape Mudge

Grant Warkentin
Campbell River Mirror
Oct 05 2005

The Cape Mudge Indian Band worries its members are facing a higher risk of cancer due to coal burning at Elk Falls mill.

"The Cape Mudge Village...is already profoundly and negatively affected by the airborne emissions from the NorskeCanada Elk Falls pulp mill. Additional contamination from the burning of coal would create further damage to the health, safety and enjoyment of life of this aboriginal community," says a letter from the band's lawyers to the provincial government.

Cape Mudge band manager Brian Kelly told Canadian Press recently that the Cape Mudge and Campbell River Indian bands are almost demographically identical- except that the Cape Mudge Band, whose reserve is blanketed with more emissions from the mill than the Campbell River band's reserve, has a higher rate of cancer among its members.

In the Sept. 27 letter to Randy Alexander, provincial director of water and waste protection, law firm Donovan and Company, representing the band, outlines their concerns over emissions from NorskeCanada's Elk Falls pulp and paper mill. The law firm explains the band wants to see extensive monitoring of air quality at the band's Quadra Island village to learn what sort of health effects emissions from the mill's smoke stacks is having on band members.

The problem, the law firm says, is an unwillingness by NorskeCanada to address the issue and refusal in the past to respectfully deal with the band.

"Norske is well aware of the concerns by the We Wai Kai Nation (Cape Mudge band) with respect to the impact of its airborne emissions on the Cape Mudge village, particularly how the stack emissions frequently become entrained and travel directly through Cape Mudge village and how local residents have suffered respiratory ailments and extraordinarily high cancer death rates," the law firm says. "Norske, however, ignored repeated requests for proper monitoring of air quality in the village.

"The consultation with the We Wai Kai First Nation-has been perfunctory and inadequate; it has-scarcely gone beyond mere notification."

On Tuesday, mill spokesperson Carole Dodds said NorskeCanada is continuing to work with the Cape Mudge band to improve air quality monitoring equipment on Quadra Island.

On Oct. 1, mill manager Norm Facey said if the mill were causing health problems, mill employees would be the ones most affected. And if they were affected, the Workers Compensation Board would be "all over" the mill, he added.

Facey also told Canadian Press that the company was willing to work with the Cape Mudge Band to install more monitoring equipment but added that if the Elk Falls mill is not allowed to continue burning coal, it will have a severe economic impact on the mill.

The mill has been burning coal in its main power boiler for several years, technically on a trial basis, as a supplementary fuel.

The mill's goal is to help its main fuel source - salty hog fuel - burn more efficiently and with fewer pollutants.

However, the coal-burning trials have attracted concerns and opposition from area residents and environmentalists, including Cortes Island resident Dolores Broten, who runs pulp and paper mill watchdog group "Reach for Unbleached."

Broten is skeptical of a technical assessment interpreting data from the coal-burning trials. She believes the data is inadequate and incomplete.

As well, she said, the mill can't ignore a health risk assessment done on the mill's emissions a decade ago, which outlines health risks caused by the mill's emissions.

"The consultant notes that the health risk assessment for airborne dioxin (a toxic chemical emitted from burning coal and salty hog fuel) showed no risk to persons in the Campbell River area. This statement is not accurate," she said in a letter to Alexander. "That risk assessment did in fact show a health risk to the members of the Cape Mudge First Nation."

Broten is also skeptical of the government's standards for the mill.

"The technical assessment assures us that Elk Falls pulp mill emissions meet all provincial standards, most of which were developed 25 years ago," she said. "The technical assessment also assures us that Elk Falls pulp mill emissions are significantly lower than those for a hazardous waste incinerator or a municipal garbage incinerator.

None of these are appropriate comparisons.

"Elk Falls is supposed to be a pulp and paper mill, not a contaminated site, a hazardous waste incinerator or a coal-fired power plant."

The mill's permit to burn coal expired last week but has been extended to the end of October.

Posted by Arthur Caldicott on October 06, 2005

October 05, 2005

Crossed wires at the BCUC -
VITR and VIC as of October 5, 2005

Vancouver Island Transmission Reinforcement (VITR)


Background

The Vancouver Island Transmission Reinforcement (VITR) is a project of the BC Transmission Corporation (BCTC) to build a 230 kV AC transmission cable to carry electricity from the Lower Mainland to Vancouver Island. BCTC filed an application for a Certificate of Public Convenience and Necessity (CPCN) for the VITR with the BC Utilities Commission (BCUC) in July 2005. The project is stated to cost about $245 million and will be completed in two phases, operational in October 2008 and Phase II when required, 2017 is suggested.

BCTC-VITR site: http://tinyurl.com/e4j9e
BCUC project site: http://www.bcuc.com/ApplicationView.aspx?ApplicationId=78
EAO project site: http://www.eao.gov.bc.ca/epic/output/html/deploy/epic_project_home_250.html

The proposed route would be overland on existing right-of-way (ROW) from Arnott Terminal in South Delta, through Tsawwassen; underwater to Galiano Island (through the United States, for half of this first underwater leg); overland at Galiano; underwater again to Salt Spring Island; then overland on existing ROW on Salt Spring, across Sansum Narrows, and to Vancouver Island Terminal just north of Duncan in North Cowichan. (map, below)

It is referred to by the BCUC as BCTC-VITR.

BCTC-VITR is at the pre-application stage of an environmental assessment (EA) by the BC Environmental Assessment Office (EAO).

The application to BCUC contains this paragraph, surrendering considerable discretion to the BCUC with respect to changes to the proposed transmission solution, but pleading for approval:

BCTC must have a transmission solution to Vancouver Island in place by the fall of 2008. ... BCTC respectfully requests that the Commission approve the Project as proposed, or with modifications considered to be in the public convenience and necessity and supported by the evidence, rather than denying the Project if it finds that the Project, as proposed, is not in the public interest. [1.4 Order Sought]


BCTC-VITR Timetable: Hearing November 28, 2005

Here are the key dates in the BCUC timetable for the BCTC-VITR proceeding, revised as of October 5, 2005:

16 Sep 2005 Intervenor and Interested Party Registration
16 Sep 2005 Participant Assistance/Cost Award Budgets
10 Oct 2005 BCTC Responses to Information Requests
17 Oct 2005 Intervenor Evidence
12 Oct 2005 Sea Breeze to file further motions for the Pre-hearing Conference
21 Oct 2005 Pre-hearing Conference
26 Oct 2005 BCUC and Participant Information Requests to Intervenors
10 Nov 2005 Intervenor Responses to Information Requests
12 Nov 2005 Town Hall Meeting (Salt Spring)
16 Nov 2005 Staff issue Hearing Issues List
19 Nov 2005 Town Hall Meeting (Vancouver Island)
21 Nov 2005 Town Hall Meeting (Tsawwassen)
21 Nov 2005 Open Oral Submissions
22 Nov 2005 BCTC Consolidation of Hearing Issues List
24 Nov 2005 Panel issues Hearing Issues List
28 Nov 2005 Public Hearing Commences


Intervenors

There are now 50 intervenors in the BCUC-VITR proceeding. Compare this to the Duke Point - Electricity Purchase Agreement hearing, which had 39 intervenors, or the Terasen - Kinder Morgan Acquisition hearing, with 31.

Many of these intervenors are residents along the ROW in Tsawwassen and on Salt Spring.

Two organizations, TRAHVOL and IRAHVOL (Tsawwassen/Island Residents Against High Voltage Overhead Lines) have filed as intervenors to represent the concerns of these respective residents. More, below

The Corporation of Delta, the Islands Trust, Capital Regional District - these local governments have registered, also representing local interests.

South Delta Secondary School & Delta School District, again, representing local concerns.

The Elk Valley Coal Corporation, Norske Canada, Joint Industry Electricity Steering Committee (JIESC), Terasen

Sea Breeze Pacific Regional Transmission System Inc. - see more, below

GSX Concerned Citizens Coalition.

No Vanport Sterilizers, yet.


Interest of IRAHVOL and TRAHVOL and others

IRAHVOL and TRAHVOL share concerns about electromagnetic fields (EMF) generated by alternating current transmission systems, and about continued use of overhead transmission lines. TRAHVOL is opposed to the VITR route through the Tsawwassen ROW, irrespective of whether it goes overhead or underground. IRAHVOL is likewise opposed to continued use of the Salt Spring ROW, and is pushing for an all-submarine cable.

Both organizations have engaged lawyers to represent them at the BCUC. TRAHVOL have engaged Mark Underhill and Joe Arvay. Arvay is one of the lawyers that dominates public interest legal issues in British Columbia. His firm also does work for the provincial government. (Chris Jones, at the time working for Arvay Finlay, represented the province in support of the GSX Pipeline.) Murray Rankin is also advising.

IRAHVOL have engaged David Austin, a director of and legal agent for the Independent Power Producers of BC. Austin has a long history of critical opinion on energy issues in BC, and particularly with respect to BC Hydro.

While we're still on lawyers, Delta is represented by James Yardley, who represented Abbotsford and later, David Suzuki Foundation, in the Sumas Energy 2 Powerline proceeding.

Delta essentially supports the TRAHVOL position and is opposed to the current BCTC to underground in existing ROW in Tsawwassen and supports alternative technologies or routes that eliminate concerns with EMF.

www.irahvol.org
www.trahvol.org


Vancouver Island Cable (VIC)


Interest of Sea Breeze Pacific Regional Transmission System Inc.

Sea Breeze is proposing an alternative to the BCTC-VITR, and on September 30, 2005, filed an application for a CPCN with the BCUC for the Vancouver Island Cable (VIC) project, a 550 MW HVDC Light cable system. HVDC Light is proprietary technology of ABB, and purports to have performance benefits that are superior to those of AC transmission.

The VIC application to BCUC gives a cost comparison table that shows Phase I & II of the VITR project at $266 million and the VIC project at $324 million. Sea Breeze then factors in other costs and benefits associated with VITR and VIC and gives a "Total Project Cost" for VITR of $289 million and VIC of $163 million. There's a great amount of apples-to-oranges in this table, and the ensuing complex discussion that is about to unfold between the two projects won't be easy stuff.

Sea Breeze Vancouver Island Cable site: www.vancouverislandcable.com

The VIC proposed route is underground or underwater along its entire length. From the Ingledow Substation in Surrey to White Rock it proposes to run alongside existing roads. It would run underwater from White Rock, through the United States to the southeast end of Saturna Island, then along the GSX Pipeline route to the north end of the Saanich Peninsula. On land again, it would run alongside roads or other powerline ROW to Pike Substation. (map, below)

Some argue that BCTC appears to be biased against DC transmission. Phasing out its existing HVDC. Denying that ABB's DC Light technology has merit. In April, BCTC released a report it had commissioned which concluded that "For VITR, HVDC LightTM is more expensive to construct, has higher losses, and costs more to maintain than the 230 kV ac alternative. It does not offer any technical advantage in this situation ...."
http://www.sqwalk.com/Rashwan_HVDCLightAnalysis_2005-04-08.pdf


Hearing Process

In its application, Sea Breeze says it filed the VIC CPCN application as a result of an invitation by the Commission on August 9.

The "invitation" is included in the hearing order for BCTC-VITR, and says this:

If Sea Breeze files a CPCN Application and desires to have it reviewed in this proceeding, then Sea Breeze should file the CPCN Application ...no later than the end of September 2005. Participants should assume that information requests to Sea Breeze will be due on October 17, 2005, assuming Sea Breeze files either a CPCN Application or Intervenor Evidence. http://tinyurl.com/be8lo

Sea Breeze then recommends that the BCUC confirm its consolidation of the VIC CPCN application with the existing BCTC-VITR proceeding.

This should be challenging - for the Commission, for intervenors, and for the public interest. Stay tuned.


What's this?

The bottom of a number of pages of the BCTC-VITR application filed with BCUC contains this peculiar image:
BCHydroEngineering.gif
http://tinyurl.com/bh774
Perhaps the company slogan should be "designed in mirrors".

VITRMap.gif

sbx-vic.gif

Posted by Arthur Caldicott on October 05, 2005

October 04, 2005

SUV sales tank as gas soars

Greg Keenan
Globe and Mail
Tuesday, October 4, 2005

Gas guzzlers stay on lots as auto makers report big decline in luxury 4WD category

Soaring gas prices sent sales of sport utility vehicles into the tank in North America last month.

Sales of the biggest SUVs tumbled as hurricanes Katrina and Rita and fears of gas shortages sent fuel prices soaring to well above $1 a litre across most of Canada and $3 (U.S.) a gallon south of the border.

"These ultra high gas prices are taking a toll on the larger, less fuel-efficient light trucks," said industry analyst Dennis DesRosiers, who heads DesRosiers Automotive Consultants Inc. in Richmond Hill, Ont.

The slide hit large SUVs in particular. Sales in that category, which includes such behemoths as Dodge Durango, Ford Expedition, GMC Yukon and Nissan Armada, slumped 50 per cent last month in Canada from year-earlier levels, according to data released by the auto makers yesterday.

That compares with an overall decline of just 2.4 per cent in the Canadian vehicle market last month.
The market also suffered from the end of discount programs at some auto makers that allowed consumers to pay the same price as employees for their new vehicles.

The SUV slide may, however, be a regional phenomenon.

"Out here, [gas prices] are not top of mind," said Ted Knight, who owns Crestview Chrysler Dodge Jeep in Regina as well as dealerships elsewhere in Saskatchewan and in Medicine Hat, Alta.

"It's not anywhere near what I thought it would be," Mr. Knight said. "We're selling Durangos, we're selling Grand Cherokees."

But even sales of luxury SUVs, which have held up in the face of higher gas prices, took it on the chin last month.

Sales of Ontario-made vehicles such as the RX330 for Toyota's luxury Lexus division slumped 17 per cent in Canada.

It was a similar story for the Chrysler Pacifica, which is built in Windsor, Ont. It slumped 24 per cent in the U.S. market.

Last month, sales of the Toyota Sequoia fell 30 per cent, to 38 units from 54, and sales of Chrysler's Dodge Durango plunged 64 per cent to 249 from 698.

Overall, sales in Canada fell to 124,175 vehicles, from 127,233 in September of 2004.

Each of the Big Three reported a drop, with Ford and GM noting large declines in truck sales.

At DaimlerChrysler Canada Inc., car sales fell, while truck sales rose, sparked by a big jump in sales of minivans.

Carlos Gomes, a Bank of Nova Scotia economist, said high gas prices packed a double whammy for auto makers.

First, they put a dent in sales of SUVs and other light trucks last month.

Sales of all light trucks -- which include minivans, so-called crossover utility vehicles that are based on a car chassis instead of a truck chassis and actual trucks -- fell about 10 per cent in Canada.

High gas prices, Mr. Gomes said, also dampen consumer confidence, which is a key driver of vehicle sales.

He acknowledged that the mood of consumers is likely more buoyant in provinces that benefit from high oil prices such as Alberta, than it is in Ontario and Quebec, which are the biggest markets for new vehicles.

The percentage declines in sales of large SUVs were similar in the U.S. market, where they represent a much larger and more important slice of the overall market than they do in Canada.

Sales of SUVs and trucks slumped 50 per cent for General Motors Corp., while Ford Motor Co. saw sales of traditional, truck-based SUVs tumble by the same amount.

This is another blow to Ford and GM, because they rely heavily on highly profitable SUVs to make up for money-losing passenger car operations.

The two largest U.S. auto makers are already reeling, with massive losses in their North American automotive operations caused in part by years of sliding market share.

Ford is preparing a major financial restructuring that is expected to be unveiled this month and include several plant closings and thousands of job cuts in the United States.

GM is in the midst of negotiations with the United Auto Workers union south of the border on ways to trim the auto maker's soaring health-care costs.

A switch to more fuel-efficient vehicles benefits Asia-based auto makers, which have already grabbed more than 50 per cent of the passenger car side of the market in both Canada and the United States.

"It's history repeating itself," said Thomas Leritz, an investment manager with Argent Capital Management in Clayton, Mo. "You go back to the seventies, during those oil shocks the Japanese took market share."

Join the online conversation on this article, here: http://tinyurl.com/arpnp

Best headline in a long time ... Arthur

Posted by Arthur Caldicott on October 04, 2005

Northern towns await pipeline decision

Scott Simpson
Vancouver Sun
October 04, 2005

Whether Enbridge picks Prince Rupert or Kitimat, oil line will benefit both

A $3.5-billion pipeline project that would create thousands of construction jobs and light up the economies of communities across northern British Columbia is about to take another major step in its development.

Enbridge Pipeline's Gateway project envisions two 1,200-kilometre pipelines running from Edmonton to the B.C. coast, either at Prince Rupert or Kitimat, and the company said Monday that an announcement of the final choice for the line's western terminal is just days away.

No matter which city is finally chosen, benefits are expected to resonate across the north.

"It's pretty significant all the way along the route in terms of benefit to the local communities and to the province as well," said Doug Ford, a community consultant with Enbridge Pipelines.

The number of permanent jobs at a loading-unloading terminal would number about 40, but the mayors of both coastal cities see the project as a key aspect of economic revitalization.

Prince Rupert has been hurting, employment-wise, since the closure of the Skeena Cellulose pulp mill several years ago, while Kitimat is reeling after a recent announcement by Methanex that it is closing its Kitimat methanol plant because North American natural gas prices make it a money-loser.

Both mayors have taken Enbridge on tours of their local port facilities, but insist they're not privy to a final decision.

"We've made our arguments that Kitimat is a better location than the other location, based on cost, based on the fact that we're an industrial community, and we have the land available, and so on," Kitimat Mayor Richard Wozney said.

"We've got our ears to the ground and we're waiting for the thunder to hit Kitimat."

Prince Rupert Mayor Herb Pond said the project, coupled with container port development and cruise ship stops, could create enough critical mass to support a whole new marine industry in his community.

Overall, he added, the project would be great news for all communities in northern B.C. -- Enbridge said it will require "thousands" of workers during a two-year construction project that could begin as early as 2007.

"Obviously, the first hit is the construction phase, which is going to be great for everybody in the north. The only negative [that] one might talk about at all is that it's going to require so many people that it may in fact drain from other projects. But we'll deal with that problem," Pond said.

The Gateway project includes an oil pipeline carrying Alberta crude to the coast, and a separate line carrying an oil-thinning condensate in the other direction -- from a Pacific coast terminal to Albertan oil fields.

Enbridge announced on Monday that the open season -- the sign-up period for shippers to indicate their interest in participating -- for the condensate line was a roaring success.

The open season ended on Friday with enough response that the company now plans to increase the diameter of the pipeline to about 51 centimetres (20 inches) from about 41 centimetres (16 inches).

The open season for the oil pipeline is expected to commence later this month.

The oil line will not be commercially viable until Enbridge signs up enough shippers to fill the pipe -- although the company took a major step forward last April when it announced that PetroChina signed a memorandum of understanding for shipments encompassing about half the line's 400,000- barrel-per-day capacity.

The proposed pipelines must also receive approval from the National Energy Board and the Canadian Environmental Assessment Agency, as well as support from more than 40 B.C. and Alberta first nations along the proposed route.

"Based on the open season, we can now be confident we will have at least the minimum required threshold of 150,000 barrels per day committed to the line, and probably more," said Richard Bird, a vice-president at Enbridge, in a company news release.

"The successful open season on the condensate line also means we will be able to focus on lower tolls for the crude oil line."

Enbridge will stage open house meetings in several B.C. communities along the pipeline route beginning n extmonth.

A meeting is scheduled for Kitimat on Oct. 18, but Wozney said that's "not necessarily" an indication his city will be selected for the route. Obviously, I hope that will be the case."

Prince Rupert Mayor Herb Pond had a similar story.

"Enbridge representatives were up through the area two weeks ago, and met with council, just doing a general update," he said. "They continue to have teams of people in our community doing economic assessments and all those kinds of things. But there's no hint yet as to what decision they've made . . ."

ssimpson@png.canwest.com

Posted by Arthur Caldicott on October 04, 2005

October 03, 2005

Sea Breeze: Vancouver Island Cable

Sea Breeze has filed its application with the BC Utilities Commission for a certificate of public convenience and necessity (CPCN) for a 550 MW HVDC Light cable system to Vancouver Island.

In order G-70-05, dated August 7, 2005, the BC Utilities Commission (BCUC) said "If Sea Breeze files a CPCN Application and desires to have it reviewed in this proceeding, then Sea Breeze should file the CPCN Application ... no later than the end of September 2005. Participants should assume that information requests to Sea Breeze will be due on October 17, 2005, assuming Sea Breeze files either a CPCN Application or Intervenor Evidence."

Sea Breeze has asked that its VIC project be reveiwed in a process parallel to the review of the BCTC VITR project.

The cable would run underground from the Ingledow Substation in Surrey, along road routes to White Rock, across Georgia Strait on much the same route as the GSX Pipeline, to the tip of the Saanich Peninsula, then again underground down to the Pike Substation (where Sea Breeze's other cable, the Juan de Fuca Cable is also proposed to terminate.)

The full application is now on the project's website at www.vancouverislandcable.com. Happy reading.

Interesting times at the BCUC. Will BCTC blink?

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Posted by Arthur Caldicott on October 03, 2005

A natural gas primer -- and where the money goes

Randy Jespersen
Vancouver Sun
03-Oct-2005

Ever since Terasen Gas announced natural gas costs were increasing, we have heard from many of our customers questioning our reasoning.

British Columbia is blessed with large natural gas reserves and I am often asked who makes money from this resource. Why do we allow "our" natural gas to be sold outside B.C. rather than keeping it for ourselves?

The rights to B.C.'s natural gas reserves are owned by the provincial government, which earns a royalty on every gigajoule of gas sold, based on a percentage of the market price. When the market price rises, the government makes more money. According to the latest provincial budget update, Victoria expects to earn $1.8 billion in 2005 from natural gas royalties alone.

The companies exploring for and producing oil and natural gas in B.C. are some of the largest in the world: EnCana, Petro-Canada, Canadian Natural Resources, Talisman (Canadian firms); Imperial Oil and Devon (U.S. firms), and Shell and British Petroleum (European.)

Terasen Gas is not in the exploration or production side of the business, and we don't own or control natural gas reserves or production. We buy gas on behalf of our 875,000 customers here in B.C. and are allowed to only recover our actual cost of gas (i.e. no mark-up), our profit coming from the delivery charges.

Every three months we review commodity rates with the BC Utilities Commission. If we expect to pay more for natural gas than what we are charging, we ask for a rate increase. This occurred in July and September. Likewise, if we expect the gas to cost us less than we are charging, we ask to reduce rates. Rate reductions occurred in January 2004 and January 2002.

Since June 2005, natural gas prices across North America rose more than 30 per cent. But our purchasing strategies, which include hedging and gas storage, have saved our customers more than $270 million this coming winter.

The current rise in prices is the result of increased demand caused by a hot summer, the rising price of crude oil, and disruptions to supply caused by hurricanes in the Texas gulf region. Why do events far from B.C. result in us paying more for natural gas?

The answer lies in the development of the natural gas sector.

In 1985 Canadian governments deregulated natural gas prices to improve access to markets. This caused prices to fall as production increased and producers tried to realize value from the long-term proven reserves they had been required to hold. In the following years, demand grew as natural gas was increasingly used for home heating, fireplaces, manufacturing processes, electricity generation, and as a replacement for diesel fuel.

Over time, a network of pipelines crisscrossing North America was built, allowing natural gas to move to markets where demand is greatest. A competitive market was created where price differences from one side of the continent to the other are typically just the cost of transportation.

Eliminating constraints to market access ensures B.C. gets full value for its gas reserves and because of our location near supply sources, B.C.'s natural gas consumers enjoy lower transportation costs.

Some people are worried that Canada is running out of gas. That's not the case. We are running low on easily accessible, cheap-to-produce natural gas found in prior years. According to the National Energy Board, Canada has 70 to 80 years of natural gas reserves based on current levels of production.

Much like B.C.'s rich heritage of hydro-generation assets, where the costs of producing electricity from a new dam will be higher than from existing facilities, there will be additional costs to find new gas reserves.

But B.C. has many options: The Nechako and Bowser basins, coal bed methane, offshore reserves, and liquefied natural gas imports from terminals being built across Canada, the U.S. and Mexico.

We have ample supplies of natural gas to heat our homes and run our businesses well into the future while continuing to attract major new investment and generate substantial government revenues providing benefits to all British Columbians.

Randy Jespersen is president of Terasen Gas.

Posted by Arthur Caldicott on October 03, 2005

Natives want province to halt coal-burning at mill

The Canadian Press
October 1, 2005

CAMPBELL RIVER -- The First Nation on Quadra Island has asked the B.C. government not to approve an application for the Elk Falls pulp and paper mill to burn any more coal until the emissions have been studied.

The 200-member Cape Mudge band is worried about the possible health effects of emissions from the NorskeCanada mill.

An emissions-fallout study commissioned by Norske during the past year showed elevated levels of various toxic compounds around the Cape Mudge lighthouse a few hundred metres south of Cape Mudge village, but mill personnel said the figures were well within safety limits.

Mill vice-president Norm Facey said if the mill waste were causing health problems the group most likely to be affected would be mill employees.

"If that was happening the [Workers Compensation Board] would be all over us," he said.

Government agencies are required to consult with and help protect First Nations from the environmental and health impact of industrial plans.

A Cape Mudge member said new or recurring cases of cancer have been coming in at a rate of at least two a year over the past 10 years or more, about three times the number of cases at the nearby Quinsam Indian reserve, which receives only a fraction of the mill's smoke-stack emissions compared to Cape Mudge.

Cape Mudge band administrator Brian Kelly said the two First Nations communities are an almost exact mirror image of each other demographically, in population, age distribution, dietary habits and lifestyle, such as smoking.

"I don't see there's any reason [the cancer rate] would be different [apart from the mill emissions]," Kelly said.

Cape Mudge band members in their 40s and early 50s have been diagnosed with cancer, he said. "It's not like it's people 75-plus."

The mill is seeking an open-ended amendment to its present temporary permit to burn up to 83 tonnes of coal a day as an auxiliary fuel for its boilers.

The permit expired Friday. The Environment Ministry's waste-protection branch extended it for 30 days and also extended the consultation period until the end of October.

Facey said if the company was not allowed to go on burning coal at the mill, that would have a severe impact on the operation's economics, already hit by several other factors such as the high value of the Canadian dollar.

Facey said the mill was prepared to work with the First Nation to try to get more continuous-monitoring equipment, perhaps for a study over two years.

A letter from the band to the B.C. government called for increased air pollution monitoring.

"Additional contamination from the burning of coal would create further damage to the health, safety and enjoyment of life of this aboriginal community," the letter said.

Posted by Arthur Caldicott on October 03, 2005

October 02, 2005

Gas prices beginning to affect consumer behaviour

Barrie McKenna
Globe and Mail
September 29, 2005

WASHINGTON -- The high price of gas already has consumers feeling a lot less confident and with another surge in energy prices yesterday, economists are watching for signs the price shock is enough to get people to actually change the way they live and spend.

"Consumers have to adjust their budgets," insisted economist Peter Morici, a business professor at the University of Maryland in College Park, Md. "Something is going to have to give."

The first hint of a consumer pullback is likely to show up in purchases of non-essential goods and services, including apparel, cars and leisure travel, according to Prof. Morici. He also predicted there would be changes in behaviour as people drive less, buy more fuel efficient cars, car pool and turn to public transit.

"We are going to see conservation in gasoline that we didn't expect," he said. "We've crossed the threshold."

Oil, gasoline and natural gas prices all jumped yesterday, on news of a decline in crude inventories in the United States and continuing fears over refining capacity. The question now is whether those high prices will radically change behaviour.

That hasn't been the pattern over the past decade, according to a report released yesterday by Statistics Canada that showed Canadians consumed a record 40.3 billion litres of gasoline last year, up nearly 17 per cent from a decade earlier.

Still, there is plenty of evidence that high energy prices are starting to bite.

Consumer confidence in the United States suffered its largest drop in 15 years after hurricane Katrina sent gasoline prices to record highs, according to report this week by the U.S. Conference Board.

Energy costs are also spooking business owners. Owners of small and medium-sized Canadian companies said they too are fretting about the economic fallout from higher fuel prices, according to a survey by the Canadian Federation of Independent Business. The study found that 88 per cent of respondents said energy prices were now a major cause of concern.

A report yesterday showed consumer strains are already turning up in credit card delinquencies among Americans. The American Bankers Association blamed rising fuel costs for a record high percentage of credit card customers who've fallen behind on their payments.

"Gas prices are taking huge chunks out of wallets, leaving some individuals with little left to meet their financial obligations," ABA chief economist James Chessen said.

The ABA said 4.81 per cent of credit card accounts were past due by 30 or more days in the second quarter, up from 4.76 per cent in the first quarter. He pointed out that the effects of hurricanes Katrina and Rita won't show up until the fourth quarter.

Gasoline for October delivery jumped 17.29 cents (U.S.) or 8 per cent to close at $2.33 a gallon on the New York Mercantile Exchange, the highest since Sept. 1. Crude oil for November delivery rose $1.28 or 2 per cent to $66.35 a barrel. Natural gas for October delivery rose $1.251 or 9.9 per cent to $13.907 per million British thermal units, the highest close since trading began in 1990.

Posted by Arthur Caldicott on October 02, 2005

A World Turned Upside Down

George Monbiot
The Guardian
September 2005

The corporations are demanding regulation, and the government is refusing to give it to them

Climate change denial has gone through four stages. First the fossil fuel lobbyists told us that global warming was a myth. Then they agreed that it was happening, but insisted it was a good thing: we could grow wine in the Pennines and take Mediterranean holidays in Skegness. Then they admitted that the bad effects outweighed the good ones, but claimed that it would cost more to tackle than to tolerate. Now they have reached stage 4. They concede that it would be cheaper to address than to neglect, but maintain that it's now too late. This is their most persuasive argument.

Today the climatologists at the Snow and Ice Data Centre in Colorado will publish the results of the latest satellite survey of Arctic sea ice(1). It looks as if this month's coverage will be the lowest ever recorded. The Arctic, they warn, could already have reached tipping point: the moment beyond which the warming becomes irreversible(2). As ice disappears, the surface of the sea becomes darker, absorbing more heat. Less ice forms, so the sea becomes darker still, and so it goes on.

Last month, New Scientist reported that something similar is happening in Siberia. For the first time on record, the permafrost of western Siberia is melting(3). As it does so, it releases the methane stored in the peat. Methane has 20 times the greenhouse warming effect of carbon dioxide. The more gas the peat releases, the warmer the world becomes, and the more the permafrost melts.

Two weeks ago, scientists at Cranfield University discovered that the soils in the UK have been losing the carbon they contain: as temperatures rise, the decomposition of organic matter accelarates, which causes more warming, which causes more decomposition. Already the soil in this country has released enough carbon dioxide to counteract the emissions cuts we have made since 1990(4).

These are examples of positive feedback: self-reinforcing effects which, once started, are hard to stop. They are kicking in long before they were supposed to. The intergovernmental panel on climate change, which predicts how far the world's temperature is likely to rise, hasn't yet had time to include them in its calculations. The current forecast - of 1.4 to 5.8 degrees this century - is almost certainly too low.

A week ago, I would have said that if it is too late, then one factor above all others is to blame: the chokehold big business has on economic policy. By forbidding governments to intervene effectively in the market, the corporations oblige us to do nothing but stand by and watch as the planet cooks. But on Wednesday I discovered that it isn't quite that simple. At a conference organised by the Building Research Establishment, I witnessed an extraordinary thing: companies demanding tougher regulations, and the government refusing to grant them(5).

Environmental managers from BT and John Lewis (which owns Waitrose) complained that without tighter standards that everyone has to conform to, their companies put themselves at a disadvantage if they try to go green. "All that counts", the man from John Lewis said, "is cost, cost and cost." If he's buying eco-friendly lighting and his competitors aren't, he loses. As a result, he said, "I welcome the EU's Energy Performance of Buildings Directive, as it will force retailers to take these issues seriously."(6) Yes, I heard the cry of the unicorn: a corporate executive, welcoming a European directive.

And from the government? Nothing. Elliot Morley, the minister for climate change, proposed to do as little as he could get away with. The officials from the Department of Trade and Industry, to a collective groan from the men in suits, insisted that the measures some of the companies wanted would be "an unwarranted intervention in the market".

It was unspeakably frustrating. The suits had come to unveil technologies of the kind which really could save the planet. The architects Atelier Ten had designed a cooling system based on the galleries of a termite mound. By installing a concrete labyrinth in the foundations, they could keep even a large building in a hot place - like the arts centre they had built in Melbourne - at a constant temperature without air conditioning(7). The only power they needed was to drive the fans pushing the cold air upwards, using 10% of the electricity required for normal cooling systems.

The man from a company called PB Power explained how the 400 megawatts of waste heat poured into the Thames by the gas-fired power station in Barking could be used to warm the surrounding homes. A firm called XCO2 has designed a virtually silent wind turbine, which hangs, like a clothes hoist, from a vertical axis. It can be installed in the middle of a city without upsetting anyone(8).

These three technologies alone could cut millions of tonnes of emissions without causing any decline in our quality of life. Like hundreds of others, they are ready to deploy immediately and almost universally. But they won't be widely used until the government acts: it remains cheaper for companies to install the old technologies. And the government won't act because to do so would be "an unwarranted intervention in the market".

This was not, I now discover, the first time that the corporations have demanded regulation. In January the chairman of Shell, Lord Oxburgh, insisted that "Governments in developed countries need to introduce taxes, regulations or plans Š to increase the cost of emitting carbon dioxide."(9) He listed the technologies required to replace fossil fuels, and remarked that "none of this is going to happen if the market is left to itself." In August the heads of United Utilities, British Gas, Scottish Power and the National Grid joined Friends of the Earth and Greenpeace in calling for "tougher regulations for the built environment"(10).

So much for the perpetual demand of the thinktanks to "get government off the backs of business". Any firm which wants to develop the new technologies wants tough new rules. It is regulation that creates the market.

So why won't the government act? Because it is siding with the dirty companies against the clean ones. Deregulation has become the test of its manhood: the sign that it has put the bad old days of economic planning behind it. Sir David Arculus, the man appointed by Blair to run the government's Better Regulation Task Force, is also deputy chairman of the Confederation of British Industry, the shrillest exponents of the need to put the market ahead of society. It is hard to think of a more blatant conflict of interest.

I don't believe it is yet too late to minimise climate change. Most of the evidence suggests we could still stop the ecosystem from melting down, but only by cutting greenhouse gases by around 80% by 2030. I'm working on a book showing how this can be done, technically and politically. But it has now become clear to me that the obstacle is not the market but the government, waving a dog-eared treatise which proves some point in a debate the rest of the world has forgotten.

www.monbiot.com

References:

1. This was reported by Steve Connor, 16th September 2005. Global warming 'past the point of no return'. The Independent. But the centre has just announced that its results won't be published until the end of the month. http://nsidc.org/news/

2. Steve Connor, ibid.

3. Fred Pearce, 11 August 2005. Climate warning as Siberia melts. New Scientist.

4. John Pickrell, 7th September 2005. Soil may spoil UK's climate efforts. New Scientist.

5. Resource '05, 13th-15th September 2005. BRE, Watford.

6. Bill Wright, energy and environment manager, John Lewis Partnership.

7. See http://www.atelierten.com/ourwork/profiles/0513-federation-square.pdf

8. Quiet Revolution 6kW. Brochure from XCO2. Offord St, London. http://www.xco2.com/quietrevolution

9. Lord Oxburgh, 27th January 2005. Quoted in Greenpeace press release: Shell Chair urges government to act now on climate change. http://www.greenpeace.org.uk/climate/climate.cfm?ucidparam=20050210110220

10. Tony Juniper et al, 1st August 2005. Letter to Margaret Beckett and other ministers. Available on request from Friends of the Earth.

Posted by Arthur Caldicott on October 02, 2005

October 01, 2005

Why Cheap Gas Is a Bad Habit

Robert J. Samuelson
Newsweek
Sept 19, 2005

Higher pump prices would help push Americans away from gas guzzlers.


Mario Tama / Getty Images
Hurricane Katrina’s impact was felt far beyond New
Orleans. All drivers learned the cost on oil disruption.


Sept. 19, 2005 issue - What this country needs is $4-a-gallon gasoline or, maybe, $5. We don't need it today, but we do need it over the next seven to 10 years via a steadily rising oil tax. Coupled with stricter fuel-economy standards, higher pump prices would push reluctant auto companies and American drivers away from today's gas guzzlers. That should be our policy. The deafening silence you hear on this crucial subject from the White House, Congress and the media is a sorry indicator of national shortsightedness.

Katrina's message is clear: we are vulnerable to any major cutoff of oil. This cutoff came from a natural disaster, but the larger menace is a political cutoff. Two thirds of the world's proven oil reserves lie around the Persian Gulf; these countries, led by Saudi Arabia, now provide about a quarter of today's oil supply. This flow could be interrupted at any time for many reasons—terrorism, war, domestic upheaval, deliberate cuts. Many other oil exporters are similarly unreliable: Russia (the No. 2 exporter), Venezuela (No. 5) or Nigeria (No. 8).

Until oil's geography changes, a prudent society would respond to this unavoidable insecurity. After the first oil "crisis" in 1973, Americans did. Congress created a Strategic Petroleum Reserve (SPR) and mandated fuel-economy standards. Drivers were sobered by high prices. From 1970 to 1990, average fuel economy for cars rose from 13.5 miles per gallon (mpg) to 20mpg. For "light trucks" (a category covering pickups, SUVs and minivans), the gains were from 10mpg to 16mpg. But in the 1990s, there was massive backsliding. Fuel economy stagnated, as millions of Americans shifted to SUVs and pickups. The SPR languished. In 1992, it had oil equal to 83 days of imports; by 2000, that was only 52 days.

Complacency reigned. Americans re-embraced the notion of cheap gasoline as a "right" that, if impaired, must be blamed on greedy oil companies, monopolistic OPEC or some sinister conspiracy. Thus, "gouging" was last week's acceptable explanation for the sharp run-up of gasoline prices. Forget the law of supply and demand. Forget our continuing vulnerabilities.

More than 60 percent of our oil use goes for transportation, dominated by road travel. It's a myth that encouraging more fuel-efficient vehicles means that we will all have to drive shoeboxes. The advent of "hybrid" vehicles—combining internal-combustion engines and electric motors—promises fuel-efficiency gains of 10 percent to 50 percent based on existing technologies, says David Greene of the Oak Ridge National Laboratory. But it's also a myth that simply issuing tougher fuel standards will bring instant relief.

"It's going to take a long time," says Walter McManus of the University of Michigan Transportation Research Institute. "You've got 225 million vehicles out there. It's about 15 years to turn over the fleet." Actually, the math is worse than that. From 2003 to 2025, the number of vehicles may grow by 50 percent, projects the Energy Information Administration. The increase reflects more people (from today's 297 million to 351 million in 2025) and higher incomes. The upshot: to keep total gasoline consumption constant, average fuel efficiency must improve roughly 50 percent.

We should be able to do this. Car companies can shift decisively toward hybrids. Despite the hype, annual hybrid sales this year will amount to a mere 234,000 out of total sales of about 17 million, McManus says; and present production plans would raise that to only about 600,000 by 2009, he projects. But if companies are to be shoved toward hybrids, they have to be assured of strong demand, because there's a definite downside. On average, hybrids cost $3,000 to $4,000 more than conventional cars, says Greene. (The reasons: the cost of batteries and the need for two power systems.) The traditional U.S. car companies—General Motors, Ford and Chrysler—are unfortunately the least prepared for change. They tied their fortunes to the biggest SUVs and pickups.

Hence, the need for a stiff oil tax. Government needs to foster a market for fuel efficiency. The tax should be introduced gradually—paralleling tougher fuel standards— and, perhaps, tempered if global oil prices rise sharply. One way or another, Americans should know that the era of cheap gasoline is history. Some drivers will want hybrid versions of their present vehicles; others will downsize. It's not a national tragedy for someone to trade an Expedition for a Taurus.

At times, individual freedom must be compromised to improve collective security. Even with this approach, we would not insulate ourselves from all upsets in the world oil market, including a catastrophic loss of supply. Barring huge oil discoveries or technological breakthroughs, "energy independence" is another myth. But we could limit our exposure. The fact that we're not trying is—considering how warnings of New Orleans's vulnerability were ignored—an irony worth noting.

© 2005 Newsweek, Inc.

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Posted by Arthur Caldicott on October 01, 2005

September 29, 2005

Harvesting the wind: Nai Kun

Glenn Bohn
Vancouver Sun
26-Jul-05

Nai Kun Wind Developments has an ambitious plan to build the largest wind farm in Canada

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.

Ran with fact box "Tapping the Wind's Energy", which has been appended to the end of the story.

© The Vancouver Sun 2005

Nai Kun Wind Developments

Posted by Arthur Caldicott on September 29, 2005

If Ralph's a friend, who needs enemies?

Andrew Nikiforuk
Globe and Mail
Wednesday, September 28, 2005


Ralph Klein has taken time out from his Jean Chrétien retirement course to issue prosperity cheques. The media can't gush enough about his beneficence; other Canadians are envious. Everyone wants some "Ralph bucks." But please don't envy us. Whenever a government sends money to its citizens, you can be sure it wants to hide an addiction or buy forgetfulness. And in Mr. Klein's case, the Premier is hoping his prosperity dividend will obscure the province's growing economic vulnerability and a trail of land abuse so grotesque that even Americans in Dick Cheney's Wyoming might shake their heads.
Frenzied gas drilling by EnCana and other land-eaters has turned some parts of Wyoming, Colorado and New Mexico into what even the National Geographic now calls "national sacrifice zones." Alberta, which has no plan other than frenzied drilling, may yet outdo Wyoming on the sacrifice scale. According to Statistics Canada, Alberta is now the country's largest single producer of cattle, natural gas, oil, bitumen, coal-bed methane and unplanned urban growth. The Alberta Genuine Progress Indicator, just published by the Pembina Institute (a non-profit energy watchdog), says if that everyone spent their natural capital so liberally, "five planets would be needed to meet global consumption demands."

To print Ralph bucks, the province has systemically looted one landscape after another. Forty years ago, Alberta's boreal forest was a wilderness; today, provincial records show that 90 per cent has been seriously fragmented by roads, well sites, seismic lines, pipelines and power lines, and looks like an industrial park. What isn't being drilled is being logged.

In Drayton Valley, southwest of Edmonton, the government allows companies to build highly toxic sour-gas wells so close to people's homes that many Albertans live in what's known as "emergency response zones" (in the event of a leak or accident, they would die or suffer permanent brain damage if not evacuated in time). There are as many as 52 such zones; to be located inside one devalues a home by an average of $6,000. But property devaluation is par for the course in Alberta.

The eastern slopes of the Rockies, Alberta's signature landscape, is now slated for gas drilling so intensive that within the industry it's known as "carpet-bombing." Watersheds and fescue grasslands -- which can capture more carbon dioxide than forests (maintaining these lands is the province's smartest climate-change fighter) could all be destroyed to make a few more "Ralph bucks."

To accommodate urban sprawl and other goodies, the government admits that it has over-allocated water from every major river in southern Alberta -- an area experiencing a 3-per-cent economic growth rate. In 50 years, no one expects to be able to float down the Bow or Oldman rivers.

To please Dick Cheney, we are now liquidating Alberta's No. 1 revenue earner, natural gas, faster than VLT gamblers can eat up cash. Even with a quarter of the world's drilling rigs at play in Alberta, production is dropping by 3 per cent a year (according to Dave Hughes, a geologist at Natural Resources Canada). We have a nine-year supply of conventional gas left -- and the sorry replacement, coal bed methane, promises to fragment more land, threaten more water, use more energy and unsettle more rural Albertans than all previous drilling combined.

The much vaunted oil sands, Alberta's original "provincial sacrifice zone," remain a sobering study in megaproject mismanagement. It's not likely that the world's biggest holes in the ground will ever be reclaimed, and most projects are already being dogged by the rising costs of steel, water, solvents, natural gas, manpower and basic infrastructure. Even industry sources describe the province's cumulative impact planning as "dysfunctional."

Although Mr. Klein pretends that Alberta is deficit-free, don't believe it. The provincial oil-and-gas regulator (the Alberta Energy and Utility Board) reports that the oil patch has $9-billion worth of wells and gas facilities that haven't been cleaned up -- and has only set aside $20-million for the job. Alberta Infrastructure Minister Lyle Oberg admits that the province has a $7-billion backlog in work on schools and roads. A $1-billion water strategy has gone largely unfunded. Growth, of course, never pays for itself. But you'll never hear that truth in Alberta.

When a society greedily eats its children's future, the social indicators generally look bad. Pembina's sobering, 51-page Genuine Progress Indicator reports that Alberta has Canada's highest rate of car crashes and fatalities, a divorce rate that grew by 357 per cent in the last 40 years and one of the worst gambling records anywhere. Albertans now spend more on gambling ($2-billion) than the province earns from oil revenues. Many consider it Mr. Klein's most impressive legacy.

Saving for the future, a no-brainer, just isn't happening. Norway has a rainy day petroleum fund worth $100-billion and Alaska has a $35-billion fund (plus its own petro cheques). Yet Alberta hasn't put one penny in the province's static $12-billion Heritage Fund since 1987. With Ralph bucks, who needs to worry about rainy days or grandchildren?

The worst is this: Alberta can't even be bothered to collect a fair share of its fossil-fuel wealth. Between 1995 and 2002, Norway and Alaska collected twice as much revenue from their oil and gas reserves. In contrast, Alberta simply let the profits slip south of the border. Our one-per-cent royalty rate for oil sands remains a continental embarrassment.

The poet Sir Walter Scott once asked if there breathed a man "with soul so dead/Who never to himself hath said, 'This is my own, my native land!' " Gamblers with petro bucks can't be bothered with such reflective nonsense. Envy us? Hell, no. Envy Norway.

Andrew Nikiforuk is a Calgary journalist and author of Saboteurs: Wiebo Ludwig and the War Against Big Oil.

Posted by Arthur Caldicott on September 29, 2005

September 22, 2005

Trade pact cost us a bundle

by David Orchard

Across Canada the price of gasoline rose steadily over the summer. Recently it shot up another 30%. We were told that this unprecedented leap was because Hurricane Katrina in the Gulf of Mexico affected U.S. production.

Why does a storm in the U.S. drive up Canadian prices? There was no storm in Alberta. No drilling rigs were toppled in Saskatchewan. Yet Canadians are now paying up to $1.44 a litre or over $6 per gallon for gasoline, more than in most places in the U.S. How can this be? Isn't Canada an oil and gas producer, the largest foreign source in fact for the U.S.?

The answer is spelled FTA and NAFTA. Not long ago we had a made-in-Canada price for energy, Canadian oil and gas companies, and a 25 year reserve of gas set aside for Canada's future needs. A cold country, with vast distances, quite reasonably gave its own citizens a better price for oil and gas than it charged for export -- just as Saudi Arabia, Venezuela and other oil exporting countries do for their citizens.

Abundant energy was Canada's advantage in an era of world competition. China has cheap labour, the U.S. a warmer climate. Canada had energy.

All of that changed in 1988 when Canada, for reasons unknown to most of its citizens, signed the Canada-U.S. free trade agreement (FTA) and with the stroke of a pen gave away control of its energy.

The energy terms of the FTA bear repeating.

Canada abolished its reserve requirements for its own future needs -- so all of our reserves can now be exported -- and agreed to never charge the U.S. more for exports of energy than it charged Canadians. In addition, if Canada faced a shortage of any form of energy it would continue to send the same proportion of its energy to the U.S., even if Canadians went short themselves.

It is safe to say that no other country in the world has, in time of peace, signed away so completely its energy resources, present and future.

In 1994, the FTA was expanded to NAFTA to include Mexico. Mexico refused to sign the energy clauses Canada had signed.

Those of us who spoke out against the FTA pointed out this was not free trade, but forced trade, and warned the agreement would have profound effects on our future, our energy security and our sovereignty.

We were accused of being "fearmongers," of being "anti-trade," of being "protectionist" and so on. Now even those who hurled those accusations are realizing they have been standing on quicksand.

The results stare Canadians in the face and hit their wallets every time they fill their cars, trucks, industrial or agricultural machines with fuel.

As Canada exports more and more oil and gas -- it has by-passed Saudi Arabia as the largest supplier to the U.S. -- some still attempt to justify these agreements. However, under the FTA, the U.S., now taking 60 % plus of our production, will, when the shortage comes, have the right to 60% (or more!) in perpetuity -- Canadians will have the right to whatever is left.

Oh, but the Alberta tar sands are there, we are assured. Rarely mentioned is that the petroleum coming out of the tar sands is going south to the U.S. virtually royalty free and that large reserves of increasingly valuable natural gas are being burned to process this tar sands production. In other words, Canada is actually subsidizing -- at great financial and environmental cost -- the giveaway of a precious finite resource.

The NAFTA promise of secure access to the U.S. market was never anything but an illusion and nothing but shreds remain of the guarantee of an end to arbitrary U.S. tariffs. Yet the take over of our industries continues apace -- from energy to beef, from manufacturing to retail. It's time to wake up.

We need to set up a coast to coast comprehensive review of the FTA and NAFTA. This review should examine in detail the effects of these agreements on our economy and sovereignty and then make an informed recommendation about the future.

Integrating our energy and our economy into that of the U.S. means being subject to U.S. ownership, decisions, priorities and prices. It means losing the capacity to direct our future and our own resources in our national interest.

We don't have to remain tied into agreements that will see our energy prices driven through the roof, or watch our economy and control of our destiny move into foreign hands.

Some insist that Canada continue to suffer and crawl, but it is not necessary. Both the FTA and NAFTA have withdrawal clauses that enable Canada, with six months notice, to withdraw without penalty or conditions and then revert back to trading with the U.S. under existing multilateral trade rules.

Let's not wait till our industries and agriculture become completely uncompetitive or until Canadians are left begging for their own energy at 40° below zero. As we watch the catastrophic events unfold in the Gulf of Mexico it is clear that Canada too has important decisions to make to safeguard its future.


--------------------------------------------------------------------------------

David Orchard is the author of The Fight for Canada - Four Centuries of Resistance to American Expansionism, and ran for the leadership of the federal Progressive Conservative Party in 1998 and 2003. He farms at Borden, SK and can be reached at tel (306) 652-7095, e-mail: davidorchard@sasktel.net, http://www.davidorchard.com

Posted by Arthur Caldicott on September 22, 2005

September 21, 2005

We Can Help New Orleans, But Can We Help Ourselves?

Ricardo Acuńa
Parkland Institute
Edmonton Journal
20-Sep-2005

Alberta has a positive track record of using its natural resource wealth to help in times of crisis. Hurricane Katrina was no exception. But what would happen if the crisis was at home?

Recently the Alberta Energy and Utilities Board suspended its Maximum Rate Limitation systems to allow the Alberta oil patch to extract up to 30,000 extra barrels of oil per day on a “temporary basis. ”The goal, according to the EUB, is to help the United States meet its energy needs for “as long as necessary. ”

There has been much rhetoric from the Klein government of late about exclusive provincial control over natural resources and the spoils that go with it. One might ask if Alberta would be just as willing to lift limits on production in order to help avert a Canadian energy crisis.

If it were to happen today, the answer to that question would be irrelevant. Alberta would simply not be able to increase oil extraction for domestic consumption, regardless of whether it wanted to or not.

That’s right, the provincial and federal governments can easily increase production for export in response to a crisis in the US, but are currently prohibited from doing so for domestic consumption.

Article 605 of the North American Free Trade Agreement (NAFTA) states that Canada can do absolutely nothing to reduce the proportion of oil being exported to the United States relative to the proportion being consumed domestically. NAFTA’s proportionality provisions are not limited to oil ­ they extend to natural gas, energy and petrochemicals as well ­ but these days it is oil that is front and centre.

In 2004, Canada produced approximately 3. 1 million barrels per day of oil, of which about 68% (2. 1 million barrels per day) was exported to the United States. What proportionality means is that regardless of how much - or how little - oil we are producing, our governments cannot ever take any steps which will result in less than 68 % of it going to the United States.

What would that mean if a hurricane like Katrina were to hit Nova Scotia or Montreal today?Quite simply that, if we choose to abide by the rules of NAFTA, we would not be able to help. Regardless of how much oil there is in Alberta, we would not be able to help.

But there is a choice, and the time is right to do something about it.

International trade agreements are essentially legal contracts. When one party refuses to adhere to the rules of the contract, the other parties can also ignore the rules.

The basic premise of NAFTA was that Canada would give up control over our natural resources in order to gain access to the US market. By ignoring the softwood lumber decision, the US has reneged on its side of the bargain. We no longer have to live up to our side of the bargain.

US Vice President Dick Cheney has said on a few occasions that Alberta’s oil is one of the “pillars of North American energy security. ”The truth is that, under NAFTA, Alberta’s oil may be a pillar of the United States’ energy security, but it can do nothing for energy security in Canada - especially in a crisis.

Whether it is by declaring NAFTA null and void, or by having the US declared in violation, or by simply issuing due notice that we are withdrawing from the agreement, Canada must assert its sovereignty over our energy and trade policy now. If we do not, and find ourselves faced with a disaster like Katrina, we will not be able to help ourselves. Instead, we will have to rely on the charity and good will of those in the world that do have control over their own resources.

Ricardo Acuńa is executive director of the Parkland Institute, a non-partisan public policy research network based at the University of Alberta.

*****************************************
Parkland Institute
11045 Saskatchewan Drive
Edmonton, AB T6G 2E1
Switchboard: (780) 492-8558
Fax: (780) 492-8738
www.ualberta.ca/parkland
*****************************************

Posted by Arthur Caldicott on September 21, 2005

Takeover tidal wave on the way

Takeover tidal wave on the way
Gary Park, Petroleum News, Aug-2005
Total eyes larger footprint in oil sands
Gary Park, Petroleum News, Aug-2005


Takeover tidal wave on the way

Gary Park
Canadian Correspondent
Petroleum News
August 2005

Global strategist bets U.S. securities regulator will ease oil sands reserve rules, freeing U.S. companies to buy existing Alberta sands operators

The U.S. Securities and Exchange Commission will relax its rules on what constitutes proved oil reserves, freeing major oil companies to embark on a buying binge in the Alberta oil sands, predicts a leading North American analyst.

Added momentum could come from the International Monetary Fund adopting a broader definition of measuring the bitumen deposits, boosting Canada’s oil reserves to two or three times those of Saudi Arabia, he said.

Donald Coxe, chairman and global portfolio strategist for Chicago-based Harris Investment Management and chief strategist for the Bank of Montreal, said Aug. 5 he is counting on the SEC changing rules that are more than 30 years old and opening the door to a flurry of acquisitions.

He told a conference call he believes the result will be a “disappearance” of publicly traded companies operating in the oil sands “once the SEC comes out with its rulings.

“I believe Big Oil is going to want to go (into the oil sands) and buy these companies.”

Oil sands bandwagon rolling

In a week when U.S. energy giant Kinder Morgan made a stunning C$6.9 billion bid for Vancouver-based Terasen followed a day later by the C$1.35 billion takeover of Deer Creek Energy by France’s Total, plenty of other energy executives and analysts climbed on the oil sands bandwagon.

John Mawdsley, senior vice president with brokerage firm Raymond James, issued a new report forecasting that the oil sands resource will deliver a “wall of profit” over the next several decades.

He said the northern Alberta deposits will eventually push Canada to third place in world oil production after Saudi Arabia and Russia.

To bolster his argument, Mawdsley noted that Suncor Energy’s C$3.4 billion Millennium expansion paid off its capital costs within two years of coming on stream, regardless of a C$1.4 billion cost overrun and is now generating “massive amounts of cash flow which will fund future expansions.”

His 128-page report said Canada is one of the few non-OPEC countries positioned to increase its oil output from reserves that are currently booked at 175 billion barrels and likely to increase.

Within 10 years, Canada’s production will trail only Saudi Arabia among all OPEC members, he said.

To underscore the attraction of the oil sands, he said a project costing C$350 million and producing 25,000 barrels per day would generate after-tax returns in the low 20 percent range over 25 years if West Texas Intermediate prices remained above US$40 per barrel. At US$60 per barrel, the profits would climb to the 25-309 percent range.

Even high prices for natural gas, needed for some extraction and processing operations, is not likely to undo the promise of the oil sands, Mawdsley said.

He said a barrel of synthetic crude that sells for US$60 per barrel can be profitably produced if gas costs US$10 per thousand cubic feet.

Mawdsley’s overall forecast projects that synthetic crude volumes will quadruple to 4 million bpd by 2020 and could eventually satisfy 25 percent of North America’s consumption.

Commenting on the Kinder Morgan-Terasen deal, Matthew Akman, a CIBC analyst, said in a note to clients that energy infrastructure growth in the United States is “limited because U.S. oil and gas production has peaked. Canada offers attractive energy production growth that attracts U.S. players.”

Oil sands companies will be seized

Deer Creek President and Chief Executive Officer Glen Schmidt said the expectation of long-term oil prices has prompted large companies such as Total to rapidly change their view of the oil sands, which were considered an overly expensive, fringe resource only two years ago.

He said the old yardstick is no longer an accurate instrument to measure “what’s happening today and in the future.”

For Coxe, there is little doubt that companies with existing oil sands operations, such as Suncor, Canadian Oil Sands Trust and Western Oil Sands, will be seized, despite the growth in their market values.

“The wealth of the oil companies has also grown by leaps and bounds,” he said, while cautioning investors not to buy equity in hopes of pocketing a large gain from a takeover.

Existing SEC rules prevent large chunks of oil sands holdings from being booked as reserves and would, in fact, limit Alberta’s bitumen resource to just 12 billion barrels, not the 175 billion barrels that are increasingly accepted by various authorities, including the Oil & Gas Journal.

Instead the SEC only assigns reserves once a company has built a facility to extract bitumen, in what Coxe describes as a “legal and accounting technicality.”

As well, the regulator requires companies to estimate their reserves based on prices at Dec. 31 each year, resulting in a writedown of hundreds of millions of barrels because it coincided with a slump to uneconomic heavy oil prices.

As one example, Husky Energy was forced to delete 39 percent of its heavy crude reserves, which were trading at US$12.27 per barrel on Dec. 31 against an average price for 2004 of US$28.75, while synthetic crude or upgraded heavy oil was trading at almost US$50.

In fact, by Jan. 10 this year the price of Lloydminster heavy crude was US$21.56, sufficient for Husky to return 98 percent of the of the reserves subtracted by negative revision to the proved reserve category.

That was an extreme version of the usual winter-time dip in heavy crude, which rebounds along with demand during the road-building season.

SEC asked to reconsider approach

Coxe said Cambridge Energy Research Associates sent a brief to the SEC, asking the commission to reconsider its approach to distinguishing proved from probable reserves and arguing that reserves that were highly profitable shouldn’t be immediately worthless.

CERA said companies should be allowed to include probable reserves in addition to proved reserves.

Coxe said in a March report that oil sands pioneers — Suncor and Syncrude Canada — struggled for decades to produce oil consistently at a cash cost of less than US$20 a barrel.

“They have long since driven wellhead costs far below that level,” although they face the risk of brutal winter weather, mechanical failures and accidents, natural gas prices, steel prices, labor rates, provincial royalties and the rising value of the Canadian dollar, he said.

But a new technology developed for the Long Lake project by Nexen and OPTI Canada should see “wellhead costs drop to single digits and stay there,” Coxe said.

TOP


Total eyes larger footprint in oil sands

Gary Park
Canadian Correspondent
Petroleum News
August 2005

Total is prepared to import its own technical and management experts and set more ambitious goals for its rapidly expanding Alberta oil sands holdings, said the president of the French giant’s Canadian subsidiary.

Following Total’s C$1.35 billion acquisition of Deer Creek Energy, Jean-Luc Guiziou told a conference call that his company is weighing the possibility of doubling first-phase production from the Joslyn project to 100,000 barrels per day by 2010.

The eventual goal is to produce 500,000 bpd from the Athabasca region of northern Alberta, said Philippe Arman, Total’s director of exploration and development for the Americas, joining Syncrude Canada, Suncor Energy and Shell Canada as the leading oil sands producers.

To that end, Total is on the lookout for a third project to add to its 50 percent stake in the ConocoPhillips Canada-operated Surmont venture and Joslyn.

As well, Total, which spends about C$10 million a year on research and development of heavy crudes, has teamed up with Devon Canada to study the use of vaporized solvents rather than natural gas-generated steam to inject into deep bitumen deposits and coax them to the surface.

Away from Venezuela?

Without making any direct connections, the Total executives were seen as pointing to a shift in their company’s heavy oil operations from troubled Venezuela to the political calm of Alberta.
Raymond James analyst John Mawdsley said Total could have taken its money to any number of places, such as Venezuela, Russia or offshore West Africa, but chose the oil sands. He said the drawing power was political stability, a huge resource base and known technology — something that is not available anywhere else.

Like all foreign-owned producers in Venezuela, Total has been a victim of the impulsive behavior of the Latin American country’s populist president, Hugo Chavez.

In just the last six months, Chavez has promised a new deal for Total and its partners in the Sincor heavy crude project, only to accuse Total, Royal Dutch/Shell and Norway’s Statoil of inflating their Sincor production and demand that they pay an additional US$1 billion in royalties.

They are also being compelled to convert production-sharing agreements into joint ventures.

The belief among some analysts is that Chavez is applying strong-arm tactics to force the foreign companies to surrender a portion of their ownership stake to Venezuela’s state-owned PDVSA.

Instead those companies are having second thoughts about their future in Venezuela and others are turning their attention to Alberta, where the Canadian and Alberta governments have worked closely since the 1980s to develop predictable royalties and environmental regulation.

—Gary Park

TOP

Posted by Arthur Caldicott on September 21, 2005

September 20, 2005

Whistleblowers, tread carefully.

Article raises suspicions about Alyeska official being let go
Joy Mapaye, ktuu.com, 17-Sep-2005
WSJ article questions Alyeska firing
webcenter11.com, 19-Sep-2005



Article raises suspicions about Alyeska official being let go

Joy Mapaye
ktuu.com
Saturday, September 17, 2005

Article raises suspicions about Alyeska official being let go

Anchorage, Alaska - Was Alyeska Pipeline Service Company’s number two executive fired because of his warnings about the pipeline? A Wall Street Journal article Saturday raised the question, and a long-time critic says that's exactly what happened.

The Wall Street Journal says last month, the former chief operating officer of the trans-Alaska oil pipeline, Dan Hisey, warned of 101 risks in the oil pipeline's integrity. The article says in an Aug. 16 memo, Hisey warned a consortium of the pipeline's owners that a plan to fully automate the line will be in trouble because of lack of staff, delayed maintenance, insufficient funding and other problems.

These are all issues that have been discussed in the past, but one critic says what's significant about this is that Hisey was the number two executive at APSC and he is intimately familiar with operations. The article goes on to say that one week after Hisey sent the memo out, he was told his position had been eliminated.

The Wall Street Journal quotes APSC officials as saying Hisey's job was eliminated as part of a restructuring and was unrelated to the memo. However, long time oil-industry critic Chuck Hamel says this is exactly why Hisey was fired. Hamel says with chief executive David Wight retiring, Hisey saw an opportunity.

“He's going to be the fall guy, so he realized that with Mr. Wright leaving, he can approach the owners and say, 'Look, here's what the problems are.' Hoping that they would agree, they would together fix it with money, and instead he got fired,” said Hamel (right).

The article also mentioned that in the memo Hisey (below) wrote about replacing a leaking valve, Check Valve 109, near the Klutina River. Experts say a failed valve in this area could trigger an oil spill.

“I think the oil companies should be proper with the people of Alaska and release that document to everybody,” said Hamel.

Chuck Hamel says it's likely the Wall Street Journal will continue to look at this story. Hamel has since written a memo to U.S. Sen. Pete Domenici and Alaska Gov. Frank Murkowski, asking them to improve oversight of the Alyeska Pipeline Service Company owners.

KTUU-TV did attempt to contact APSC for comment, but officials did not return the calls.

The governor's press secretary, Becky Hultberg, says they have not had the opportunity to review Hamel's letter. She says the same thing goes for the Wall Street Journal article. So at this point, she says, they have no comment until they get a chance to review the documents in question.

TOP



WSJ article questions Alyeska firing

webcenter11.com
September 19, 2005


(September 19, 2005) An article appearing in the Wall Street Journal is calling a firing at Alyeska into question.

Alaska Pipeline COO Dan Hisey wrote a memo that warned of 101 risks in the pipeline's integrity.

The article says Hisey warned the pipeline's owners that the plan to fully automate will be in trouble because of lack of staff, delayed maintenance, insufficient funding and other problems.

The pipeline is currently undergoing a $250 million dollar upgrade, called the strategic reconfiguration project.

However, one week after Hisey sent the memo out, he was told his position had been eliminated. Alyeska officials say Hisey's job was eliminated as part of a restructuring and was unrelated to his memo.

Alyeska is reviewing the merits of the recommendations contain in the memo from Hisey. A spokesman for the pipeline company says they are taking the actions necessary to keep the line safe and efficient.

TOP

Posted by Arthur Caldicott on September 20, 2005

Methanex Kitimat to provide terminal for EnCana

News Release
Methanex
September 20, 2005

METHANEX KITIMAT TO PROVIDE TERMINALLING SERVICES TO ENCANA

Methanex Corporation has entered into an agreement to provide terminalling services to EnCana at Methanex’s Kitimat, British Columbia site. EnCana advises that it plans to import diluent through this terminal for use in its oilsands projects in Alberta.

In addition, the agreement provides EnCana the option to buy from Methanex, and Methanex the option to sell to EnCana, the Kitimat site (excluding the methanol and ammonia facilities), within the five-year term of the agreement. Methanex recently announced its plan to shut down its Kitimat production facilities in early January 2006.

“This is a win-win for Methanex and EnCana” said Bruce Aitken, President and CEO of Methanex. “It will enable us, over time, to offset some of the Kitimat shutdown costs and will provide EnCana with a convenient terminalling facility on the west coast of Canada.” Aitken continued, “An important feature of the agreement is our right to use the Kitimat terminal facilities to import methanol from our other production facilities through Kitimat. This will allow us to continue to provide a secure, long term supply of methanol to our customers in the Pacific Northwest.”

The agreement is subject to certain conditions precedent. Methanex expects to commence terminalling services for EnCana in early 2006.

Methanex is a Vancouver based, publicly-traded company engaged in the worldwide production and marketing of methanol. Methanex shares are listed for trading on the Toronto Stock Exchange in Canada under the trading symbol “MX” and on the Nasdaq National Market in the United States under the trading symbol “MEOH.” www.methanex.com

Posted by Arthur Caldicott on September 20, 2005

September 18, 2005

'The new Kuwait'

Joe Morris
Business Editor
West Virginia Gazette-Mail
September 18, 2005

Could W.Va. be sitting on the answer to the energy crisis?

A major fuel reserve in West Virginia is capable of gushing the equivalent of half the oil under the ground in Iraq, but no one is yet willing to build the refinery that will get the stuff tank-ready. That's essentially what it would take to turn West Virginia, with its ample coal seams, into "the new Kuwait," according to energy experts at the Pentagon.

Speaking at a research forum in Roanoke last month, the Defense Department's William Harrison, a top adviser in the military's Clean Fuel Initiative, said the Pentagon is serious about partnering with energy companies to develop alternative fuels. And the most viable alternative, he said, appears to be diesel and other motor fuels produced by gasifying and then liquefying coal through a catalyzed chemical reaction known as the Fischer-Tropsch process.

"If you build it, we will come," Harrison told the Consortium for Fossil Fuel Science, a Department of Energy-funded research center. "With West Virginia's coal reserves equaling about 70 billion barrels of oil," he said, "perhaps West Virginia could be the new Kuwait."

Liquefying coal through Fischer-Tropsch "offers the promise of starting new industries in West Virginia that could also increase demand for West Virginia coal," said Richard Bajura, director of West Virginia University's National Research Center for Coal and Energy, who was also at the conference.

There have been some initial steps in West Virginia, but nothing definitive. Two years ago the state Development Office pledged itself to help a Pennsylvania company, WMPI Proprietary LLC, secure land in Logan County in order to build such a plant. More recently, the Mingo County Redevelopment Authority commissioned a feasibility study, also to look at the possibility of building such a plant.

WMPI hasn't followed up because it has been preoccupied with building its first Fischer-Tropsch plant in Pennsylvania. The Mingo study won't be out for probably two more months, according the agency's director, Mike Whitt. "But this thing looks like it makes sense," he said. In light of all the coal here and the large amount of diesel that the state uses, "it looks like a no-brainer."

Fischer-Tropsch, named after its German inventors, is neither new nor untested technology. Franz Fischer and Hans Tropsch, working in a government-funded science institute in Berlin, perfected the method in the 1920s, and the Nazis relied on it to feed their war machine.

"It has always been viable, and it almost seems to be exceptionally viable today," said Anthony Stranges, a professor of the history of science at Texas A&M University who concentrates in the history of energy development.
"The economics are very favorable for it."

Nevertheless, today the only company employing Fischer-Tropsch on a major scale is South Africa's government-affiliated Sasol Ltd., based in Johannesburg. Over the past 50 years, much of which while South Africa was shut out of the global economy because of its racial segregation policy, Sasol has produced nearly 1.5 billion barrels of synthetic fuel from coal, while on a daily basis it churns out 150,000 barrels, dispensed in filling stations across the country. Its coal refining supplies about 28 percent of South Africa's fuel needs, the company says, saving the country more than $5.1 billion annually in foreign exchange.

The Defense Department is suddenly interested in Fischer-Tropsch not only because it could help reduce U.S. dependence on foreign oil but also, as the existence of its Clean Fuel Initiative implies, because it's aiming to switch to environmentally friendlier energy sources in the wake of some costly cleanups. It has spent more than $60 million, for instance, in studying and remediating perchlorate, a constituent of its jet fuels that may pose a health danger to groundwater supplies near military bases. Fischer-Tropsch fuels strip out pollutants such as sulfur, mercury and arsenic. The Natural Resources Defense Council, one of the country's biggest environmental groups, estimates that such plants emit about 40 percent less carbon dioxide than conventional power plants.

On the other hand, demand for coal is pretty high as it is, and were West Virginia coal to become a viable substitute for oil, the result could be a mining frenzy the likes of which have never been seen.

"Clearly the technology works," said Richard Kassel, director of the NRDC's Clean Fuels and Vehicles Project in New York. But while the burning may be cleaner, "somebody needs to take a good hard look at what this means for the natural resources and beauty of the state."

What has held Fischer-Tropsch plants back, however, is not environmental concerns. Rather, it's the financial risk involved. Construction can cost several billion dollars, and if the fuel ends up costing more than gasoline and other oil products, there won't be any buyers. Even the Pentagon, for all its enthusiasm, has made it clear that it won't overpay.

"Our strategy is not to write big checks, but rather to bring the right mix of industries together to make processes commercially viable," Harrison said.

Fischer-Tropsch fuels would be a bargain next to oil even if the cost of crude were to plunge roughly 45 percent, to about $35 a barrel, but that is considered the cost-cutoff point. No one is predicting anything like such a decline, yet coal-liquefaction plants take years to build, and oil prices have proven highly volatile.

"Cost is a key consideration," Bajura said. "The fear is that the price of oil could drop below the Fischer-Tropsch fuels."

The last time investors started lining up money for Fischer-Tropsch plants, in the 1970s, the OPEC oil cartel opened up its spigots and pushed the price of crude down to $10 a barrel, and that was that. Even before that, there had been spurts of activity that eventually fizzled. During the 1950s, the federal government built Fischer-Tropsch demonstration plants in Bruceton, Pa., just across the West Virginia border, and in Louisiana, Mo. Over the years, the government has spent hundreds of millions for research into such fuel conversions, but nothing ever came of it because, according to Stranges, the investment never materialized.

"It didn't pay off and it wasn't worth doing," he said.

Don't count on such a scenario to repeat itself, said John Ward, a spokesman for Headwaters Inc., a South Jordan, Utah-based company that is now building coal-to-liquids plants abroad and advising companies on the technology in the United States.

"The question is, does OPEC or anyone else today still have the ability to lower the price [of crude] to $10?" Ward said. "There are several functional changes in the landscape that make that much less likely, especially the strong demand [for oil] from China."

To Stranges, who has studied the torturous path of Fischer-Tropsch research and development through the years, it's long past time to take the plunge. "Instead of going in circles, as we have been, why not just build it so we'll have it?" he said. "That way we can keep improving it."

That's what seems to be happening. But it's generally private companies, not the federal government, that are taking the initiative. For the most part, however, they've opted to do so abroad. Shell USA and ExxonMobil Corp. have coal-to-liquid projects underway in China and Qatar. Tulsa, Okla.-based Syntroleum Corp. recently signed an agreement to look into building a coal-to-liquids plant in Australia. And just last month, Headwaters signed deals to build two plants for coal liquefaction, a process similar to
Fischer-
Tropsch, in China. Similar efforts are in the works in India and the Philippines, Ward said.

The enthusiasm of China, in particular, to embrace Fischer-Tropsch and related coal-to-liquids projects comes down to the government's commitment, according to Ward. "They've simply got a government willing to invest." But the United States is starting to catch up.

DKRW Energy LLC of Houston intends to start building a coal-to-liquids plant in Wyoming next year, with operations scheduled to get underway between 2008 and 2010. Rentech Inc. in Denver and Clear Energy Inc. in Calgary, Alberta, have similar hopes.

Yet it is WMPI, of Gilberton, Pa., that appears to be the furthest along. It expects to start construction in April on a $112 million Fischer-Tropsch plant near Gilberton that would transform 1.4 million tons of waste coal a year into 60 million gallons of liquid fuel. It has agreements with Shell and Sasol for technical help and, more importantly, it secured federal loan guarantees in the energy bill just passed by Congress that should put it over the top on financing, said John Rich, WMPI's president. Eventually, Rich said, he sees the plant building out its capacity, requiring a $4.2 billion investment.

Once the Gilberton plant gets going, WMPI will start looking for second and third sites, Rich said, and the Logan location is still a possibility. A memorandum of understanding signed with the state Development Office in 2003 pledges the state to "exercise its best efforts within applicable laws to facilitate and assist WMPI in the location and development of WMPI's coal-to-oil project in West Virginia."

The property under consideration is owned by a private party whose identity WMPI wouldn't disclose. The Development Office official involved did not return calls for comment.

The Mingo feasibility study, meanwhile, is drawing on the expertise of Headwaters and nine other participants. They include WVU's Bajura and Christine Risch, an energy economist from Marshall University. There are also lawyers from Boston-based Cambridge Associates, Patton Boggs LLP in Washington and Jackson Kelly PLLC in Charleston, and executives from San Francisco-based URS Corp., a huge global engineering and construction firm; the energy consultancy UtiliPoint International Inc. of Albuquerque; and the engineering and technology consultant Augusta Systems Inc. in Morgantown. The study will come up with estimates of the overall cost of such a plant as well as the amounts and types of coal necessary and available, among other things, Whitt said. He estimates that a plant would need more than a million tons of coal a year.

Even if the study green-lights a Mingo plant, it would take probably four to five years to bring about, Whitt said. Investors would be the first thing needed, he said, adding that the plant wouldn't hinge on government support. "We don't like to look for the government to fund things for us," he said. "Someone has to be willing to take the risk and get egg on their face if it doesn't work out."

To contact staff writer Joe Morris, use e-mail or call 348-5179.

Ultra Clean Fuels

Posted by Arthur Caldicott on September 18, 2005

Mines ask Victoria to plug into northwest

Paul Luke
The Province
September 18, 2005

Megawatts needed to tap wealth

Metal czar Carl Zuber has a high-tension problem that keeps him from being the happiest man in B.C.'s mining industry.

The company Zuber chairs, bcMetals Corp., has just received environmental approval from the province to build the Red Chris mine, a copper-gold project 450 kilometres north of Smithers.

Zuber is finding customers for the concentrates Red Chris will produce and nailing down financing for the $228-million project.

But Zuber's financial and regulatory successes will come to nothing unless the province strings a transmission line as far as 335 km into the northwest.

Without 37.5 megawatts of juice from that line, Red Chris, which would employ 250, won't see the light of day -- no matter how many bankers want to finance it.

"We just need the power," Zuber says. "The rest is business."

Goaded by decent metal prices, bcMetals and other companies are puncturing northwest B.C. like a Swiss cheese in a rush to unearth ore bodies. And when they do find something, electricity-hungry miners are queuing up to press the B.C. government to build a transmission line along Highway 37 to Iskut or Dease Lake.

Some $2.1 billion of potential mining investment in the area hinges on the line being extended from Meziadin Junction, where it currently stops, according to the newly formed Northwest Powerline Coalition.

Dan Jepson, executive director of the B.C. & Yukon Chamber of Mines, says the northwest region's mineral wealth could go untapped because the largest projects can't generate enough power with diesel generators.

"Our members feel the most important thing the government can look at right now is providing power up the Highway 37 corridor," Jepson said.

Bill Bennett, provincial minister of state for mining, sympathizes with the industry's plea. The province has yet to decide whether to extend power to the northwest.

But it is considering issues such as line size and projected demand, Bennett says. Also to be resolved is the issue of whether industry should share in costs.

"We're not going to see new mines up there, I don't think, without power being taken up," Bennett says.

First Nations in the area are less sympathetic.

Curtis Rattray, chairman of the Tahltan Central Council in Dease Lake, says the Tahltan expect to be directly engaged in determining the shape of any power line.

The Tahltan, wary of the social and economic impact of a line, argue a land-use plan for the area is essential.

"A power line would determine the pace and feasibility of resource development in our traditional territory in lieu of a land-use plan," Rattray said.

"There's a requirement for a land-use plan prior to a transmission line being put in place."

The pricetag of a line will depend on how much power it packs.

Studies done for B.C. Transmission Corp. estimate a 138 kilovolt (kV) line would cost $185 million, a 230 kV line $375 million and a 287 kV version $368 million.

- - -

A RED-HOT ZONE FOR MINERAL EXPLORATION

- The northwest accounted for $55 million of the $130 million spent on exploration in B.C. last year, according to B.C. ministry of energy and mines.

- Forty-one firms were seeking minerals in the area last year.

- Vancouver-based NovaGold Resources alone is spending a whopping $40 million on exploring its copper-gold-silver property at Galore Creek -- dwarfing the $29 million spent on exploration across the entire province in 2001.

- Other active sites in the region are Fortune Minerals' Mount Klappan coal project, Hard Creek Nickel's Turnagain nickel project and Copper Fox Metals' Schaft Creek project.

- Mining is a $4.5-billion industry in B.C. that supports 6,442 direct jobs.

Preparation for a line would eat up two years and construction, depending on the option, three or four years.

A fourth option would reduce the four-year requirement by building the infrastructure for a 287-kV line, firing it up at 138-kV and later boosting it to 287 kV.

Vancouver-based NovaGold Resources is by far the largest player in the northwest region. Carl Gagnier, executive vice-president at NovaGold Canada, says his company is spending about $40 million this year to explore its Galore Creek gold-silver-copper property 150 km northeast of Stewart.

That investment, which is fuelling an army of 10 drilling rigs and 170 people at the camp, is said to make Galore Creek North America's biggest exploration program this year. A mine at Galore Creek would cost an estimated $1 billion US to build and employ about 500 people once it's operating, possibly by 2010.

A mine of Galore Creek's scale would consume an enormous 80 megawatts of electricity, making diesel-generated power out of the question, Gagnier says.

"We have to connect to the B.C. grid in order to make the project viable," Gagnier says. "If the grid is extended up Highway 37 to Iskut it makes it much easier to connect."

Donald McInnes, head of Vancouver-based Western Keltic Mines, says a power line makes sense for the northwest and the rest of B.C. Northern mines buy goods and services from around the province and employ people from all regions, McInnes says.

Western Keltic, which owns the Kutcho Creek project 100 km east of Dease Lake, could generate its own power -- though a provincial line to Dease Lake would trim its operating costs, McInnes says.

"If a power line is built now, the mines that might be built in that area may not happen in this copper cycle," he says.

"But it will happen in the next one."

pluke@png.canwest.com

© The Vancouver Province 2005

Posted by Arthur Caldicott on September 18, 2005

September 16, 2005

BC Hydro boosts plans to build controversial Site C dam

Scott Simpson
Vancouver Sun
Thursday, September 15, 2005

Two senior managers have been assigned to prepare the Peace River project for final approval, a memo shows

SiteC_179702-59482.jpg
CREDIT: Ian Lindsay, Vancouver Sun Files
Peace River Valley islands and farmland face being covered with water if BC Hydro gets to build the Site C dam near Fort St. John.

BC Hydro is accelerating plans for a controversial $3.5-billion power project that would require flooding a vast area of the Peace River Valley and is assigning two senior managers to prepare the Site C dam project for final approval.

A Sept. 7 internal Hydro memo says the two have been appointed to set the direction for public and first nations consultation, regulatory approvals and communications -- prompting several Site C critics to suggest that Hydro has decided the project will proceed.

The project, to be built near Fort St. John, is supported by Energy Minister Richard Neufeld but has been opposed by area residents and environmentalists since it was first proposed in the mid-1970s.

Potentially B.C.'s fourth-largest hydroelectric facility, it has been rejected in the past as too costly and because of adverse environmental impacts.

At a rough cost of $3.5 billion, not including potential compensation to first nations and the impact of escalating construction costs across North America, it would be one of the most expensive infrastructure projects ever undertaken in B.C.

The dam would join two others already in service on the Peace including the WAC Bennett Dam and Peace Canyon, and would flood an additional area of the Peace Valley 15 times as large as Stanley Park.

It would be a 900-megawatt facility generating enough electricity to serve 500,000 households -- although that's still less power than British Columbia imports each year to serve the province's domestic needs.

The Hydro memo announces that Steve Eckert, acting manager for power acquisitions, has been promoted to acting general manager for Site C. Hydro staffer Al Boldt, who has experience in large project design and construction, has been appointed manager of public and regulator affairs for Site C.

"Steve will provide leadership to take the project through to the approval stage," the memo says.

Hydro spokeswoman Elisha Moreno said Wednesday that despite the appointments, the Site C project won't proceed until -- and unless -- it receives approval from the Hydro board and provincial cabinet.

"We don't want people to think this is a done deal by any account," Moreno said.
However, Hugh Taylor, land use manager for the West Moberly First Nation, noted in an interview that when Richard Neufeld paid a recent visit to the area to study proposals for wind power, "Site C was all he could talk about."

"I think it means they are trying to keep the project going. They will probably hold off formal approval until they are so far down the line that it only makes sense to complete it. I don't think Hydro is being very transparent, and it's prejudicial to wind power proponents," said Taylor.

Ruth Ann Darnall, chairwoman of the Peace Valley Association, said it now appears Hydro intends to proceed with the project.

"I don't understand why Hydro is doing all this if they're not sure cabinet will tell them to go ahead," Darnall said. "I think it would be nice if folks down south could generate their own power."

Brian Churchill, an environmental consultant in Fort St. John, said Hydro appears to be following Neufeld's leadership on Site C.

"I'm really concerned that at this point in time the cost estimates of Site C, are very unclear as to whether this project is in the province's best interests or not. We're missing properly-done cost estimates for building Site C, transmission lines for Site C, and for the environmental and social impacts of Site C," Churchill said.

"I personally don't think the public will support Site C. The Peace River Valley has paid its price in supporting the energy needs of the province . . . in the two existing Hydro dams."

Hydro critic David Austin, who represents independent power producers in B.C., called on Hydro to produce a comprehensive assessment of Site C's costs before taking other steps towards development of the project.

He's not opposed to Site C in principle, but said Hydro is "getting too far ahead of themselves without the release of the basic financial model."

Austin has made formal requests for Site C cost details, in Hydro hearings before the B.C. Utilities Commission, but said he is still waiting for a satisfactory response.

"The project has been around a very long time and the creation and release of a properly functioning financial model should be a very simple exercise," Austin said.

THE NUMBERS:
- Current estimated cost of project: $3.5 billion.
- Electricity potential: 900 megawatts, enough for 500,000 homes
- Time required to complete project: Seven years.
- Approvals required: BC Hydro board, B.C. provincial cabinet, B.C. Utilities Commission.
- Jobs created: 7,650 person-years of work.
- Peak workforce: 2,015 people in year four of construction.

CAPACITY OF BC HYDRO'S TOP FIVE GENERATING FACILITIES:
Shrum Generating Station/WAC Bennett -- 2,730 megawatts
Revelstoke -- 1,980 megawatts
Mica -- 1,805 megawatts
Peace Canyon -- 694 megawatts
Seven Mile -- 594 megawatts
Site C on Peace River -- 900 megawatts

Source: Vancouver Sun
Ran with fact boxes "The Numbers" and "Capacity of BC Hydro's Top Five Generating Facilities", which have been appended to the end of the story.

Posted by Arthur Caldicott on September 16, 2005

Gregoire: Washington needs to ease its oil dependence

David Ammons
Seattle Times
15 September 2005

OLYMPIA, Wash. -- Washington can become a world leader in biofuels and other non-petroleum energy sources that can ease reliance on foreign oil and help the state's farm economy at the same time, Gov. Christine Gregoire said Thursday.

The governor and legislative leaders also announced hearings on what they strongly suspect is gasoline price-gouging.

And Gregoire told a news conference that Washington is reasonably well prepared for an earthquake or other natural disaster, but needs to study ways of improving. The joint House-Senate hearings also will take up this topic. The sessions will be in October, with locations and times to be announced soon.

Gregoire said she has asked the U.S. Department of Justice to probe whether the oil industry gouged consumers during the recent run-up of prices, particularly after Hurricane Katrina.

Gregoire, who battled Enron's energy pricing when she was state attorney general, said there appears to be no legitimate reason for Washington pump prices to jump 20 cents a gallon in the aftermath of the hurricane.

Washington is remote from the Gulf Coast, relies on Alaskan crude oil and has refineries, she noted. The state Legislature may well want to pass anti-gouging legislation to protect against a recurrence, she said.

In the longer term, she said, the state should get serious about developing its potential for producing ethanol and other biofuels from Washington-grown grains.

"It improves our energy independence and keeps our petrodollars in Washington," the governor said. "It creates new jobs in the state, reduces pollution and reduces other environmental problems and risks, and it helps farmers maintain the profitability of their farms."

Dependence on oil is crippling Washington's farmers, she said.

"Our farmers are paying out more for a gallon of diesel fuel than they earn for a bushel of wheat. We may have the opportunity to plug our farmers right into the fuels they need. They could be producing the crops to make the fuel."

Gregoire said she has been talking with biofuel companies about setting up shop in Washington, primarily in the eastern part of the state. She gave no specifics.

State Rep. Hans Dunshee, D-Snohomish, said a biodiesel plant called the New Roosevelt Project is proposed for Spokane, Columbia or Lincoln county.

"We could have five million gallons of biodiesel coming on line next August or September," he told reporters. "I think we can get something done. It will mean jobs here in Washington and fuel in the tanks of Washingtonians. I think it's a great step forward."

The state motor pool and ferry system are early customers for biofuel, said state Rep. Jeff Morris, D-Anacortes. The Legislature has put in place one of the country's strongest tax incentive packages, he said.

"The Northwest stands a good chance of becoming a biofuel leader in the world," he said.

Gregoire agreed: "The idea that we could be an international leader is real."

Washington also is doing important work in solar energy, wind-generated power and other alternative sources of energy, she said.

At her wide-ranging news conference, the governor also touted the state's emergency preparedness, saying the state wouldn't have been caught as flat-footed as the Gulf region. The state has a clear chain of command and knows that state and local government, not the feds, will have to be the early responders during the first 72 hours after a disaster, she said.

Gregoire said Washington must fix its earthquake-vulnerable bridges and roads, especially the Alaskan Way viaduct in Seattle and the State Highway 520 bridge across Lake Washington. Both would have failed if the 2001 Nisqually Quake had lasted another 15 seconds, she said.

Drawing an analogy to Katrina, she said "These are our levies. The earthquake is our hurricane."

State Sen. Pam Roach, R-Auburn, faulted Gregoire for talking about biofuels and oil dependency rather than putting sole emphasis on state residents being prepared to survive a disaster.

"She should stick to talking about survival. She should be alerting our people about storing up food and water and flashlights, first-aid kits, being ready to leave damaged residences, completing a ham radio network for Washington state, and talking about how families can stay in communication with each other in a disaster.

"Katrina is not an opportunity to move forward an environmental or energy agenda."

---

On the Net:

Legislature: http://www.leg.wa.gov Gov.: http://www.governor.wa.gov

http://seattlepi.nwsource.com/

Posted by Arthur Caldicott on September 16, 2005

Hot natural gas prices may boost B.C.'s surplus

Derrick Penner
Vancouver Sun
16-Sep-2005

British Columbia has an estimated $1.4-billion budget surplus, but if natural gas prices remain high, and one of B.C.'s most prominent economists is right, the surplus is likely to becomes even bigger.

Helmut Pastrick, chief economist for Credit Union Central B.C., said he believes the province's projections revealed Wednesday in its budget update are still conservative.

"I'm of the view we'll see higher numbers," Pastrick said. "I still put economic growth at a higher level, more growth in housing."

Pastrick added that, assuming there are no spending surprises, the government is likely to see an even bigger surplus.

Finance Minister Carole Taylor's budget update projects the government will take in $34.5 billion by the end of 2005-06 -- a $1.4-billion gain from the $33.1 billion that was written into government's February budget -- which will help raise its overall surplus to $1.3 billion.

Tax recoveries, estimated at $15.5 billion in Taylor's update, are running $753 million ahead of February's budget. Resource revenues, pegged at $4.4 billion in the revision, are also $488 million ahead of expectations written into the earlier budget.

The province, however, may not be being generous enough in its projections for its resource revenues given the performance of natural gas prices versus the assumptions used by Ministry of Finance staff to calculate its revised expectations.

Royalties on B.C.-drilled natural gas are the biggest source of provincial resource revenue, which the ministry estimated at $1.8 billion in Taylor's budget update, $199 million ahead of February's expectations.

Taylor's updated fiscal plan shows that her staff based that projection on $6.51 per gigajoule average price for natural gas to the end of the 2005-06 fiscal year.

Prices on Thursday, however, hit $10.17 at the Sumas hub, the main distribution point for gas exports to the U.S. West Coast, and have averaged $7.67 since the start of the government's fiscal year in April.

In an interview, Taylor said the province will hold to a conservative approach to setting its expectations, which are based on the projections of industry experts.

"Everyone realizes that this is a moving target," she said. "If you look at natural gas [prices], we don't know if we can sustain these levels."

Taylor added that despite knowing that B.C.'s economy was still performing well, the results of her staff's budget revision were still unexpected.

"We certainly anticipated that the numbers would be better than the February budget, but I'd say it was a surprise on the upside, even from those expectations," she said.

However, Taylor added that besides the additional spending and tax breaks and spending increases that government has already committed to, she will not succumb to temptation and start spending more of the surplus.

Within the additional $753 million in taxes the province expects to take are some $282 million in additional personal income tax revenue and $190 million more in property transfer taxes. The expectation for corporate income tax revenues was also raised -- by $140 million.

Taylor said the province will continue to re-examine the competitiveness of its tax regime, but does not expect any more tax cuts in the immediate future.

"I think there are other priorities for this [budget] update," Taylor said.

In 2006, she noted, government will be under pressure to give its employees wage increases after several years of an official wage freeze, though the province does not know how long the current economic boom will last.

"There are a lot of issues, and if you're a prudent manager, which is what I'd like to be, you make sure your budget will withstand a few disappointments," Taylor said.

Peter Simpson, CEO of the Greater Vancouver Home Builders' Association, said a change to the property transfer tax is one measure his organization would like to see.

depenner@png.canwest.com

RISING REVENUE TIDES:

The provincial government is collecting more revenue than it expected this year, some $1.4 billion more than was pencilled in to its February budget, according to Finance Minister Carole Taylor's budget update released Wednesday. Here are some of the revised expectations:

Total revenue:

$34.5 billion +$1.4 billion

Taxation revenue: $15.5 billion

+$753 million, including:

- Personal income tax: $$5.5 billion +$282 million

- Property transfer tax: $650 million +$190 million

- Corporate income tax: $1.2 billion +$140 million

Natural resource revenue: $4.4 billion +$488 million, including:

- Natural gas royalties: $1.8 billion +$199 million

- Forests revenue: $1.2 billion +$166 million

- Energy and minerals: $775 million +$62 million

- Columbia River treaty: $305 million +$55 million

Other provincial revenue: $6.7 billion +84 million

Contributions from federal government: $5.6 billion +$131 million

Crown corporation income: $2.3 billion

-$56 million, including:

- B.C. Lottery: $892 million +/- 0

- Liquor distribution branch: $779 million +/- 0

- ICBC: $224 million +48 million

- B.C. Hydro: $329 million

-$66 million

- B.C. Rail: $39 million

-$37 million

Posted by Arthur Caldicott on September 16, 2005

History is turned on its head as Campbell and native leaders reach out

Vaughn Palmer
Vancouver Sun
September 16, 2005


VICTORIA - Not many first nations leaders can rival Stewart Phillip's record for militancy over the years.

Mount Currie ... Seton Portage ... Apex Alpine ... Adams River ....

From the 1970s to the 1990s, Phillip turned up at most of the big showdowns, often as a participant, sometimes getting arrested, always quotable.

After Oka, he said Canada "could end up looking like Northern Ireland." At Gustafsen Lake, he accused the police of "behaving like cowardly goon squads of some Central American military junta."

Just last year, on the front lawn of the legislature, he accused the B.C. Liberals of trying to buy off natives with "beads and trinkets."

But on Wednesday he was sitting on the floor of the legislature with other aboriginal leaders, listening appreciatively during the budget update speech.

Phillip, who is president of the Union of B.C. Indian Chiefs, came to hear the promise of a $100-million New Relationship fund.

The fund is to help first nations develop their own capacity (staff, facilities, training) to manage land, resources and social programs in partnership with government.

Phillip confided to reporters that when he accepted the premier's invitation to attend, he had a nagging fear in the back of his mind about one more parade of beads and trinkets.

But $100 million. That was "undeniable evidence that times have changed."

Phillip was not alone in this assessment. He was joined on the floor of the house -- and in praising the fund -- by Shawn Atleo of the B.C. Assembly of First Nations and Ed John of the First Nations Summit.

John is a fascinating study as well. He was a cabinet minister in the last New Democratic Party government.

He didn't let partisan history keep him from praising the Liberals for making "a significant investment in the new relationship."

He was also enough of a gentleman not to highlight why the New Democrats could never have gotten away with this level of generosity to first nations: Because the Liberals, then in Opposition, would have roasted them for it.

All three leaders emphasized the degree to which the native organizations have worked together to promote the new relationship, since signing a landmark accord earlier this year.

Still, Phillip best illustrates the distance travelled already, and not only because of his militant history.

His organization, the UBCIC, has shunned B.C. treaty negotiations from the outset.

While several dozen bands toil at the treaty table, Phillip has repeatedly denounced the process as a huge waste of time and money.

He took another shot Wednesday, saying "we need to learn the lessons" about spending vast amounts on talks and studies, with no results.

"I don't want to hear a stampede of lawyers and consultants coming down the hall to help us spend the money," Phillip said, to knowing laughter from his colleagues.

He hopes the new relationship will provide an alternative route for bands that want to get on with sharing power and managing land and resources.

He, like the other native leaders, says the fund is "only the first step." But for the first time in long years, he admits to being "hopeful."

Of course, when Phillip mounted his first barricade in the mid-'70s, he was in his mid-20s, with all the preoccupations of a young firebrand. Today, he's an established leader (eight years and counting in the UBCIC presidency) with six grandchildren.

"I have to start thinking of their future. I have to think less of public posturing. I have to think more about getting results."

But all that perspective has its own risks. Phillip faces a running critique from his own crop of young militants these days, and has to persuade them the new relationship is the real thing.

What persuaded him to go this far? He has no hesitation in answering. "The premier stepped out on this issue."

Hard to believe, especially for natives.

As Opposition leader, Gordon Campbell fought the Nisga'a treaty in court. As premier, he ramrodded a treaty referendum that infuriated native leaders.

Now, he's leading B.C. to what looks like reconciliation and unprecedented recognition of native rights and autonomy.

"Maybe only Campbell can do it," Phillip says.

The line echoes a political maxim from south of the border: "Only Nixon can go to China." As U.S. president, Richard Nixon opened up relations with Communist China. His history as a ferocious anti-Communist left little room to accuse him of selling out.

Maybe Campbell's history protects his back with those who might otherwise oppose the new relationship. It is harder to accuse him of selling out.

Then again, thinking of the UBCIC president's history, you could say the same about him: "Only Phillip can go to Campbell."

vpalmer@direct.ca

Posted by Arthur Caldicott on September 16, 2005

September 14, 2005

VICTORY: GSX & Duke Point are dead - for now

Tom Hackney, GSX Campaigner and this year’s winner of the Sierra Club of Canada’s Conservation Chapter Award

Duke Point is dead. After six years, BC Hydro has shelved plans to build a gas-fired power plant at Duke Point near Nanaimo. With it goes the last vestige of a plan that would have seen 900 MW of gas-fired power generation on Vancouver Island and a pipeline across the Strait of Georgia.

The story began in September 1999, when BC Hydro announced plans to partner with the US giant, Williams Gas Pipeline Company, to build the Georgia Strait Crossing (GSX) natural gas pipeline from Washington State to Vancouver Island, linking to the existing Centra Gas pipeline.

Hydro planned to meet all new electricity demand using gas-fired power plants on Vancouver Island. The 250-MW Island Cogeneration Project was slated for Campbell River, MacMillan Bloedel (now Weyerhauser) was partnering with a private firm to build a 250-MW power plant at its mill site in Port Alberni, and BC Hydro planned to locate a 640-MW plant near Duncan by 2007.

The Sierra Club of Canada, BC Chapter became involved when Bo Martin and Tom Hackney of the Energy and Climate Change Committee decided to intervene in the federal regulatory process. Bo and Tom thought the climate change harm of fossil fuel use was unjustifiable, especially when BC Hydro’s own Electricity Conservation Potential Review (1994) showed potential to cut electricity demand by 25 percent or more. This theme has remained constant, and has gathered public support and political recognition. In 2003, the BC Utilities Commission ruled that a greenhouse gas (GHG) liability should be factored into the costing of gas-fired generation. And then in February 2005, the Kyoto Protocol became law, along with Canada’s GHG reduction targets.

But in early 2000, the energy to fight Hydro’s plans came mainly from people’s shock at seeing maps showing high-pressure pipeline routes through their back yards, past schools, and across farm fields. People became furious at community meetings when BC Hydro officials said the decisions were unalterable.

The BC Chapter linked up with citizens in Cobble Hill and Duncan and with the Georgia Strait Alliance and other groups to form the GSX Concerned Citizens Coalition. The Coalition (GSXCCC) devoted huge amounts of time and energy to refuting Hydro’s claims, bringing powerful evidence to the National Energy Board review of GSX and the BC Utilities Commission’s two reviews of successive power plant proposals for Duke Point (first BC Hydro’s Vancouver Island Generation Project, then the private Duke Point Power roposal).

GSXCCC also mobilized people all over the mid Island, as BC Hydro sought sites for the next power plant. First, the Coalition alerted Port Alberni residents, who blocked rezoning near a residential area. Next, the Coalition brought out crowds in North Cowichan to warn municipal leaders against changing their industrial zoning. BC Hydro finally found a site and sympathetic municipal leaders in Nanaimo, though by 2005, Mayor Gary Korpan was forced to acknowledge that his support for the power plant represented his personal views, not those of the City.

Despite a rubber-stamp approval of GSX by the National Energy Board in 2003, the GSXCCC and others delayed the pipeline so long that BC Hydro cancelled it in 2004, citing high gas costs and unfavourable economics for gas-fired generation (which we had warned of in 2001). Accordingly, BC Hydro then reduced its gas-fired generation plan to a single additional plant, part of the 252-MW Duke Point Power electricity purchase agreement. Hydro claimed this was needed to ensure “the lights wouldn’t go out” on Vancouver Island.

This already represented a big success, given the Sierra Club’s goal of reducing the use of fossil fuels to generate electricity. But we were going for gold. GSXCCC developed extensive evidence to refute the myth that a power shortfall could only be met by building power plants, and brought that evidence to the Utilities Commission’s review of the Duke Point Power deal.

In February 2005, the Commission approved the purchase agreement. But the GSXCCC, the BC Sustainable Energy Association, and the Society Promoting Environmental Conservation, working with the Joint Industry Electricity Steering Committee, applied to the BC Court of Appeal for leave to appeal the decision. It claimed that information was inappropriately kept secret and that there was a reasonable apprehension that the Commission had acted with bias.

On June 14, the Court granted leave to appeal. But the Coalition’s appeal never went ahead. Three days later, BC Hydro publicly announced it was cancelling plans for a gas-fired power plant at Duke Point.

There is a footnote to this story. BC Hydro is still looking for ways to generate more electricity on Vancouver Island in 2006, and will be again accepting bids from independent power producers. But it would seem the table has tilted slightly in favour of renewable energy. For the first time – undoubtedly because of the evidence submitted by the GSXCCC – the BC Utilities Commission will consider the liability of greenhouse-gas emissions and the cost of offsetting them when it assesses power generation proposals.

From the Fall 2005 Sierra Report

Posted by Arthur Caldicott on September 14, 2005

EnCana sells Ecuadorean oil assets to China

Paul Haavardsrud
Calgary Herald, with files from Canadian Press
Wednesday, September 14, 2005

sqwalk.com
COMMENT:Pressures on EnCana, on the street, in the media, and at the 2004 AGM pushed the company to sell its Ecuadorean operations, particulary the OCP Pipeline.

The strategic problem for NGOs, in what initially was viewed as a victory of sorts, is what happens next. Any purchaser is going to be aware of the controversies, and will be buying in, fully prepared to take the heat. Andes Petroleum Company, a consortium of Chinese companies, is well removed from the shareholder and investor vulnerabilities that a North American or European company is exposed to.

Chinese energy investments continue to expand globally, an echo of US, Dutch and British energy capitalists from a hundred years ago. What forces this unleashes, at the end of the easy oil era, rather than at its beginning, will be profound.

Encana's news release
sqwalk.com

CALGARY -- EnCana Corp. closed the book on a six-year stay in Ecuador, selling its contentious South American assets to a state-owned Chinese oil venture for $1.42 billion US.

The sale comes only weeks after violent protests against the country's petroleum industry led to speculation that EnCana's year-long search for a buyer would be further drawn out.

As part of a move to focus on the North American natural gas business, EnCana confirmed its assets in Ecuador were on the block last September, while announcing the $2.1 billion US sale of its North sea oil interests to Nexen Inc.

Given the ongoing struggles of doing business in Ecuador, which most recently saw its petroleum industry shut down as demonstrators protested the handling of the country's petro-wealth, the list of potential buyers for EnCana's assets was believed to be limited to national oil companies that are better suited to working around political and social unrest.

EnCana's chief executive Gwyn Morgan has said doing business there was "constantly a roller-coaster."

© The Vancouver Sun 2005

Posted by Arthur Caldicott on September 14, 2005

September 13, 2005

US Government Slams Kinder Morgan's Safety Procedures

Jeremy J. Nuttall
TheTyee.ca
September 13, 2005


Suisun marsh: 70,000 gallons of diesel
Out to buy BC's Terasen, Texas pipeline
firm ordered to clean up its act.

A day after The Tyee first reported on the marred environmental record of Kinder Morgan, the company wanting to take over Terasen, the Texas based pipeline giant was hit with a corrective action order from the US Department of Transportation's Pipeline and Hazardous Materials Safety Administration.

According to PHMSA spokesperson Damon A. Hill, the August 24 order, addressed to co-founder Richard Kinder, tells Kinder Morgan to review their operating procedures.

"We issued this order to get this company to address the recent rash of incidents that they've had in the past couple of years," says Hill. "They've had a significant number of them."

Now, Hill says, the PHMSA wants Kinder Morgan to restructure their safety procedures in hopes of creating a sound network. "We did an analysis of what we thought could be going wrong with the company. We looked at their integrity management (and) the way they implement their integrity management," he says.

Hill adds although no clear cut violations were found, the PHMSA "did see weaknesses in use of their tools to interpret the data that they receive when they conduct integrity management inspections."

'A widespread failure'

The order points out "recent accidents indicate a widespread failure to adequately detect and address the effects of outside force damage and corrosion. This failure has systematically affected the integrity of the Pacific Operations Unit."

It focuses on eight more severe accidents out of the 44 Kinder Morgan has experienced over the last two years. Such as the Suisun Marsh diesel spill, which leaked 70,000 gallons of fuel into the Northern California marsh. According to the order, the cause of that spill was a 14-foot section of corroded pipe that was not identified as requiring repair.

Of the seven remaining incidents, five of them are listed to have been the result of an outside force, meaning third party involvement. One such case was an explosion that killed five people. Kinder Morgan was found to have not marked the pipeline properly and was cited $140,000 for their part in the accident.

The order goes on to point out three of the accidents were not addressed by Kinder Morgan in a timely manner, among them the Suisun Marsh spill.

'We fully intend to comply'

Hill says the company has a problem with organizing its own internal inspection reports with other information key to safely running pipelines.

According to the order, Kinder Morgan practices internal inspection relying on multiple departments, however those departments don't always have access to each other's information. And the order says the "internal inspection geometry tools employed by the respondent (Kinder Morgan) are generally insufficient."

Kinder Morgan spokesperson Rick Rainey says the company is taking the order seriously.

"Many of those steps we have already taken including a third party review of our operations and procedural practices as well as a restructuring of our internal inspection program," says Rainey. "We fully intend to comply with the order in that regard."

Kinder Morgan is appealing some elements of the order, but Rainey was unable to say which ones by press time.

Effect on sale not clear

The British Columbia Utilities Commission is currently reviewing the intended sale of Terasen gas when its owner, Terasen Inc, is taken over by Kinder Morgan.

BCUC spokesperson Bill Grant says the only way the corrective action order can have an effect on the sale of Terasen is if one of the sale's 15 registered interveners submits the order as part of their contention. Grant adds such a submission could be considered because part of the BCUC's responsibility is to ensure Terasen offers quality service to customers.

"If parties can demonstrate that (circumstances prompting the order) might have an impact on Terasen gas, then that would have an impact on the reliable service issue," says Grant. "I don't believe anybody's made a submission on that."

During the interview with The Tyee, Rainey repeatedly mentioned Terasen pipes would be maintained by the same people performing the task now. "One of the issues that's kind of gotten lost in this whole discussion is that following the completion of this sale, you're essentially going to have the same people that are in charge of pipeline integrity for those Canadian assets in place once the sale goes through," he says.

This is not the first time Kinder Morgan has been dealt with by the PHMSA. Their website has many instances where Kinder Morgan shows up on a list of compliance section orders served to numerous companies since the early 90s.

Jeremy J. Nuttall is a Penticton radio reporter and freelance writer. To read his previous report on Kinder Morgan's safety record, go here.

Posted by Arthur Caldicott on September 13, 2005

September 10, 2005

Enbridge pipeline proceeds

Vancouver Sun
September 10, 2005

CALGARY -- With a planned in-service date of mid-2008, Enbridge Inc. said Friday it will proceed with construction of the 380-kilometre Waupisoo pipeline from the Alberta oilsands to the Edmonton refinery hub. The Calgary-based firm said it has reached agreement on long-term shipping commitments with ConocoPhillips Canada, Petro-Canada, Suncor Energy Inc. and Total E&P Canada Ltd. Enbridge will construct the 30-inch (76-centimetre) diameter pipeline at an estimated cost of $400 million in 2005 dollars. The line's initial capacity will be 350,000 barrels a day, with a maximum capacity of 600,000 barrels per day.

© The Vancouver Sun 2005

Posted by Arthur Caldicott on September 10, 2005

Opposing energy projects has a price

Michael Campbell
Vancouver Sun
September 10, 2005

Problems arise when new energy supplies don't keep pace with rising demand

sqwalk.com
COMMENT: This begins like a column that should be an engaging read, but Michael Campbell stays well away from any useful analysis of the problem he identifies. Yes, our fossil fuel energy demands have outpaced industry's ability to deliver. Yes, communities are objecting with increasing strength to ugly, poisonous, dangerous energy projects in their neighbourhoods. Yes, the system is highly utilized, with no tolerance for breakdown.

But Campbell seems to suggest that the solution is for NIMBYs to get off the case, and allow the growth that might otherwise take place. He doesn't follow through to a proposal for serious uptake on conservation and more efficient use of existing supply. He doesn't go anywhere near talking about investing in sustainable technologies.

Heck, he doesn't even acknowledge that the five year sustained resistance against the GSX Pipeline and the Duke Point Power project has saved British Columbians hundreds of millions of dollars. - Arthur Caldicott
sqwalk.com


They are protesting the Sumas 2 power project. They are protesting offshore oil drilling. They opposed the Duke Point power project. Some residents in South Delta are up in arms over the proposal to put higher-voltage power lines in their neighbourhood in order to transport electricity. And no one dares mention nuclear power in North America in spite of the fact that it may be the best existing solution to our energy needs.

In other words, at every opportunity there are individuals and groups ready to oppose the expansion of energy resources. I'm not saying that I want a brand-new power project in my neighbourhood either, but our reluctance to further our energy supplies and infrastructure presents a problem.

The growth in our consumption continues to outpace our increase in supplies. There are more cars, more home computers, more data centres, more electronic gear, more energy needs for manufacturing, bigger houses to heat and numerous other demands that are relentlessly increasing our energy needs. Even our push for alternative sources of energy often relies on energy inputs from other sources. For example, methanol from corn takes more energy to produce than it creates.

What this spells is an obvious problem that Hurricane Katrina simply exacerbated when it comes to oil and gasoline. There is no mystery why gas prices have spiked up in the wake of the U.S. losing 10 per cent of its refining capacity. Demand continues to grow while the supply of gasoline through the refiners was curtailed.

North American refineries have been operating at full capacity for years and had no ability to absorb the loss of 12 refineries. The question should be: Given that we had capacity problems that inevitably would lead to gasoline supply shortages and higher prices, why weren't more refineries built?

The answer is that nobody wants them in their area. While demand for gasoline has been steadily growing, there has not been a refinery built in the U.S. in 25 years. Forbes magazine has just reported on Arizona Clean Fuel's application to build a refinery in the desert near Yuma Arizona. Now keep in mind that Arizona Clean Fuel has been cited many times for its friendly environmental record, but when it came to building a new refinery that made no difference.

It has taken 10 years to get the state and federal environmental approval, which means the company can now enter the permit phase, where it will face more organized opposition. It's anyone's guess how many legal challenges and other hurdles will need to be overcome before the project is finally started.

As I said, when demand continues to rise and supply doesn't keep pace, we have a problem. What's scary is that in the face of such obvious problems we're being greeted with solutions like the proposal to nationalize the oil industry, which a Leger Marketing poll suggests is supported by about half of Canadians.

Even leaving aside the avalanche of problems such a solution would immediately trigger, it still wouldn't negate the fact that regardless of who is the owner we still need to expand capacity and infrastructure. Yet there is still vocal and effective opposition to any such proposal. I'm not passing judgment on the merits of the opposition, I'm simply pointing out that it has consequences in terms of supply and that means higher prices.

Michael Campbell's Money Talks radio show can be heard on CKNW 980 on Saturdays from 8:30 a.m. to 10 a.m.

© The Vancouver Sun 2005

Posted by Arthur Caldicott on September 10, 2005

September 09, 2005

Terasen asks for natural-gas hike of 13.3%

Wendy Mclellan and John Bermingham
The Province
09-Sep-2005


B.C.ers are about to experience the after-effects of Hurricane Katrina on their natural-gas bills.

Terasen Gas filed a request yesterday with the B.C. Utilities Commission to up its rates for residen-tial customers in mainland B.C. by 13.3 per cent, effective Oct. 1.

Vancouver Island customers will not be affected because they follow a different regulatory schedule.

The rate hike would add $180 to the average annual natural-gas bill in the Lower Mainland.

"The primary reason is the repercussions from Hurricane Katrina," said Terasen spokesman Dean Pelkey. "At first we thought it would be an increase of five to 10 per cent, but with the damage to the infrastructure on the Gulf Coast, it will be 13.3 per cent."

Utilities commission spokesman Rob Pelat said a decision on Terasen's request will be made early next week.

"We've already had [an increase] in July of 5.6 per cent," he said. "Just have a look at the market-price of natural gas -- it's just been horrendous."

Said Jim Quail of the B.C. Public Interest Advocacy Centre: "It's very painful, but I don't think Terasen is the villain.

"The market price goes up, unfortunately, and we get skinned. Once again, consumers are the victims of large market forces, which have been worsened by Hurricane Katrina."

Peter Dyne of the Consumers Council of Canada said natural-gas bills could rise another 30 per cent.

"There's more incentive for people to think about insulating their houses," he said from Ottawa. "The trouble is those things cost money, too. It's a very difficult problem, particularly for low-income consumers."

Rudy Lawrence, president of the Council of Senior Citizen's Organizations of B.C., agreed: "It's going to have an impact on some people for sure, not just seniors, but a lot of people on low incomes. That's just scandalous."

Homeowners are shifting to other forms of heating, said Doug Rempel, owner of Solace Energy, a Burnaby home-heating retailer.

Customers are looking at investing in geothermal heating systems and high-efficiency gas furnaces.

"People are concerned, so they're putting in considerably more expensive systems when they're building homes," said Rempel.

Energy Minister Richard Neufeld said there are no plans to help out with the bills.

"Those higher energy costs will be experienced by mostly people that live outside the Lower Mainland, in the colder regions," said Neufeld. "Royalties do increase as the price of natural gas goes up, and so the province will be receiving more revenue. But we haven't contemplated anything about rebates."

Terasen makes its money from delivering the gas, not on its price. The company says it has to raise rates to cover the anticipated increase in natural gas prices.

wmclellan@png.canwest.com

jbermingham@png.canwest.com

- - -

HEATING TIPS . . .

At least 50 per cent of your energy bill goes to heating your home. Here are some tips to reduce heat loss:

WINDOWS

- Up to one third of the heat can escape through windows. Put storm windows or plastic sheeting on single-glazed windows.

- Consider installing energy-efficient windows.

HEATING SYSTEM

- Clean your furnace filters.

- Avoid heating uninsulated spaces.

- Close the fireplace chimney damper between fires to keep warm air in.

- Avoid heating unused rooms by closing doors and warm-air-supply registers or lower the room thermostat for baseboards.

-- B.C. Hydro

Posted by Arthur Caldicott on September 09, 2005

Hydro's net income off 90% in 2006 first quarter

Scott Simpson
Vancouver Sun
09-Sep-2005


BC Hydro's net income fell 90 per cent in the first quarter of fiscal 2006, despite significantly higher trade revenues, the crown corporation reported on Thursday.

In a statement accompanying the first quarter report for 2005-2006, Hydro said it recorded net income of $5 million after regulatory transfers, compared to $52 million in the same period a year earlier.

"Key drivers for the lower net income this quarter were increased costs related to energy purchases to help meet domestic needs and increased finance charges," reported Hydro chief financial officer Alister Cowan.

Hydro also reduced its forecast for annual net income by $20 million, to $376 million, adding that its fiscal payment to the British Columbia government for 2006 would be $302 million.

Revenues from domestic electricity sales moved up by $1 million to $633 million compared to the first quarter of the 2005 fiscal year that ended March 31.

Electricity trade revenues, derived principally from sales to the United States, were up $92 million -- but those gains were effectively wiped out by a $106 million increase in electricity purchases on behalf of customers in B.C.

"Total sales volumes increased by three per cent as a result of an additional 18,996 residential customers compared with the same period last year, as well as an increase in activity in the light industrial and commercial sector as a result of improving economic conditions," Hydro said.

About $30 million of that amount was "due to higher volumes of electricity purchases from Independent Power Producers and other long-term commitments at higher unit prices to meet an increase in domestic load requirements."

Hydro traditionally uses a buy and sell strategy to take advantage of short term differences between electricity prices here and in the U.S., buying comparatively cheap U.S. power during off-peak hours, and opening up its dams to generate power when prices are at premium levels south of the border.

However, Hydro spokeswoman Elisha Moreno said in an interview, the crown corporation put more focus on buying electricity from other sources during the quarter -- with the objective of refilling its reservoirs that were somewhat depleted after two years of comparative drought.

"At June 30, 2005," Hydro reported, "the combined storage in BC Hydro's reservoirs was 119 per cent of average, compared with 91 per cent of average last year.

"Faster-than-normal runoff in the quarter resulted in water inflows into BC Hydro's reservoirs which were 16 per cent higher at June 30, 2005."

"We are coming off a couple of successive lower water years. If we have an opportunity to rebuild our reservoir levels without having significantly negative impact on our financial results then we are definitely going to take advantage of that," Moreno said.

Cowan said Hydro has enough total generating capacity to meet domestic needs but added that the system's flexibility "enables us to look at the most economic way to meet customer demand. In the past quarter, it was cheaper for us to import some electricity from the market than it was to use more expensive resources like Burrard Generating station."

Over the longer term, he said, the result will be lower costs "and better financial performance for our customers in B.C."

ssimpson@png.canwest.com

Posted by Arthur Caldicott on September 09, 2005

Wasco rides with the wind

Eileen M. Garvin
Portland Business Journal
2 September 2005

PPM Energy's wind projects boost city's bottom line


When President George W. Bush signed the nation's new energy bill in New
Mexico in August, the reverberations were felt far north in the small town
of Wasco, Ore. (population 381).

That's because the Energy Policy Act includes tax breaks for the
development of renewable energy sources, which have been a boon to the
agricultural community east of The Dalles.

This summer, Portland's PPM Energy Inc. launched the second phase of a wind
farm that has been encouraged by the federal Energy Production Tax Credit,
which provides a 1.8 cent-per-kilowatt-hour tax credit for electricity
generated through wind turbines.

PPM Energy has invested $90 million in Klondike II, a 50-turbine project
expected to create 75 megawatts of wind power.

"That's a $90 million investment in steel and concrete and turbines," says
Jan Johnson, PPM Energy spokeswoman.

That investment also translates into revenue for Sherman County, which saw
a 10 percent increase in property taxes in the year following the first
phase of the project, Klondike I.

For PPM Energy, Klondike II is another success story for an Oregon company
that grew from 12 employees to 300 in just four short years. This year, it
posted operating profits of $98 million, up from $35 million last year.

PPM Energy is a U.S. subsidiary of international energy company
ScottishPower. A wind power wholesaler, PPM Energy also deals in natural
gas generation and storage.

When ScottishPower purchased the company in 1999, it was then a small
division of electric utility PacifiCorp., which operates as Pacific Power
in Oregon. Interested in pursuing non-utility business, ScottishPower spun
out PPM Energy in 2001.

It quickly grew to employ approximately 300 people, and ScottishPower now
plans to invest $1.6 billion in building its wind capacity in the next five
years. The company is in the process of selling PacifiCorp. to MidAmerican
Energy Holdings Co. for $9.4 billion in a deal subject to approval by the
SEC and other regulatory bodies.

PPM Energy got its start in the wind business through marketing when it
agreed to buy the power produced by the Stateline Wind Farm -- FPL Energy's
454-turbine wind farm straddling Umatilla County, Oregon, and Walla Walla
County, Washington.

"We took all the power," says Johnson. "(FPL) would not build it until they
had someone who would take all the power."

PPM Energy warehoused the power produced at Stateline and sold it to
customers such as Seattle City Light and the city of Eugene. Success in the
marketing business naturally led to operating and building its own wind farms.

PPM Energy now owns or controls wind power projects in seven states --
Oregon, Colorado, California, Iowa, Washington, Wyoming and Minnesota --
representing 830 megawatts of wind power, and is building new farms in New
York and Kansas.

Customers include utilities such as Alliant Energy, Xcel Energy and San
Diego Gas and Electric, public power authorities like Southern California
Public Power Authority and the Bonneville Power Administration, and such
public entities as Seattle City Light and Sacramento Municipal Utility
District.

Klondike I came online in 2001 with just 16 turbines producing up to 24
megawatts of electricity, enough to power 6,100 homes. PPM Energy has been
selling that power to the Bonneville Power Administration.

Last December, Portland General Electric signed a 30-year agreement with
PPM Energy to purchase the output from Klondike II. According to the
American Wind Energy Association, 1 megawatt of wind generates as much
electricity as 300 households would use in year.

More than one kind of green

Wind power is hailed as a clean and green energy source, but it makes money
too, and not just for the company. The Klondike project also has created
local jobs. Local farmers also collect leasing fees for the land used by
the turbines, and the wind farm does not disrupt their traditional farming
practices.

"It is a very positive story for Oregon," says Rachel Shimshak, director of
Renewable Northwest Project, an organization that promotes the development
of renewable energy in the Northwest. PPM Energy is a member of the
organization, which provides a meeting place for environmentalists,
consumer groups and businesses.

In a report last December, Renewable Northwest Project hailed the wind farm
as a sound choice for economic diversification for Sherman County.

"Sherman County was dead last in terms of per capita income in the state,"
says Shimshak. "We think it is a great story. It is something welcomed by a
community that is desperate for economic development."

Sherman County Judge Gary Thompson is enthusiastic about the potential for
tax revenue brought by PPM Energy.

"The economy in Sherman County has been down in the doldrums for so many
years because it has been primarily agriculture-based," says Johnson, a
fifth generation farmer. "This is something new that is really going to
help us."

The county granted PPM Energy a three-year tax abatement for Klondike II.
It will continue to collect property taxes from Klondike I, and PPM Energy
has agreed to donate the approximate amount that it would have paid in
property taxes into a 501c3 to fund county schools, fire districts and
economic development.

Thompson says that translates into approximately $700,000 year.

"That is quite a boon for economic development," he says.

Looking to the future

The American Wind Energy Association, a national trade association, says
PPM Energy is ahead of the curve in planning for the future.

"They are seeing that wind energy is going to be a big part of the future,"
says Wind Energy Association spokesperson Christine Real de Azua.

Real de Azua says PPM Energy has been a leader in 2005 -- a record year for
wind power development -- and is the fourth largest wind power purchaser in
the country.

The strong track record has encouraged the company to pursue more wind
power projects in the Pacific Northwest. PPM Energy is currently in the
permitting stage for projects in Arlington, Ore., and Bickleton, Wash.
Klondike III is also on the horizon.

Portland Business Journal

Posted by Arthur Caldicott on September 09, 2005

September 08, 2005

Teck Cominco Announces Acquisition of 15% Interest in Fort Hills Oil Sands Project

TeckCominco News Release
06-Sep-2005

Vancouver, B.C. -- Teck Cominco Limited today announced that it has entered into an agreement with UTS Energy Corporation and Petro-Canada to subscribe for a 15% interest in the Fort Hills Energy Limited Partnership (the “Partnership”), which is developing the Fort Hills oil sands project in Alberta, Canada.

The aggregate subscription price is $475 million. Teck Cominco will earn a 10% interest in the Partnership by funding $250 million of Petro-Canada and UTS expenditures. In a separate transaction, Teck Cominco will earn a further 5% interest from UTS by funding an additional $225 million of UTS expenditures. On closing of the transactions, expected to occur in October, Teck Cominco will be issued a 15% interest and the interests of UTS and Petro-Canada in the Partnership will be adjusted to 30% and 55%, respectively. The subscription price will be satisfied by Teck Cominco contributing 34% of project expenditures until project spending reaches $2.5 billion and its 15% share thereafter. Closing of the transactions is subject to due diligence, definitive documentation and receipt of regulatory approvals.

Teck Cominco President and CEO Don Lindsay said: “Fort Hills is an ideal opportunity to further diversify our production base in a commodity which will be increasingly important in a world concerned about security of energy supply, and in which Canadians can be expected to play a major role. It is consistent with our strategy of emphasizing the development of quality, long life assets in a variety of significant products in favourable jurisdictions.

Teck Cominco’s proven open pit mining expertise should make a significant contribution to the success of Fort Hills, which will involve mining and extraction as well as upgrading to a final petroleum product. We look forward to working with UTS and project operator Petro-Canada to add value to this project, and view this transaction as the foundation for potential further opportunities in the oil sands business.”

Fort Hills, located approximately 90 kilometres north of Fort McMurray, is a long-life asset with 2.8 billion barrels of bitumen resource. Regulatory approvals are in place for up to 190,000 barrels per day of bitumen production, with initial start-up by the end of the decade. Plans include an integrated upgrader. The project partners are currently evaluating the best location for the upgrader and the technology to be employed.

In a separate transaction, UTS has agreed in principle to grant to Teck Cominco the right to acquire at fair market value a 50% working interest in “Lease 14”, an oil sands property contiguous to the Fort Hills property. The option would be exercisable following delineation by

UTS of the resource on Lease 14 in the event that UTS determines that Lease 14 should be developed as a satellite mine to Fort Hills, subject to agreement of the Partnership.

Teck Cominco will host a conference call to discuss this news release. The call will take place on Tuesday, September 6, 2005 at 5:30 a.m. (PDT) / 8:30 a.m. ( EDT). The dial-in phone number is 416-231-6596, toll-free at 866-250-4910. To access a recording of the call at a later time, dial 1-416-640-1917 and enter code 21151341#. The recording will be available until November 7, 2005.

A live audio webcast of the conference call, together with supporting presentation slides, will be available at Teck Cominco's website at www.teckcominco.com. The webcast will also be available at www.Q1234.com and www.newswire.ca. The webcast will also be archived at www.teckcominco.com.

Teck Cominco is a diversified mining company, headquartered in Vancouver, Canada with assets of over $6 billion. Shares are listed on the Toronto Stock Exchange under the symbols TEK.MV.A and TEK.SV.B. The company is a world leader in the production of zinc and metallurgical coal and is also a major producer of copper and gold. Further information can be found at www.teckcominco.com.

The slideshow presentation is at www.teckcominco.com

Posted by Arthur Caldicott on September 08, 2005

September 07, 2005

Tsawwassen power line foes to fight underground proposal

Maurice Bridge
Vancouver Sun
07-Sep-2005

TRAHVOL is holding a public meeting tonight, Wednesday, 07-Sep-2005, at 7:30 p.m. at the South Delta Rec Centre.

TRAHVOL website: www.trahvol.com

IRAHVOL website: www.irahvol.org

BCTC VITRP web info: www.bctc.com

BC EAO VITRP website: www.eao.gov.bc.ca

BCUC VITRP website: www.bcuc.com


TSAWWASSEN - A group of Tsawwassen residents who have been fighting attempts to run a pair of high-voltage power lines to Vancouver Island through their neighbourhood are gearing up for another battle.

B.C. Transmission Corp. has applied to the B.C. Utilities Commission for permission to run the lines underground along its right-of-way, which overlaps the property lines of 147 private homes in the area. It says it will use expropriation if it cannot reach an agreement with the property owners.

"They need 21 metres of your backyard to put these two lines in . . . in some cases, it's people's entire yards," Maureen Broadfoot said Tuesday.

Broadfoot is the spokeswoman for Tsawwassen Residents Against Higher Voltage Overhead Lines (TRAHVOL), which fought an earlier proposal to run the lines overhead. She said TRAHVOL was promised by the premier, local MLA Val Roddick and the former chair of BCTC that they would not recommend construction of an overhead line.

The residents are opposed to both overhead and underground power lines because of fears of adverse health risks, including cancer.

TRAHVOL says the electro-magnetic field (EMF) levels of the new underground lines would be almost 200 times higher than the World Health Organization warning level for childhood leukemia and other adverse health risks.

BCTC says its proposal strictly adheres to all public health, safety and environmental protection standards and is well below the precautionary guideline for EMFs endorsed by the WHO.

Broadfoot says in addition to opposing the power lines on health grounds, the residents are upset at the idea of expropriation.

"They've basically said they're going to negotiate with us, although three months have gone by and we've not heard boo from them, " Broadfoot said. "If they're unsuccessful, then they'll expropriate."

"The residents' group did our town public consultation, and 100 per cent of the people said, 'Forget it, we're not giving you underground rights.' "

Dennis Maniago, vice-president of system planning and asset management for BCTC, said Tuesday the corporation is not trying to acquire any extra land, but simply wants to make use of its existing right-of-way.

Two overhead power lines are already on the right-of-way, he said.

He said the problem is rooted in a subdivision plan from the 1960s which allowed homes built at the time to use part of the right-of-way as back yards.

"We have had an overhead right-of-way from some 50 years there, it's about 53 metres wide, so what we simply would be looking for is an exchange of overhead rights for underground rights," he said.

"We would be putting it within the right-of-way, which is within their [residents] property."

BCUC is expected to consider the proposal in November, with a decision by February or March.

TRAHVOL is holding a public meeting tonight at 7:30 p.m. at the South Delta Rec Centre.

mbridge@png.canwest.com

Posted by Arthur Caldicott on September 07, 2005

August 29, 2005

Feds slap local energy company

Tom Fowler
Houston Chronicle
Aug. 26, 2005

In one of largest such orders, Kinder Morgan unit must change how it operates

Kinder Morgan Energy Partners' 3,900-mile-long Pacific Operations system, which supplies six Western states with gasoline, diesel fuel and jet fuel, has been hit by a rash of accidents in the past two years, including:

• May 28: Gasoline leaks close to a highway in the Fort Bliss Military Reservation near El Paso. The company concluded the cause was defective pipe.

• April 1: Gasoline and diesel fuel leak into Summit Creek that flows into Donner Lake near a ski resort outside of Truckee, Calif. Company had no additional information.

• Nov. 22, 2004: About 96,000 gallons of gasoline spray the air near San Bernardino, Calif., polluting a portion of the Mojave Desert and shutting down Interstate 15 for hours. Company concluded the line had been damaged by a third party.

• Nov. 9, 20 04: In Walnut Creek, Calif. five contractors were killed when a backhoe used to lay a water main hit a pipeline, sparking a blast.

• April 27, 2004: Corroded pipe leads to about 105,000 gallons of diesel fuel fouling the Suisun Marsh near Fairfield, Calif., killing wildlife.

Source: Company and Transportation Department

Federal pipeline regulators have ordered Houston-based Kinder Morgan Energy Partners to change how it operates more than 3,900 miles of pipelines in six Western states following a recent string of accidents.

In what is being called one of the largest regulatory actions undertaken by the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration, the company must restructure its internal inspection program, get an independent review of its operations and analyze recent incidents, including one that killed five people.

The order didn't come as a surprise to the company — a spokesman said it had been working with regulators on the issues for months and has fixed some already. But it is unusual in its breadth, affecting more than 40 different pipeline segments that carry gasoline, diesel and jet fuel throughout the West.

Most of the recent incidents were due to third parties, such as construction backhoes digging nearby, striking the pipelines. But in its letter to the company, regulators said the recent accidents "indicate a widespread failure to adequately detect and address the effect of outside force damage and corrosion. This failure has systematically affected the integrity of the Pacific Operations unit."

The Kinder Morgan companies operate more than 25,000 miles of pipelines in the nation, carrying crude oil, natural gas and refined products.

While the company has invested in new construction, much of its growth has come through acquisitions. Most of the pipeline system in question came to the company in 1998 when it acquired Santa Fe Pacific Pipeline.

Kinder Morgan said it would spend more than $900 million this year maintaining and operating its pipelines and other assets.

"We share the PHMSA's priorities to operate our pipelines as safely as possible and to protect the public, employees and the environment," company spokesman Larry Pierce said. "These are top priorities at Kinder Morgan."

About 60 percent of accidents along pipelines under Kinder Morgan's Pacific Operations were caused by what is called outside force damage, namely another company or individual damaging the pipeline with equipment, according to the Transportation Department.

One of the worst accidents occurred Nov. 9, 2004, in Walnut Creek, Calif., near San Francisco. Contractors laying a water main are thought to have struck a pipeline with a backhoe, sparking a blast that killed five workers.

But some incidents are due to age and wear and tear. An April 27, 2004, release of 105,000 gallons of diesel into a marsh near Fairfield, Calif., was due to a patch of corrosion almost 14 feet long. The firm paid more than $5 million in fines, penalties and restitution in that case.

Damon Hill, a spokesman with the PHMSA, said the broad scope of the order is due to the large number of incidents in the company's Pacific operations: 44 since Jan. 1, with 14 resulting in the release of more than five barrels of refined petroleum.

"We didn't find any clear-cut violations of integrity management rules, but we did see some weaknesses in the use of their tools to interpret data," said Hill.

For example, the order notes that in some instances Kinder Morgan used internal pipe inspection tools that aren't sufficient to identify certain defects.

The company's organizational structure also expects workers in different departments to identify specific pipeline safety threats, but it does not allow workers from one department easy access to data from another department, the order says.

Kinder Morgan has 120 days to submit a revised integrity management plan to regulators. The company must also provide a list of outside experts it may use to do the independent evaluation within 30 days.

"It's possible, we may choose to appeal certain elements in the order, but we've been working with them on these issues for months," Pierce said.

tom.fowler@chron.com

Copyright 2005 Houston Chronicle


Posted by Arthur Caldicott on August 29, 2005

August 25, 2005

Transportation Department Orders Kinder Morgan to Address Rise in Pipeline Incidents

U.S. Department of Transportation
Pipeline and Hazardous Materials Safety Administration
Thursday, August 25, 2005

Contact: James Wiggins/Damon A. Hill
Tel.: (202) 366-4831

The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) today announced it ordered Kinder Morgan Energy Partners (KMEP) to address a recent increase in incidents along its hazardous liquids pipeline system. The agency issued a Corrective Action Order requiring KMEP to comprehensively address integrity threats along the entire 3,900-mile Pacific Operations unit.

The order requires a thorough analysis of recent incidents, a third-party independent review of operations and procedural practices, and a restructuring of KMEP’s internal inspection program. KMEP must have a revised integrity management plan approved by PHMSA within 120 days. Failure to comply may result in an assessment of civil penalties of as much as $100,000 per day.

Since January 1, 2003, KMEP has experienced at least 44 accidents with some 14 resulting in the release of more than five barrels of refined petroleum products, some in or near environmentally sensitive areas or major transportation corridors.

“Our investigations into these incidents identified inadequacies in Kinder Morgan’s interpretation of in-line inspection information to evaluate and repair their pipeline systems,” said PHMSA Acting Chief Safety Officer Stacey Gerard. “It is imperative for operators to utilize the most comprehensive set of technologies available to improve their ability to consistently characterize and address every possible threat their systems pose to public safety.”

Recent PHMSA investigations of these accidents, and reviews of KMEP’s operations and procedures, prompted the agency Order requiring KMEP to apply technologies and procedures to help evaluate its pipelines, Gerard said.

PHMSA pipeline engineers and agency State Pipeline Safety Program partners will continue to carefully monitor and scrutinize KMEP’s activities.

-END-

Corrective Action Order - Kinder Morgan Energy Partners, L.P.
August 24, 2005 | News Release
- regarding KM's Pacific Operations - systems in California, Nevada, Arizona, New Mexico and western Texas.

Final Order - Kinder Morgan Energy Partners, L.P.
April 22, 2005
- Rockland CA to Reno NV

Final Order - Kinder Morgan Energy Partners, L.P.
March 23, 2005
- finding of violation and assessing $25,000 fine

Corrective Action Order - Kinder Morgan Energy Partners L.P.
May 1, 2004
- Concord to Sacramento

All pipeline operators at one time or another come under the finger-wagging oversight of OPS, including Terasen, the recent willing takeover subject of Kinder Morgan.

Final Order - Trans Mountain Oil Pipe Line Company (a Terasen company)
June 6, 2005
- regarding adherence to maintenance and inspection standards on the TM pipeline in BC and WA

Posted by Arthur Caldicott on August 25, 2005

Kinder Morgan open houses in BC

Kinder Morgan has placed ads in newspapers inviting the public to find out more about them. Open houses in Cranbrook, Prince George, Whistler, Kelowna, and Vancouver are scheduled.

Between 29 Aug - 1Sept, they're on Vancouver Island:

Victoria, 31 Aug, 10am - 1pm, Holiday Inn, Topaz Room.
Nanaimo, 31 Aug, 5-8pm, Coast Bastion Inn, Malaspina Room.

www.terasen.com
www.kindermorgan.com

Posted by Arthur Caldicott on August 25, 2005

Terasen gas plant project still alive

Edward Hill
Ladysmith Chronicle
Aug 23 2005

A natural gas storage facility north of Ladysmith is still in the works, says Terasen Gas, despite the demise of the Duke Point power project and Terasen's recent takeover by a Texas energy company.

Carol Greaves, Terasen's community relations manager, said the company will re-start the approval process with the B.C. Utilities Commission within the next several months. The BCUC previously gave the go-ahead in February, predicated on supplying gas to a 252-megawatt power plant, which BC Hydro abandoned in June.

Greaves said Terasen is still calculating the economics of building a $100-million liquid natural gas (LNG) facility, but suggested its construction is likely.

"It depends on projected use. The facility will offer a flexible source to store gas. We will buy it in the summer when prices are lower, and draw from it in the winter when demand is greater," Greaves said. "It will contribute to stabilizing prices."

Houston-based Kinder Morgan, which operates pipelines within North America, took control of Terasen Aug. 1 for $6.9 billion. Kinder Morgan was primarily interested in Terasen's Alberta oilsands pipeline network.

Greaves said for B.C. customers and projects, "it's business as usual. Nothing is going to change."

LNG storage is slated for construction about six kilometres northwest of Ladysmith near Mt. Hayes, on 12 hectares of a 42-hectare parcel owned by Terasen. The Cowichan Valley Regional District granted the LNG storage environmental certification and zoning approval last year.

The tank will be massive, 60 metres in diameter and 55 metres high, holding up to 30 million cubic metres of LNG. Natural gas is stored in a liquid state at -162 degrees Celsius, which reduces its gaseous volume by a factor of 600, but makes it a dangerous substance to humans.

Should the tank ever rupture, from an earthquake or otherwise, the plan calls for an earthen dike that holds the same volume as the tank.

In June, at about the same time the Duke Point project died, Terasen entered into an agreement with the with the Chemainus First Nation and Cowichan Tribes' Khowutzun Development Corporation.

"The project might affect [Chemainus First Nation] land," Greaves said. "We want them to help with site prep work."

If the project gets the nod from the BCUC, Chemainus members have been guaranteed contracts for site road construction, land clearing and pipeline installation, among other jobs.

Posted by Arthur Caldicott on August 25, 2005

August 24, 2005

The wind blows for free, advocate argues

Guy Dauncey
Guest Commentary
Victoria News
Aug 24 2005

They are spinning on the windswept hills of southern Alberta, and on a hill outside Whitehorse, in the Yukon.

They are spinning in downtown Toronto and along the shores of the St. Lawrence, in Quebec. But there are no wind turbines spinning in British Columbia - yet.

The production of electricity from the wind is making rapid progress around the world. By the end of 2003, wind turbines had 39,000 megawatts of global capacity. By the end of 2004, it had risen to 47,000 MW. In Quebec, the government has just given approval for the construction of a further 2,000 MW.

In Calgary, the public light rail system is powered by 12 wind turbines in the southern prairies, near Pincher Creek. The program is called "Ride the Wind," and moves the Calgary C Trains while producing no greenhouse gas emissions at all. Wind-generated electricity is also powering many Calgary households, which purchase green electricity credits to show that their power has come from Alberta's turbines.

Overall, in Canada, wind turbines have 570 MW of capacity. The Canadian Wind Energy Association believes that Canada could have 10,000 MW of wind power capacity by 2010.

But don't wind turbines kill birds? Aren't they ugly, and noisy?

And what happens when the wind is not blowing?

These are all important questions.

The first generation of turbines with latticed frames were certainly no friends of birds, especially if they were inappropriately located.

But the new turbines have smooth tubular stems, with nowhere for a bird to rest. Studies show that on average they kill no more than one or two birds per turbine per year. If we want to protect the birds, we should look after our cats. [and cars, and pesticide use ...]

To some people, wind turbines are ugly. But many people like their sleek designs and see them as an emblem of the future. If you live very close, they will sometimes produce a background noise, but most of Canada's wind farms are in remote areas where few people live.

What happens when the wind is not blowing?

The answer is simple: they stop turning. This is why it will never be possible for a community to get all its energy from the wind. Here in B.C., however, we are blessed with a hydro system which can be used like a battery. When the wind is blowing, and the turbines are putting energy into the grid, the hydro engineers can hold back the water in the dams. When the wind stops, the dams can do their part. This eliminates the problem and allows them to contribute consistent
power to the grid.

How much power could wind turbines in B.C. produce?

A recent study done for BC Hydro suggested we have potential for 5,000 MW, enough to power almost a million homes. The best locations are in the Peace River country, on the northern end of Vancouver Island, and along B.C.'s mid-coast off Haida Gwaii.

How much will it cost?

The cost varies according to the wind, ranging from 6 to 12 cents a kilowatt hour. The owners of a 58.5 MW project that was recently scrapped at Holberg, on northern Vancouver Island, negotiated a low-price contract with BC Hydro before they knew how much wind there was, and had to back out when the numbers didn't work.

Power from natural gas, for comparison, costs 9 cents a kilowatt hour, which is guaranteed to increase since North America has only enough gas left for 10 more years, after which it must be shipped in as liquefied natural gas from unstable countries like Russia, Algeria, and Iran.

Coal-fired power is still cheap, but coal is the dirtiest of all fuels, and "clean coal" technologies which will not produce greenhouse gas emissions are still years off. Wind energy, by contrast, is a gift from the sun (since it's the sun's heat that causes the wind to blow).

It is renewable, clean, and goes on forever.

In Denmark, where the modern wind energy movement began, farmers, teachers, and other people have formed wind energy cooperatives, and own their own turbines. Globally, a study from Stanford University has suggested that the world could harvest five times more power from the wind than we are currently using for all purposes - if we wanted to.

The BC Sustainable Energy Association believes that wind energy has a big future in B.C., as long as policies and rules are put in place to encourage it.

Let's hope we don't have to wait much longer!

- Guy Dauncey is president of the BC Sustainable Energy Association,
www.bcsea.org, and author of the book Stormy Weather: 101 Solutions to Global Climate Change. He lives in Victoria.

Posted by Arthur Caldicott on August 24, 2005

August 23, 2005

The EUB’s ‘men without chests’

Andrew Nikiforuk
Calgary Herald
August 23, 2005

In one of his most famous essays, the Christian philosopher C.S. Lewis once described bureaucrats who banished all magnanimity and heart from their decisions as “men without chests.”

The Energy and Utility Board’s recent decision to grant Compton Petroleum another 21 /2-month extension on its plans to drill sour gas wells in the city’s southeast corner illustrates just how advanced this organic atrophy has become among the agency’s faceless directors.

By now almost every Calgarian knows the direction of this sad narrative. A company, whose president wouldn’t live near a sour gas well, gleefully declares its intent to put nearly 250,000 citizens as well as a future hospital, in harm’s way so it can enrich itself. All because the oil and gas regulator has no plan, no policy and no heart.

I can’t name a world-class city that would allow active production of a highly hazardous gas and well known chemical warfare agent in its backyard. Or that would entrust the safety of its citizens to an agency so chronically understaffed that it openly expects ordinary Albertans to do its own police work. Or that would relinquish its sovereignty to a board so morally captive to provincial cash flows that it even rubber stamps wells for companies in steady “noncompliance” mode without so much as demanding a $100,000 reclamation bond.

It gets worse. By the board’s own reluctant calculations and that of rural economist Peter Boxall, the health risks of sour gas devalue properties anywhere between five and 10 per cent. Any rural house in an emergency response zone, for example, loses $6,000 in value.

So Compton’s project will sour property values in the city by at least $15 million.

Men without chests, however, don’t bat an eyelash when it comes to expropriating property rights or the security of ordinary citizens.

After giving Compton two months to produce a coherent emergency response plan, the EUB has now rewarded the company’s insouciance by giving it another delay so that Compton can, in all likelihood, work harder at convincing taxpayers and other agencies to help foot the bill.

Fortunately the Calgary Regional Health Authority has challenged this insanity with a damning legal appeal of the board’s chestless actions.

The CRHA’s motion of appeal says everything the mayor should have said. It accuses the board of not considering the potential social and economic costs of the project; and it accuses the EUB of failing to establish the costs of evacuating, sheltering and providing medical care to persons affected by an accidental release of sour gas.

The CHRA repeatedly accuses the board of erring, ignoring or misinterpreting so much evidence that “the board could not properly carry out its mandate to determine the public interest and weigh the social and economic effects of the proposed project.”

These accusations have been echoed across the province. In Drayton Valley, where the board has abused rural Albertans by putting some households in as many as 52 emergency response zones (and thereby eliminated all value), people are getting fed up.

Citizens there have actually brought industry’s high-density sour gas drilling to a standstill by objecting to every sour gas well. “The companies came in and said, ‘We will do what we want,’ ” says 56-year-old local Louis Mastre, and “we are fighting back.”

The residents of Drayton Valley, of course, support a vigorous oil and gas industry, but one run and regulated by men with chests.

They want what southeast Calgarians want: a commitment to public health and safety first.

They want priority land use zoning that keeps sour gas wells and high-density drilling away from schools, hospitals and grandmothers like Mastre. They want full cost accounting and industry to pay for property devaluation as well as full health-risk insurance for the residents of sour gas zones.

And they want the regulator to responsibly act on industry’s appalling $9-billion deficit in unreclaimed wells and facilities.

Calgarians will know when sour gas developments in cities and towns are safe when their leaders practise what they preach.

So when Premier Ralph Klein and Energy minister Greg Melchin make the ultimate sacrifice, and devalue their homes and that of their neighbours, by sticking sour gas wells in their backyards and all without improper health and economic assessments, and then submit to monitoring by an understaffed agency directed by men without chests and no cleanup fund, then we’ll know that sour gas is good for us.

Until that distant time, Compton’s rude proposal will remain a bad business supported by men without chests. “Do as you would be done by” remains a mighty measure of men, said Lewis. Even in an oil and gas town.

ANDREW NIKIFORUK IS A PROUD CALGARIAN, WON THE GOVERNOR’S GENERAL AWARD IN 2002 FOR SABOTEURS: WIEBO LUDWIG’S WAR AGAINST BIG OIL.

Posted by Arthur Caldicott on August 23, 2005

Kinder Morgan Marked by Spills

Jeremy J. Nuttall
TheTyee.ca
August 23, 2005



Trouble in Tuscon
Terasen suitor's many pipelines figure in several
U.S. disasters, including a very deadly one.

Kinder Morgan, the company that hopes to take over the B.C. gas utility Terasen, is “the poster child for pipeline problems,” according to Carl Weimer, executive director of the Bellingham, Washington--based Pipeline Safety Trust.

Weimer says Kinder Morgan has a poor safety record, which he attributes to the company taking over a huge network of pipelines in a short time frame. “They’ve expanded rapidly and a lot of the pipelines they took over are older pipelines. And that has undercut some of the safety,” he says.

Weimer, whose trust is funded by a court-ordered endowment created after an Olympic Pipe Line Co. pipeline in Bellingham burst and then exploded in 1999, killing three and destroying Whatcom Creek, says ongoing internal inspection is the best way to stay on top of pipeline maintenance. Weimer adds that Terasen has a good record on this front. “Hopefully the personnel won’t go through a dramatic change” during the takeover, he says, given Terasen staff’s credible record.

According to Terasen, many of their pipelines are approaching 50 years of age, and some, particularly under Vancouver, are as old as 70 years. Many of the lines Kinder Morgan took over in the U.S. are around 50 years old, says Weimer, which has resulted in several failures on its network.

Explosion killed five

The most dramatic and deadly incident had another cause, however. Five people were killed last November in Walnut Creek, California, after an excavator ruptured a high-pressure petroleum line. Gasoline filled the pipe trench and was ignited by a welding torch.

Kinder Morgan spokesman Rick Rainey told The Tyee that the incident had nothing to do with the company’s practices. “It was a backhoe operator that ruptured our pipeline, so that had nothing to do with integrity,” he says.

However, the California Department of Industrial Relations didn’t see it exactly that way. In its 20-page report on the Walnut Creek explosion, the department said the main contributing factor was that the pipeline was not properly marked: “The primary cause of the incident was that the location of the petroleum line was not known to employees working in the area.”

Negligence cited

In the end, Kinder Morgan was cited for two counts of “serious willful” and fined a total of $140,000. In the report, “willful” is defined as a situation “where evidence shows that the employer committed an intentional and knowing violation -- as distinguished from inadvertent or accidental or ordinarily negligent -- and the employer is conscious of the fact that what they are doing constitutes a violation, or is aware that a hazardous condition exists and no reasonable effort was made to eliminate the hazard.”

Right underneath that violation “serious” is defined as “cited where there is substantial probability that death or serious physical harm could result from a condition which exists -- or from practices, operations or processes at the workplace.”

The fines to the three other companies involved amounted to $51,750, less than half of what Kinder Morgan was fined for its part in the accident, even though Kinder Morgan insists the accident was not really its fault.

Another blemish on Kinder Morgan’s environmental record is a 2004 70,000-gallon diesel spill into a Northern California marsh from an old, corroded pipeline. However, according to Rainey, the company had wanted to replace the very pipeline that leaked into the marsh, and would have done so, except that California’s “cumbersome permitting process” held up the company’s attempts to change the line.

“It took us three years to even get permits. Had it been done a little more timely,” says Rainey, “we wouldn’t have had the issue of the rupture.”

Still, Kinder Morgan pled guilty in the case and paid about $3 million in penalties and restitution. The company didn’t notify the California government about the spill until 18 hours after it had occurred, a failure for which it was cited. Kinder Morgan attributed the delay to the time it took them to identify the leak and be certain there was a one.

Houses sprayed with gas

Not all of the leaks have been hard to locate. In 2003 in Tuscon, Arizona, 19,000 gallons of gasoline spilled out of another Kinder Morgan pipeline, spraying a housing development and flooding nearby streets. The resulting pipeline closure caused major gas shortages in the state.

In December 2004, a Kinder Morgan pipeline burst in the Mojave Desert in California. For 12 hours, it spewed diesel more than 70 feet into the air. The fuel seeped an estimated 50 feet below the surface and the clean up involved removing 7,500 tons of dirt from the site.

Rainey defends Kinder Morgan’s history and says that overall, “despite a couple of recent high-profile incidents,” the company has a clean record. “We have a very aggressive integrity management program, and that will be applied,” he says of the standards the company will promote in B.C.

Safety commitment lauded

According to Rainey, since the company was formed in 1997 it has increased its pipelines by 6.5 times yet spends 10.5 times more on safety and maintenence. He says the incidents have little to do with negligence. “It’s certainly not for lack of dedicating financial resources to make sure [pipelines] are safe,” he says.

Rainey says Kinder Morgan’s record is considered better than the industry average -- according to his company’s records. That sentiment is echoed by Terasen’s director of public affairs, Cam Avery. “In most quarters they’ve got above-industry-standard record,” says Avery, adding that B.C. standards would apply if Kinder Morgan succeeds in its takeover bid. “Terasen gas is regulated in British Columbia according to British Columbia standards.”

Rainey also stresses the company is actively trying to improve its practices. “Commitment to safety is our top priority,” he says.

However, Kinder Morgan has been cited for not complying with government safety standards, and for not performing emergency training. In December 2004, Kinder Morgan was fined $26,630 and promised to buy emergency equipment for a California town after failing to conduct the minimum 10 emergency drills at a Nevada oil-holding facility and for neglecting to conduct two oil-spill response drills. The safety drills were required by the Environmental Protection Agency.

Out of Enron

Kinder Morgan was formed by Richard Kinder and Bill Morgan, both former executives of the infamous energy giant Enron Corporation. Richard Kinder was the president of Enron until 1997, when he handed the reins over to Kenneth Lay, who now faces fraud charges related to the collapse of the company.

As with Lay, Kinder and his family are strong supporters of George W. Bush. Kinder’s wife raised more than $200,000 for Bush during the 2004 election, and had pledged $100,000 to the Bush campaign in 2001. According to Mother Jones, during that 2001 campaign Kinder and his wife served as regional co-chairs for Bush’s Presidential Exploratory Committee, and Kinder has given $379,745 US to the Republican party.

Terasen stockholders will vote on the sale of Terasen to Kinder Morgan in late October. If the deal is approved, Terasen could be under Kinder Morgan control by December.

Scott Webb, a Terasen gas utility spokesperson, says there is some nervousness within Terasen about the deal. There’s “a little bit of uncertainty,” he says. “This all happened very fast.” Webb added that some Terasen employees are excited that Terasen may be acquired by a company that really wants to own it.

The B.C. Ministry of Energy and Mines and the Ministry of the Environment were approached for comment on safety and regulatory issues in B.C. but were not available by press time.

Jeremy Nuttall is a Penticton radio reporter and freelance writer.

Posted by Arthur Caldicott on August 23, 2005

August 22, 2005

Activists, companies split over Kyoto panel

Bill Curry
Globe and Mail
22-Aug-2005


OTTAWA

Environment Canada's hope of bringing together industry executives, environmentalists and senior public servants to craft policies might not get off the ground as boycotts are threatened over who gets to run the meetings.

Some environmental critics are questioning why EnCana, a company that has been one of the most vocal critics of the Kyoto Protocol, has been asked to fill a leadership role as co-chair of a panel that will propose energy policies.

But Gerry Protti, the EnCana executive vice-president who has been named to the post, said he is proud of his company's environmental record and is looking forward to taking part in the policy sessions.

He noted that EnCana has invested in tidal-power technology, as well as research into ways to capture carbon dioxide emissions and inject them back into Earth.

"We still think [Kyoto's] a huge challenge and I think the entire energy sector recognizes that. Having said that, I think we're taking a leadership role in terms of reduction of greenhouse gas emissions.".

In July, 21 environmental groups said they would boycott the first of four such policy tables after it was announced that a vice-president of Imperial Oil had been named co-chair of the meetings dealing with chemicals.

There will also be tables dealing with the mining and forestry sectors.

Each table is co-chaired by both an industry representative and a senior public servant.

John Bennett, senior policy adviser for the Sierra Club, said that if the government wants to get industry involved, it should invite companies, such as Shell and Suncor, that have been more supportive of Kyoto and the government's environmental plan.

Mr. Bennett said environmental groups are giving Environment Canada a bit more time to convince them environmental concerns will not be sidelined by the views of industry at the four tables. "If they don't, there will be a boycott of all the tables," he added.

"The companies that fought the hardest against doing the right thing end up with the most influence with the government. It might have been some crackerjack's idea that this would be a smart way to get them in the house, but they weren't thinking what that communicated to Canadians."

Rick Smith of the Environmental Defence Fund expressed similar concerns, saying: "It's another bizarre decision by the government. It's yet another fox-in-the-henhouse scenario."

But not all environmentalists are ready to give up on the tables, or think industry representatives should be rejected out of hand.

Marlo Raynolds of the Pembina Institute, a not-for-profit environmental-policy research and education organization, took part in one of the planning meetings for the energy table. He said that while he has some concerns, he is still hopeful the meetings can be positive.

Mr. Raynolds said he is pushing for the volunteer co-chair positions to rotate and include environmentalists. EnCana deserves some credit for getting involved in the project, he added.

"It creates an opportunity for EnCana to show and demonstrate some leadership and I think we'll have to see how they use that opportunity."

Environment Canada spokesman Sebastien Bois said the co-chairs are expected to be neutral and will not be representing the positions of their companies or departments. Mr. Protti's experience in government and with outside policy groups makes him "very qualified" for the position, Mr. Bois added.

Mr. Protti, a former public servant with the Alberta government, said he received a personal invitation from Alex Himelfarb, Clerk of the Privy Council, to take part in the meetings.

Mr. Protti said he and the other energy co-chair, fisheries deputy minister Larry Murray, have been working on a list of members for the table. He predicted it will involve between 25 and 30 people.

Posted by Arthur Caldicott on August 22, 2005

August 21, 2005

The Breaking Point

Peter Maass
New York Times
August 21, 2005

The largest oil terminal in the world, Ras Tanura, is located on the eastern coast of Saudi Arabia, along the Persian Gulf. From Ras Tanura's control tower, you can see the classic totems of oil's dominion -- supertankers coming and going, row upon row of storage tanks and miles and miles of pipes. Ras Tanura, which I visited in June, is the funnel through which nearly 10 percent of the world's daily supply of petroleum flows. Standing in the control tower, you are surrounded by more than 50 million barrels of oil, yet not a drop can be seen.

The oil is there, of course. In a technological sleight of hand, oil can be extracted from the deserts of Arabia, processed to get rid of water and gas, sent through pipelines to a terminal on the gulf, loaded onto a supertanker and shipped to a port thousands of miles away, then run through a refinery and poured into a tanker truck that delivers it to a suburban gas station, where it is pumped into an S.U.V. -- all without anyone's actually glimpsing the stuff. So long as there is enough oil to fuel the global economy, it is not only out of sight but also out of mind, at least for consumers.

I visited Ras Tanura because oil is no longer out of mind, thanks to record prices caused by refinery shortages and surging demand -- most notably in the United States and China -- which has strained the capacity of oil producers and especially Saudi Arabia, the largest exporter of all. Unlike the 1973 crisis, when the embargo by the Arab members of the Organization of Petroleum Exporting Countries created an artificial shortfall, today's shortage, or near-shortage, is real. If demand surges even more, or if a producer goes offline because of unrest or terrorism, there may suddenly not be enough oil to go around.

As Aref al-Ali, my escort from Saudi Aramco, the giant state-owned oil company, pointed out, ''One mistake at Ras Tanura today, and the price of oil will go up.'' This has turned the port into a fortress; its entrances have an array of gates and bomb barriers to prevent terrorists from cutting off the black oxygen that the modern world depends on. Yet the problem is far greater than the brief havoc that could be wrought by a speeding zealot with 50 pounds of TNT in the trunk of his car. Concerns are being voiced by some oil experts that Saudi Arabia and other producers may, in the near future, be unable to meet rising world demand. The producers are not running out of oil, not yet, but their decades-old reservoirs are not as full and geologically spry as they used to be, and they may be incapable of producing, on a daily basis, the increasing volumes of oil that the world requires. ''One thing is clear,'' warns Chevron, the second-largest American oil company, in a series of new advertisements, ''the era of easy oil is over.''

In the past several years, the gap between demand and supply, once considerable, has steadily narrowed, and today is almost negligible. The consequences of an actual shortfall of supply would be immense. If consumption begins to exceed production by even a small amount, the price of a barrel of oil could soar to triple-digit levels. This, in turn, could bring on a global recession, a result of exorbitant prices for transport fuels and for products that rely on petrochemicals -- which is to say, almost every product on the market. The impact on the American way of life would be profound: cars cannot be propelled by roof-borne windmills. The suburban and exurban lifestyles, hinged to two-car families and constant trips to work, school and Wal-Mart, might become unaffordable or, if gas rationing is imposed, impossible. Carpools would be the least imposing of many inconveniences; the cost of home heating would soar -- assuming, of course, that climate-controlled habitats do not become just a fond memory.

But will such a situation really come to pass? That depends on Saudi Arabia. To know the answer, you need to know whether the Saudis, who possess 22 percent of the world's oil reserves, can increase their country's output beyond its current limit of 10.5 million barrels a day, and even beyond the 12.5-million-barrel target it has set for 2009. (World consumption is about 84 million barrels a day.) Saudi Arabia is the sole oil superpower. No other producer possesses reserves close to its 263 billion barrels, which is almost twice as much as the runner-up, Iran, with 133 billion barrels. New fields in other countries are discovered now and then, but they tend to offer only small increments. For example, the much-contested and as-yet-unexploited reserves in the Alaska National Wildlife Refuge are believed to amount to about 10 billion barrels, or just a fraction of what the Saudis possess.

But the truth about Saudi oil is hard to figure out. Oil reservoirs cannot be inventoried like wood in a wilderness: the oil is underground, unseen by geologists and engineers, who can, at best, make highly educated guesses about how much is underfoot and how much can be extracted in the future. And there is a further obstacle: the Saudis will not let outsiders audit their confidential data on reserves and production. Oil is an industry in which not only is the product hidden from sight but so is reliable information about it. And because we do not know when a supply-demand shortfall might arrive, we do not know when to begin preparing for it, so as to soften its impact; the economic blow may come as a sledgehammer from the darkness.

Of course the Saudis do have something to say about this prospect. Before journeying to the kingdom, I went to Washington to hear the Saudi oil minister, Ali al-Naimi, speak at an energy conference in the mammoth Ronald Reagan Building and International Trade Center, not far from the White House. Naimi was the star attraction at a gathering of the American petro-political nexus. Samuel Bodman, the U.S. energy secretary, was on the dais next to him. David O'Reilly, chairman and C.E.O. of Chevron, was waiting in the wings. The moderator was an éminence grise of the oil world, James Schlesinger, a former energy secretary, defense secretary and C.I.A. director.

''I want to assure you here today that Saudi Arabia's reserves are plentiful, and we stand ready to increase output as the market dictates,'' said Naimi, dressed in a gray business suit and speaking with only a slight Arabic accent. He addressed skeptics who contend that Saudi reservoirs cannot be tapped for larger amounts of oil. ''I am quite bullish on technology as the key to our energy future,'' he said. ''Technological innovation will allow us to find and extract more oil around the world.'' He described the task of increasing output as just ''a question of investment'' in new wells and pipelines, and he noted that consuming nations urgently need to build new refineries to process increased supplies of crude. ''There is absolutely no lack of resources worldwide,'' he repeated.

His assurances did not assure. A barrel of oil cost $55 at the time of his speech; less than three months later, the price had jumped by 20 percent. The truth of the matter -- whether the world will really have enough petroleum in the years ahead -- was as well concealed as the millions of barrels of oil I couldn't see at Ras Tanura.


or 31 years, Matthew Simmons has prospered as the head of his own firm, Simmons & Company International, which advises energy companies on mergers and acquisitions. A member of the Council on Foreign Relations, a graduate of the Harvard Business School and an unpaid adviser on energy policy to the 2000 presidential campaign of George W. Bush, he would be a card-carrying member of the global oil nomenclatura, if cards were issued for such things. Yet he is one of the principal reasons the oil world is beginning to ask hard questions of itself.
Two years ago, Simmons went to Saudi Arabia on a government tour for business executives. The group was presented with the usual dog-and-pony show, but instead of being impressed, as most visitors tend to be, with the size and expertise of the Saudi oil industry, Simmons became perplexed. As he recalls in his somewhat heretical new book, ''Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy,'' a senior manager at Aramco told the visitors that ''fuzzy logic'' would be used to estimate the amount of oil that could be recovered. Simmons had never heard of fuzzy logic. What could be fuzzy about an oil reservoir? He suspected that Aramco, despite its promises of endless supplies, might in fact not know how much oil remained to be recovered.

Simmons returned home with an itch to scratch. Saudi Arabia was one of the charter members of OPEC, founded in 1960 in Baghdad to coordinate the policies of oil producers. Like every OPEC country, Saudi Arabia provides only general numbers about its output and reserves; it does not release details about how much oil is extracted from each reservoir and what methods are used to extract that oil, and it does not permit audits by outsiders. The condition of Saudi fields, and those of other OPEC nations, is a closely guarded secret. That's largely because OPEC quotas, which were first imposed in 1983 to limit the output of member countries, were based on overall reserves; the higher an OPEC member's reserves, the higher its quota. It is widely believed that most, if not all, OPEC members exaggerated the sizes of their reserves in order to have the largest possible quota -- and thus the largest possible revenue stream.

In the days of excess supply, bankers like Simmons did not know, or care, about the fudging; whether or not reserves were hyped, there was plenty of oil coming out of the ground. Through the 1970's, 80's and 90's, the capacity of OPEC and non-OPEC countries exceeded demand, and that's why OPEC imposed a quota system -- to keep some product off the market (although many OPEC members, seeking as much revenue as possible, quietly sold more oil than they were supposed to). Until quite recently, the only reason to fear a shortage was if a boycott, war or strike were to halt supplies. Few people imagined a time when supply would dry up because of demand alone. But a steady surge in demand in recent years -- led by China's emergence as a voracious importer of oil -- has changed that.

This demand-driven scarcity has prompted the emergence of a cottage industry of experts who predict an impending crisis that will dwarf anything seen before. Their point is not that we are running out of oil, per se; although as much as half of the world's recoverable reserves are estimated to have been consumed, about a trillion barrels remain underground. Rather, they are concerned with what is called ''capacity'' -- the amount of oil that can be pumped to the surface on a daily basis. These experts -- still a minority in the oil world -- contend that because of the peculiarities of geology and the limits of modern technology, it will soon be impossible for the world's reservoirs to surrender enough oil to meet daily demand.

One of the starkest warnings came in a February report commissioned by the United States Department of Energy's National Energy Technology Laboratory. ''Because oil prices have been relatively high for the past decade, oil companies have conducted extensive exploration over that period, but their results have been disappointing,'' stated the report, assembled by Science Applications International, a research company that works on security and energy issues. ''If recent trends hold, there is little reason to expect that exploration success will dramatically improve in the future. . . . The image is one of a world moving from a long period in which reserves additions were much greater than consumption to an era in which annual additions are falling increasingly short of annual consumption. This is but one of a number of trends that suggest the world is fast approaching the inevitable peaking of conventional world oil production.''

The reference to ''peaking'' is not a haphazard word choice -- ''peaking'' is a term used in oil geology to define the critical point at which reservoirs can no longer produce increasing amounts of oil. (This tends to happen when reservoirs are about half-empty.) ''Peak oil'' is the point at which maximum production is reached; afterward, no matter how many wells are drilled in a country, production begins to de cline.SaudiArabia and other OPEC members may have enough oil to last for generations, but that is no longer the issue. The eventual and painful shift to different sources of energy -- the start of the post-oil age -- does not begin when the last drop of oil is sucked from under the Arabian desert. It begins when producers are unable to continue increasing their output to meet rising demand. Crunch time comes long before the last drop.

''The world has never faced a problem like this,'' the report for the Energy Department concluded. ''Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.''

Most experts do not share Simmons's concerns about the imminence of peak oil. One of the industry's most prominent consultants, Daniel Yergin, author of a Pulitzer Prize-winning book about petroleum, dismisses the doomsday visions. ''This is not the first time that the world has 'run out of oil,''' he wrote in a recent Washington Post opinion essay. ''It's more like the fifth. Cycles of shortage and surplus characterize the entire history of the oil industry.'' Yergin says that a number of oil projects that are under construction will increase the supply by 20 percent in five years and that technological advances will increase the amount of oil that can be recovered from existing reservoirs. (Typically, with today's technology, only about 40 percent of a reservoir's oil can be pumped to the surface.)

Yergin's bullish view has something in common with the views of the pessimists -- it rests on unknowns. Will the new projects that are under way yield as much oil as their financial backers hope? Will new technologies increase recovery rates as much as he expects? These questions are next to impossible to answer because coaxing oil out of the ground is an extraordinarily complex undertaking. The popular notion of reservoirs as underground lakes, from which wells extract oil like straws sucking a milkshake from a glass, is incorrect. Oil exists in drops between and inside porous rocks. A new reservoir may contain sufficient pressure to make these drops of oil flow to the surface in a gusher, but after a while -- usually within a few years and often sooner than that -- natural pressure lets up and is no longer sufficient to push oil to the surface. At that point, ''secondary'' recovery efforts are begun, like pumping water or gas into the reservoirs to increase the pressure.

This process is unpredictable; reservoirs are extremely temperamental. If too much oil is extracted too quickly or if the wrong types or amounts of secondary efforts are employed, the amount of oil that can be recovered from a field can be greatly reduced; this is known in the oil world as ''damaging a reservoir.'' A widely cited example is Oman: in 2001, its daily production reached more than 960,000 barrels, but then suddenly declined, despite the use of advanced technologies. Today, Oman produces 785,000 barrels of oil a day. Herman Franssen, a consultant who worked in Oman for a decade, sees that country's experience as a possible lesson in the limits of technology for other producers that try to increase or maintain high levels of output. ''They reached a million barrels a day, and then a few years later production collapsed,'' Franssen said in a phone interview. ''They used all these new technologies, but they haven't been able to stop the decline yet.''


The vague production and reserve data that gets published does not begin to tell the whole story of an oil field's health, production potential or even its size. For a clear-as-possible picture of a country's oil situation, you need to know what is happening in each field -- how many wells it has, how much oil each well is producing, what recovery methods are being used and how long they've been used and the trend line since the field went into production. Data of that sort are typically not released by state-owned companies like Saudi Aramco.

As Matthew Simmons searched for clues to the truth of the Saudi situation, he immersed himself in the minutiae of oil geology. He realized that data about Saudi fields might be found in the files of the Society of Petroleum Engineers. Oil engineers, like most professional groups, have regular conferences at which they discuss papers that delve into the work they do. The papers, which focus on particular wells that highlight a problem or a solution to a problem, are presented and debated at the conferences and published by the S.P.E. -- and then forgotten.

Before Simmons poked around, no one had taken the time to pull together the S.P.E. papers that involved Saudi oil fields and review them en masse. Simmons found more than 200 such papers and studied them carefully. Although the papers cover only a portion of the kingdom's wells and date back, in some cases, several decades, they constitute perhaps the best public data about the condition and prospects of Saudi reservoirs.

Ghawar is the treasure of the Saudi treasure chest. It is the largest oil field in the world and has produced, in the past 50 years, about 55 billion barrels of oil, which amounts to more than half of Saudi production in that period. The field currently produces more than five million barrels a day, which is about half of the kingdom's output. If Ghawar is facing problems, then so is Saudi Arabia and, indeed, the entire world.

Simmons found that the Saudis are using increasingly large amounts of water to force oil out of Ghawar. Most of the wells are concentrated in the northern portion of the 174-mile-long field. That might seem like good news -- when the north runs low, the Saudis need only to drill wells in the south. But in fact it is bad news, Simmons concluded, because the southern portions of Ghawar are geologically more difficult to draw oil from. ''Someday (and perhaps that day will be soon), the remarkably high well flow rates at Ghawar's northern end will fade, as reservoir pressures finally plummet,'' Simmons writes in his book. ''Then, Saudi Arabian oil output will clearly have peaked. The death of this great king'' -- meaning Ghawar -- ''leaves no field of vaguely comparable stature in the line of succession. Twilight at Ghawar is fast approaching.'' He goes on: ''The geological phenomena and natural driving forces that created the Saudi oil miracle are conspiring now in normal and predictable ways to bring it to its conclusion, in a time frame potentially far shorter than officialdom would have us believe.'' Simmons concludes, ''Saudi Arabia clearly seems to be nearing or at its peak output and cannot materially grow its oil production.''


Saudi officials belittle Simmons's work. Nansen Saleri, a senior Aramco official, has described Simmons as a banker ''trying to come across as a scientist.'' In a speech last year, Saleri wryly said, ''I can read 200 papers on neurology, but you wouldn't want me to operate on your relatives.'' I caught up with Simmons in June, during a trip he made to Manhattan to talk with a group of oil-shipping executives. The impression he gives is of an enthusiastic inventor sharing a discovery that took him by surprise. He has a certain wide-eyed wonder in his regard, as if a bit of mystery can be found in everything that catches his eye. And he has a rumpled aspect -- thinning hair slightly askew, shirt sleeves a fraction too long. Though he delivers a bracing message, his discourse can wander. He is a successful businessman, and it is clear that he did not achieve his position by being a man of impeccable convention. He certainly has not lost sight of the rule that people who shout ''the end is nigh'' do not tend to be favorably reviewed by historians, let alone by their peers. He notes in his book that way back in 1979, The New York Times published an investigative story by Seymour Hersh under the headline ''Saudi Oil Capacity Questioned.'' He knows that in past decades the Cassandras failed to foresee new technologies, like deep-water and horizontal drilling, that provided new sources of oil and raised the amount of oil that can be recovered from reservoirs.

But Simmons says that there are only so many rabbits technology can pull out of its petro-hat. He impishly notes that if the Saudis really wanted to, they could easily prove him wrong. ''If they want to satisfy people, they should issue field-by-field production reports and reserve data and have it audited,'' he told me. ''It would then take anybody less than a week to say, 'Gosh, Matt is totally wrong,' or 'Matt actually might be too optimistic.'''

Simmons has a lot riding on his campaign -- not only his name but also his business, which would not be rewarded if he is proved to be a fool. What, I asked, if the data show that the Saudis will be able to sustain production of not only 12.5 million barrels a day -- their target for 2009 -- but 15 million barrels, which global demand is expected to require of them in the not-too-distant future? ''The odds of them sustaining 12 million barrels a day is very low,'' Simmons replied. ''The odds of them getting to 15 million for 50 years -- there's a better chance of me having Bill Gates's net worth, and I wouldn't bet a dime on that forecast.''

The gathering of executives took place in a restaurant at Chelsea Piers; about 35 men sat around a set of tables as the host introduced Simmons. He rambled a bit but hit his talking points, and the executives listened raptly; at one point, the man on my right broke into a soft whistle, of the sort that means ''Holy cow.''

Simmons didn't let up. ''We're going to look back at history and say $55 a barrel was cheap,'' he said, recalling a TV interview in which he predicted that a barrel might hit triple digits.

He said that the anchor scoffed, in disbelief, ''A hundred dollars?''

Simmons replied, ''I wasn't talking about low triple digits.''


he onset of triple-digit prices might seem a blessing for the Saudis -- they would receive greater amounts of money for their increasingly scarce oil. But one popular misunderstanding about the Saudis -- and about OPEC in general -- is that high prices, no matter how high, are to their benefit.
Although oil costing more than $60 a barrel hasn't caused a global recession, that could still happen: it can take a while for high prices to have their ruinous impact. And the higher above $60 that prices rise, the more likely a recession will become. High oil prices are inflationary; they raise the cost of virtually everything -- from gasoline to jet fuel to plastics and fertilizers -- and that means people buy less and travel less, which means a drop-off in economic activity. So after a brief windfall for producers, oil prices would slide as recession sets in and once-voracious economies slow down, using less oil. Prices have collapsed before, and not so long ago: in 1998, oil fell to $10 a barrel after an untimely increase in OPEC production and a reduction in demand from Asia, which was suffering through a financial crash. Saudi Arabia and the other members of OPEC entered crisis mode back then; adjusted for inflation, oil was at its lowest price since the cartel's creation, threatening to feed unrest among the ranks of jobless citizens in OPEC states.

''The Saudis are very happy with oil at $55 per barrel, but they're also nervous,'' a Western diplomat in Riyadh told me in May, referring to the price that prevailed then. (Like all the diplomats I spoke to, he insisted on speaking anonymously because of the sensitivities of relations with Saudi Arabia.) ''They don't know where this magic line has moved to. Is it now $65? Is it $75? Is it $80? They don't want to find out, because if you did have oil move that far north . . . the chain reaction can come back to a price collapse again.''

High prices can have another unfortunate effect for producers. When crude costs $10 a barrel or even $30 a barrel, alternative fuels are prohibitively expensive. For example, Canada has vast amounts of tar sands that can be rendered into heavy oil, but the cost of doing so is quite high. Yet those tar sands and other alternatives, like bioethanol, hydrogen fuel cells and liquid fuel from natural gas or coal, become economically viable as the going rate for a barrel rises past, say, $40 or more, especially if consuming governments choose to offer their own incentives or subsidies. So even if high prices don't cause a recession, the Saudis risk losing market share to rivals into whose nonfundamentalist hands Americans would much prefer to channel their energy dollars. A concerted push for greater energy conservation in the United States, which consumes one-quarter of the world's oil (mostly to fuel our cars, as gasoline), would hurt producing nations, too. Basically, any significant reduction in the demand for oil would be ruinous for OPEC members, who have little to offer the world but oil; if a substitute can be found, their future is bleak. Another Western diplomat explained the problem facing the Saudis: ''You want to have the price as high as possible without sending the consuming nations into a recession and at the same time not have the price so high that it encourages alternative technologies.''

From the American standpoint, one argument in favor of conservation and a switch to alternative fuels is that by limiting oil imports, the United States and its Western allies would reduce their dependence on a potentially unstable region. (In fact, in an effort to offset the risks of relying on the Saudis, America's top oil suppliers are Canada and Mexico.) In addition, sending less money to Saudi Arabia would mean less money in the hands of a regime that has spent the past few decades doling out huge amounts of its oil revenue to mosques, madrassas and other institutions that have fanned the fires of Islamic radicalism. The oil money has been dispensed not just by the Saudi royal family but by private individuals who benefited from the oil boom -- like Osama bin Laden, whose ample funds, probably eroded now, came from his father, a construction magnate. Without its oil windfall, Saudi Arabia would have had a hard time financing radical Islamists across the globe.

For the Saudis, the political ramifications of reduced demand for its oil would not be negligible. The royal family has amassed vast personal wealth from the country's oil revenues. If, suddenly, Saudis became aware that the royal family had also failed to protect the value of the country's treasured resource, the response could be severe. The mere admission that Saudi reserves are not as impressively inexhaustible as the royal family has claimed could lead to hard questions about why the country, and the world, had been misled. With the death earlier this month of the long-ailing King Fahd, the royal family is undergoing another period of scrutiny; the new king, Abdullah, is in his 80's, and the crown prince, his half-brother Sultan, is in his 70's, so the issue of generational change remains to be settled. As long as the country is swimming in petro-dollars -- even as it is paying off debt accrued during its lean years -- everyone is relatively happy, but that can change. One diplomat I spoke to recalled a comment from Sheik Ahmed Zaki Yamani, the larger-than-life Saudi oil minister during the 1970's: ''The Stone Age didn't end for lack of stone, and the oil age will end long before the world runs out of oil.''


Until now, the Saudis had an excess of production capacity that allowed them, when necessary, to flood the market to drive prices down. They did that in 1990, when the Iraqi invasion of Kuwait eliminated not only Kuwait's supply of oil but also Iraq's. The Saudis functioned, as they always had, as the central bank of oil, releasing supply to the market when it was needed and withdrawing supply to keep prices from going lower than the cartel would have liked. In other words, they controlled not only the price of oil but their own destiny as well.

''That is what the world has called on them to do before -- turn on the taps to produce more and get prices down,'' a senior Western diplomat in Riyadh told me recently. ''Decreasing prices used to keep out alternative fuels. I don't see how they're able to do that anymore. This is a huge change, and it is a big step in the move to whatever is coming next. That's what's really happening.''

Without the ability to flood the markets with oil, the Saudis are resorting to flooding the market with promises; it is a sort of petro-jawboning. That's why Ali al-Naimi, the oil minister, told his Washington audience that Saudi Arabia has embarked on a crash program to raise its capacity to 12.5 million barrels a day by 2009 and even higher in the years after that. Naimi is not unlike a factory manager who needs to promise the moon to his valuable clients, for fear of losing or alarming them. He has no choice. The moment he says anything bracing, the touchy energy markets will probably panic, pushing prices even higher and thereby hastening the onset of recession, a switch to alternative fuels or new conservation efforts -- or all three. Just a few words of honest caution could move the markets; Naimi's speeches are followed nearly as closely in the financial world as those of Alan Greenspan.

I journeyed to Saudi Arabia to interview Naimi and other senior officials, to get as far beyond their prepared remarks as might be possible. Although I was allowed to see Ras Tanura, my interview requests were denied. I was invited to visit Aramco's oil museum in Dhahran, but that is something a Saudi schoolchild can do on a field trip. It was a ''show but don't tell'' policy. I was able to speak about production issues only with Ibrahim al-Muhanna, the oil ministry spokesman, who reluctantly met me over coffee in the lobby of my hotel in Riyadh. He defended Saudi Arabia's refusal to share more data, noting that the Saudis are no different from most oil producers.

''They will not tell you,'' he said. ''Nobody will. And that is not going to change.'' Referring to the fact that Saudi Arabia is often called the central bank of oil, he added: ''If an outsider goes to the Fed and asks, 'How much money do you have?' they will tell you. If you say, 'Can I come and count it?' they will not let you. This applies to oil companies and oil countries.'' I mentioned to Muhanna that many people think his government's ''trust us'' stance is not convincing in light of the cheating that has gone on within OPEC and in the industry as a whole; even Royal Dutch/Shell, a publicly listed oil company that undergoes regular audits, has admitted that it overstated its 2002 reserves by 23 percent.

''There is no reason for any country or company to lie,'' Muhanna replied. ''There is a lot of oil around.'' I didn't need to ask about Simmons and his peak-oil theory; when I met Muhanna at the conference in Washington, he nearly broke off our conversation at the mention of Simmons's name. ''He does not know anything,'' Muhanna said. ''The only thing he has is a big mouth. We should not pay attention to him. Either you believe us or you don't.''


o whom to believe? Before leaving New York for Saudi Arabia, I was advised by several oil experts to try to interview Sadad al-Husseini, who retired last year after serving as Aramco's top executive for exploration and production. I faxed him in Dhahran and received a surprisingly quick reply; he agreed to meet me. A week later, after I arrived in Riyadh, Husseini e-mailed me, asking when I would come to Dhahran; in a follow-up phone call, he offered to pick me up at the airport. He was, it seemed, eager to talk.
It can be argued that in a nation devoted to oil, Husseini knows more about it than anyone else. Born in Syria, Husseini was raised in Saudi Arabia, where his father was a government official whose family took on Saudi citizenship. Husseini earned a Ph.D. in geological sciences from Brown University in 1973 and went to work in Aramco's exploration department, eventually rising to the highest position. Until his retirement last year -- said to have been caused by a top-level dispute, the nature of which is the source of many rumors -- Husseini was a member of the company's board and its management committee. He is one of the most respected and accomplished oilmen in the world.

After meeting me at the cavernous airport that serves Dhahran, he drove me in his luxury sedan to the villa that houses his private office. As we entered, he pointed to an armoire that displayed a dozen or so vials of black liquid. ''These are samples from oil fields I discovered,'' he explained. Upstairs, there were even more vials, and he would have possessed more than that except, as he said, laughing, ''I didn't start collecting early enough.''

We spoke for several hours. The message he delivered was clear: the world is heading for an oil shortage. His warning is quite different from the calming speeches that Naimi and other Saudis, along with senior American officials, deliver on an almost daily basis. Husseini explained that the need to produce more oil is coming from two directions. Most obviously, demand is rising; in recent years, global demand has increased by two million barrels a day. (Current daily consumption, remember, is about 84 million barrels a day.) Less obviously, oil producers deplete their reserves every time they pump out a barrel of oil. This means that merely to maintain their reserve base, they have to replace the oil they extract from declining fields. It's the geological equivalent of running to stay in place. Husseini acknowledged that new fields are coming online, like offshore West Africa and the Caspian basin, but he said that their output isn't big enough to offset this growing need.

''You look at the globe and ask, 'Where are the big increments?' and there's hardly anything but Saudi Arabia,'' he said. ''The kingdom and Ghawar field are not the problem. That misses the whole point. The problem is that you go from 79 million barrels a day in 2002 to 82.5 in 2003 to 84.5 in 2004. You're leaping by two million to three million a year, and if you have to cover declines, that's another four to five million.'' In other words, if demand and depletion patterns continue, every year the world will need to open enough fields or wells to pump an additional six to eight million barrels a day -- at least two million new barrels a day to meet the rising demand and at least four million to compensate for the declining production of existing fields. ''That's like a whole new Saudi Arabia every couple of years,'' Husseini said. ''It can't be done indefinitely. It's not sustainable.''

Husseini speaks patiently, like a teacher who hopes someone is listening. He is in the enviable position of knowing what he talks about while having the freedom to speak openly about it. He did not disclose precise information about Saudi reserves or production -- which remain the equivalent of state secrets -- but he felt free to speak in generalities that were forthright, even when they conflicted with the reassuring statements of current Aramco officials. When I asked why he was willing to be so frank, he said it was because he sees a shortage ahead and wants to do what he can to avert it. I assumed that he would not be particularly distressed if his rivals in the Saudi oil establishment were embarrassed by his frankness.

Although Matthew Simmons says it is unlikely that the Saudis will be able to produce 12.5 million barrels a day or sustain output at that level for a significant period of time, Husseini says the target is realistic; he says that Simmons is wrong to state that Saudi Arabia has reached its peak. But 12.5 million is just an interim marker, as far as consuming nations are concerned, on the way to 15 million barrels a day and beyond -- and that is the point at which Husseini says problems will arise.

At the conference in Washington in May, James Schlesinger, the moderator, conducted a question-and-answer session with Naimi at the conclusion of the minister's speech. One of the first questions involved peak oil: might it be true that Saudi Arabia, which has relied on the same reservoirs, and especially Ghawar, for more than five decades, is nearing the geological limit of its output?

Naimi wouldn't hear of it.

''I can assure you that we haven't peaked,'' he responded. ''If we peaked, we would not be going to 12.5 and we would not be visualizing a 15-million-barrel-per-day production capacity. . . . We can maintain 12.5 or 15 million for the next 30 to 50 years.''

Experts like Husseini are very concerned by the prospect of trying to produce 15 million barrels a day. Even if production can be ramped up that high, geology may not be forgiving. Fields that are overproduced can drop off, in terms of output, quite sharply and suddenly, leaving behind large amounts of oil that cannot be coaxed out with existing technology. This is called trapped oil, because the rocks or sediment around it prevent it from escaping to the surface. Unless new technologies are developed, that oil will never be extracted. In other words, the haste to recover oil can lead to less oil being recovered.

''You could go to 15, but that's when the questions of depletion rate, reservoir management and damaging the fields come into play,'' says Nawaf Obaid, a Saudi oil and security analyst who is regarded as being exceptionally well connected to key Saudi leaders. ''There is an understanding across the board within the kingdom, in the highest spheres, that if you're going to 15, you'll hit 15, but there will be considerable risks . . . of a steep decline curve that Aramco will not be able to do anything about.''

Even if the Saudis are willing to risk damaging their fields, or even if the risk is overstated, Husseini points out a practical problem. To produce and sustain 15 million barrels a day, Saudi Arabia will have to drill a lot more wells and build a lot more pipelines and processing facilities. Currently, the global oil industry suffers a deficit of qualified engineers to oversee such projects and the equipment and the raw materials -- for example, rigs and steel -- to build them. These things cannot be wished from thin air or developed quickly enough to meet the demand.

''If we had two dozen Texas A&M's producing a thousand new engineers a year and the industrial infrastructure in the kingdom, with the drilling rigs and power plants, we would have a better chance, but you cannot put that into place overnight,'' Husseini said. ''Capacity is not just a function of reserves. It is a function of reserves plus know-how plus a commercial economic system that is designed to increase the resource exploitation. For example, in the U.S. you have infrastructure -- there must be tens of thousands of miles of pipelines. If we, in Saudi Arabia, evolve to that level of commercial maturity, we could probably produce a heck of a lot more oil. But to get there is a very tedious, slow process.''

He worries that the rising global demand for oil will lead to the petroleum equivalent of running an engine at ever-increasing speeds without stopping to cool it down or change the oil. Husseini does not want to see the fragile and irreplaceable reservoirs of the Middle East become damaged through wanton overproduction.

''If you are ramping up production so fast and jump from high to higher to highest, and you're not having enough time to do what needs to be done, to understand what needs to be done, then you can damage reservoirs,'' he said. ''Systematic development is not just a matter of money. It's a matter of reservoir dynamics, understanding what's there, analyzing and understanding information. That's where people come in, experience comes in. These are not universally available resources.''

The most worrisome part of the crisis ahead revolves around a set of statistics from the Energy Information Administration, which is part of the U.S. Department of Energy. The E.I.A. forecast in 2004 that by 2020 Saudi Arabia would produce 18.2 million barrels of oil a day, and that by 2025 it would produce 22.5 million barrels a day. Those estimates were unusual, though. They were not based on secret information about Saudi capacity, but on the projected needs of energy consumers. The figures simply assumed that Saudi Arabia would be able to produce whatever the United States needed it to produce. Just last month, the E.I.A. suddenly revised those figures downward -- not because of startling new information about world demand or Saudi supply but because the figures had given so much ammunition to critics. Husseini, for example, described the 2004 forecast as unrealistic.

''That's not how you would manage a national, let alone an international, economy,'' he explained. ''That's the part that is scary. You draw some assumptions and then say, 'O.K., based on these assumptions, let's go forward and consume like hell and burn like hell.''' When I asked whether the kingdom could produce 20 million barrels a day -- about twice what it is producing today from fields that may be past their prime -- Husseini paused for a second or two. It wasn't clear if he was taking a moment to figure out the answer or if he needed a moment to decide if he should utter it. He finally replied with a single word: No.

''It's becoming unrealistic,'' he said. ''The expectations are beyond what is achievable. This is a global problem . . . that is not going to be solved by tinkering with the Saudi industry.''


It would be unfair to blame the Saudis alone for failing to warn of whatever shortages or catastrophes might lie ahead.

In the political and corporate realms of the oil world, there are few incentives to be forthright. Executives of major oil companies have been reluctant to raise alarms; the mere mention of scarce supplies could alienate the governments that hand out lucrative exploration contracts and also send a message to investors that oil companies, though wildly profitable at the moment, have a Malthusian long-term future. Fortunately, that attitude seems to be beginning to chang e.Chevron's''easyoilisover'' advertising campaign is an indication that even the boosters of an oil-drenched future are not as bullish as they once were.

Politicians remain in the dark. During the 2004 presidential campaign, which occurred as gas prices were rising to record levels, the debate on energy policy was all but nonexistent. The Bush campaign produced an advertisement that concluded: ''Some people have wacky ideas. Like taxing gasoline more so people drive less. That's John Kerry.'' Although many environmentalists would have been delighted if Kerry had proposed that during the campaign, in fact the ad was referring to a 50-cents-a-gallon tax that Kerry supported 11 years ago as part of a package of measures to reduce the deficit. (The gas tax never made it to a vote in the Senate.) Kerry made no mention of taxing gasoline during the campaign; his proposal for doing something about high gas prices was to pressure OPEC to increase supplies.

Husseini, for one, doesn't buy that approach. ''Everybody is looking at the producers to pull the chestnuts out of the fire, as if it's our job to fix everybody's problems,'' he told me. ''It's not our problem to tell a democratically elected government that you have to do something about your runaway consumers. If your government can't do the job, you can't expect other governments to do it for them.'' Back in the 70's, President Carter called for the moral equivalent of war to reduce our dependence on foreign oil; he was not re-elected. Since then, few politicians have spoken of an energy crisis or suggested that major policy changes are necessary to avert one. The energy bill signed earlier this month by President Bush did not even raise fuel-efficiency standards for passenger cars. When a crisis comes -- whether in a year or 2 or 10 -- it will be all the more painful because we will have done little or nothing to prepare for it.

Peter Maass is a contributing writer. He is writing a book about oil.

Copyright 2005 The New York Times Company

Posted by Arthur Caldicott on August 21, 2005

Cogen up and running 95 per cent of the time

Grant Warkentin
Campbell River Mirror
Aug 17 2005

The Island Cogen power plant beside the Elk Falls paper mill has had minimal downtime this year.

During the second quarter of 2005, the natural gas-fired power plant was capable of generating electricity 95 per cent of the time, or 496,025 megawatt-hours. During the same time last year, the plant was only capable of generating electricity 46 per cent of the time, or 191,482 megawatt-hours of electricity.

The Island Cogen facility was shut down for four days in the second quarter of 2005 for maintenance compared to 63 days for the same period 2004. That's because in spring 2004, the plant was undergoing a major upgrade to increase its capacity to generate electricity. The plant's owners, Calpine Power Income Fund, are happy with the performance of all its power plants.

"We are pleased to announce another quarter of strong results from all of our facilities," said Toby Austin, president and CEO of Calpine Canada Power Ltd., manager of Calpine Power Income Fund, in a news release. "All of our facilities performed at high levels of availability, contributing to net earnings at or above expected levels."

Since the upgrade, the plant has been able to generate more electricity - and more revenue - for its owners.

During the first six months of 2005, the plant generated 1,018,881 megawatt-hours of electricity at 97 per cent availability.

During the same time, the plant earned $22.2 million in revenue from electricity sales compared to $13.2 million during the same time last year.

The company also made more money from the excess steam it sells to NorskeCanada's paper mill next door. During the first six months of 2005, it sold $6.4 million worth of steam to the paper mill compared to $4.9 million during the same time last year.

"As a result of the strengthening Canadian dollar, as well as natural gas prices, the steam price has increased 25 per cent over the prior quarter," says the news release. "Steam volumes, although higher than the second quarter of 2004, were lower than expected due to repairs to equipment required for delivery of steam to NorskeSkog.

"Lost revenue from lower steam sales was offset by the plant's higher deliveries of electrical power during this period." Last week, however, revenue and deliveries of steam have returned to normal levels, according to the news release.

Posted by Arthur Caldicott on August 21, 2005

August 19, 2005

Offshore oil decision promised by year's end

Rudy Haugeneder
Victoria News
August 19, 2005

Minister says it won’t happen unless environmentally safe

BC’s bitter offshore oil and gas battle with Ottawa is quickly nearing a conclusion. Ottawa has set a year-end deadline on the fate of the decades old moratorium on BC offshore oil and gas exploration and development, says a federal cabinet minister.

The federal government will make “a full decision” on the future of BC’s vast oil and gas reserves “by the end of this year,” said Western Economic Diversification Minister Stephen Owen.

“We’re getting close,” the former deputy attorney general of BC said in an interview Tuesday at the University of Victoria.

Owen wouldn’t disclose what he expects the federal cabinet decision will be, but said offshore development won’t be allowed to take place unless it’s “environmentally safe.” He said that may be the reason “oil and gas companies are in no hurry to see exploration.”

However, several southern Vancouver Island high-technology companies that provide offshore oil and gas expertise are eager for the moratorium to be lifted.

David Fissel, vice president of ASL Environmental Sciences that provides oceanographic environmental assessments to offshore rigs in Africa, Russia and the US said “It would generate jobs and business opportunities for all of us. Estimating that there are at least 100 ocean science and engineering companies head quartered in BC-dozens in the Victoria area-that would benefit if the moratorium is lifted, he said, “it would be nice, from a business point of view, to be closer to home.”

Local MP and former federal environment minister David Anderson said the Campbell government won’t like Ottawa’s answer.

He said the idea of lifting the moratorium has been “90 per cent dead and shelved” for several months at the federal level-and the provincial government knows it.

It’s why the Campbell government “didn’t mention the moratorium before or after the (May) provincial election,” he said.

Anderson said in an independent review by a Royal Society of Canada panel of experts shows 75 per cent of British Columbians oppose offshore oil and gas exploration and developments at this time.

“To do anything else would make a mockery of the process,” Anderson said. Another local Liberal MP, Dr. Keith Martin, seemed taken aback by Owen’s unexpected remarks, but agreed no exploration and development should be allowed unless it’s environmentally safe.

Only then will the federal government give the green light to offshore development, said Martin, the parliamentary secretary to Minister of Defence Bill Graham and a strong proponent of alternative energy such as tidal power.

The Royal Society’s offshore report concluded that “provided an adequate regulatory regime is put in place, there are no science gaps that need to be filled before lifting the moratoria on oil and gas development.” Steve Simons, provincial oil and gas communications director, is also surprised that Ottawa is ready to act on the moratorium because “they haven’t given us a deadline date.”

He said the Royal Society Report estimates BC waters have six offshore oil fields holding 100 million barrels of oil, and nine gas fields with 9.8 trillion cubic feet of natural gas.

Simons said that based on an oil price of $35 a barrel, the total value of BC’s potential oil and gas reserves is $110 billion.

Oil and gas prices are currently around $67 a barrel. Acknowledging that the moratorium is likely to be lifted at some time, Anderson said it’s ok to leave the oil and gas in the ground until better environmentally safe technology is developed to extract it. Owen was at UVIC to announce $3 million in federal grants for ocean research and the technology sector.

Posted by Arthur Caldicott on August 19, 2005

August 17, 2005

Tom Hackney: Activist of the Year

TomHackney
Sierra Club of Canada has named Tom Hackney, the president and founding director of the GSX Concerned Citizens Coalition, as "Activist of the Year".

August 2005 issue of Sierra Life

“Tom has shown that perseverance, dedication and a strong vision for the future can affect change at the highest levels,” said the BC Chapter Executive Director Kathryn Molloy. “Volunteers like Tom are by far this organization’s greatest asset."

See Tom's article in the Fall 2005 issue of Sierra Report, also excerpted on sqwalk.

The GSX Concerned Citizens Coalition echoes the Sierra Club's high opinion of Tom, and applauds the award decision. Tom is an awesome guy - principled, disciplined and fiercely hard-working. And fun.

Posted by Arthur Caldicott on August 17, 2005

August 15, 2005

How We Got Screwed on Terasen Deal

Rafe Mair
TheTyee.ca
August 15, 2005


Richard Kinder, former Enron president
Thanks to BC Libs, Texans control our gas profits, and supply.

I am just a poor one time lawyer, one time politician and part time environmentalist who does a bit of broadcasting and writing. I know nothing about oil and natural gas except what it costs me. But I do know bullshit when it wafts my way, especially if the source is anywhere near where politicians ply their trade, PR people hang out (usually the same place) or when CEOs of large companies tell us about the huge social benefits they are about to confer on our province by reason of their utterly unselfish corporate policy.

So, when the government and a CEO tell me that the sale of what was once BC Gas to Kinder Morgan, a Texas company in the pipeline business, is a great deal for me, knowing the sources, I ask: How?

First a bit of the history. During the Vander Zalm years the Gas division of BC Hydro was hived off and privatized making a hell of a pile of money for many investors. Nothing wrong with that, I suppose, except I didn’t get in on it. At that time foreign ownership was limited to 20 percent, meaning that at least BC Gas would be under local control and management and, one assumes, attuned to what their shareholders wanted.

This 20 percent rule wasn’t popular for the big kids in the game because it made it difficult to raise money on share sales and unpalatable for corporate takeover – which, of course, was the whole point of the restriction. Always on the lookout for campaign donations, the Campbell Liberals eliminated the 20 percent rule and BC Gas, now called Terasen Energy, was ripe for the plucking.

Texas poker

And a Texas pipeline company, Kinder Morgan, plucked and took over the whole shebang.

Richard Kinder, CEO of Kinder Morgan, didn’t try to kid the folks at all. No shilly shallerer, Big Dick made it clear that what his company really wanted were the pipelines Terasen has going into the Alberta tar sands which, when the price of oil makes them viable for extraction (which is pretty damned soon) will need those pipelines and more into the United States. Let me quote Kinder verbatim:

“For Kinder Morgan, the merger will dramatically broaden our footprint into Canada…. (Strange way to put it but Mr. Kinder is after all from Texas, where George W. Bush also learned all he knows about the English language).

“Terasen has two core businesses – a low risk, large regulated natural gas distribution company in British Columbia that produces stable cash flow, and a strategically located refined oil products and crude oil pipeline business that offers tremendous growth potential. Terasen’s pipelines are well positioned to transport growing production from the Alberta oil sands, which is expected to become an increasingly important supply source to North America and Asia. There is a definite need for additional infrastructure from the Alberta oils sands, and we have a great opportunity to use the capital strength of the combined company – along with our expertise in building and operating pipelines – to increase capacity on Terasen’s existing pipeline system to help meet the growing demand of an oil starved world.”

Several questions arise here. If Kinder Morgan is going to export oil to Asia, will that be out of Vancouver on tankers sailing out through the Straits of Juan de Fuca, creating environmental concerns?

But my main question is this: Isn’t Mr. Kinder saying, “Look folks, what a hell of a deal this is. A nice big fat cash flow from the pockets of British Columbians to help us build pipelines to the Alberta tar sands?”

Pump and run?

Nothing wrong with that, you say?

How do we ensure that Kinder Morgan will maintain and upgrade pipelines and build for the future? The surface answer is, of course, that Kinder Morgan needs our cash … but what about after their oil pipelines are all done and making money hand over foot? How much will Mr. Kinder care from his Texas skyscraper when the BC pipelines Terasen acquired don’t much matter any more? If we don’t like the service we’re getting or the government thinks, as a matter of public policy, we need more gas, do we phone Mr. Kinder’s voice mail in Dallas to complain or make our point?

The government and the companies say that the price of natural gas will be governed by the BC Utility Commission and that’s true. But BCUC has no power to force Kinder Morgan to make more pipeline capacity available nor any ability to pressure it to upgrade its infrastructure. When Terasen stood alone, with a mandated Canadian majority ownership, its main business was supplying the BC natural gas market. When that is merely a convenient cash cow to be used as necessary, are we to believe that Kinder Morgan will deal with us as if we mattered?

Hydro next?

Can Hydro be far behind? Premier Campbell says “no” but he also told us he wouldn’t privatize any part of Hydro – and he has. He also promised to keep BC Rail – and he hasn’t. He had Terasen under Canadian control and gave that up.

I only raise Hydro because if that is sold to American shareholders it will be the same as with Terasen – power and water for greedy and thirsty Americans first and the needs of British Columbia for those commodities last.

We are quickly moving to the place where American needs for oil, gas and water will trump our needs for the same. Moreover, the environmental problems this will raise will be ours not theirs and the profits not ours but theirs too.

We have taken a Canadian company that controlled the natural gas we use and turned it over to a foreign owner to use what should be our profits, public profits, to build American pipelines from the tar sands to America

Whom the gods wish to destroy, they first make mad.

Rafe Mair’s column for The Tyee runs every Monday. He can be heard every weekday morning from 8:30-10:30 on 600AM. His website is www.rafeonline.com.

Posted by Arthur Caldicott on August 15, 2005

U.S.-Canada power cable proposed for Vancouver Island

King Lee
Business Examiner (South edition)
Aug 15 2005

To say that Sea Breeze Power Corp. is just full of wind is simply not correct.

While it is true that the B.C.-registered, Vancouver-headquartered power provider is heavily into Vancouver Island wind farms, it is also developing a Pacific regional transmission system with plans for a $300-million, 990-megawatt, 19-kilometre undersea hydroelectric cable across the Strait of Juan de Fuca between Victoria and Port Angeles, Wash.

Sea Breeze's proposal for a 150-turbine, 80-metre-high wind farm at Knob Hill, 35-kilometres west of Port Hardy and eight kilometres north of Holberg that is expected to produce 450 megawatts of energy has provincial environmental assessment approval. It is the first of 10 Sea Breeze projects in the province.

"I've been a long-time observer of wind energy development," said Paul Manson, Sea Breeze president, in a telephone interview from Vancouver.

He called the fact that there was not a single wind-energy source in B.C. "close to scandalous."

But Manson said his company was also interested in hydro-electricity and began looking into that aspect of energy supply to Vancouver Island about two years ago, when BC Hydro's Duke Point power project was still being planned and hotly debated.

At that time, the Bonneville Power Administration, a federal agency under the U.S. Dept. of Energy that operates 75 per cent of the Pacific Northwest's high-voltage grid with more than 24,000 kilometres of transmission lines and 285 sub-stations covering eight states, targeted Port Angeles as a "transmission constrained" area in need of a major upgrade.

On June 17 this year, BC Hydro pulled the plug on the Duke Point project, citing continuing legal appeals that increased the risk of the power plant not being built on time.

"We knew there were difficulties in selling power to BC Hydro," Manson said. "We didn't appreciate how deep those problems were."

So Sea Breeze looked for partnership alternatives and found Boundless Energy, LCC, a transmission engineering firm, and ABB Inc., an international contractor and manufacturer of high-voltage, direct current (HVDC) equipment and cables.

Sea Breeze also signed a US$8 million development loan agreement with Energy Investors Fund.

"We're long overdue for major investments in this sector," said Manson, who predicted this was only the "tip of the iceberg" in new investments in the hydro-electricity industry.

Manson also raved about HVDC, the type of cable to be used in the Juan de Fuca transmission corridor, calling it "hands down, the best technology today."

He said the direct current (DC) method was far superior to alternating current (AC) because there were no fluctuating electro-magnetic fields, it eliminates oil-cooled lines that sometimes led to leakage, there was less line energy loss and it has minimal impact on the marine environment.

Manson said the Juan de Fuca line will connect two relatively weak transmission systems and also relieve the electrical congestion now facing the Blaine, Wash., inter-tie while serving the power needs of Vancouver Islanders.

He said the island just about hit peak capacity on Jan. 4, 2004, when consumption came within "dozens of megawatts" of "brown-outs" faced by Californians.

B.C. is a net importer of energy, buying energy from the U.S. and Alberta in a five-hour period between midnight and 5 a.m., but selling power (at a higher price) in the other hours of the day.

Sea Breeze has filed the application for the Juan de Fuca cable, found financing and completed feasibility and impact studies.

Manson said a B.C. Transmission Corp. feasibility study is now underway but he is confident it will concur with his company's and Bonneville Power Administration's findings.

"We've already done our homework," Manson said. "I'm highly confident there (are) no show-stoppers here."

The Juan de Fuca line will have a 400-megawatt capacity northward and 550-megawatt capacity southbound, compared with the 265-megawatt capacity proposed for the failed Duke Point project.

Sea Breeze signed a protocol with the Esquimalt First Nations last month and is working with Esquimalt and View Royal municipalities to clear the path. The line is expected to go through Macaulay Point in Esquimalt to the Pike substation near Thetis Lake in View Royal.

Manson said the cost for the first line is about US$200 million and should be about the same for the second line.

He said construction should begin in the fall of 2006 and directional drilling will be done for the 30-centimetre-wide tunnel near the foreshore so that the lines will not disturb tidal zones or burial remains.

Sea Breeze hopes the lines will become operational by the fall of 2007.

The majority of Sea Breeze shareholders are California residents. It started in 1991 as International Powerhouse Energy Corp. In 1999, it went public in a reverse takeover. In 2003, it acquired Sea Breeze Energy Inc. and changed its name to Sea Breeze Power Corp.

Sea Breeze's major competitors are Canadian Utilities Ltd., Hydro-Quebec and TransCanada Corporation (TRP).

Posted by Arthur Caldicott on August 15, 2005

August 13, 2005

Soaring oil prices set to shake up our business world

Peter Ladner
At Large
Business in Vancouver
August 9-15, 2005; issue 824


In case you hadn't heard, oil prices are likely to keep going up. Goldman Sachs is forecasting that oil prices will spike as high as US$105 a barrel by 2010. The chief economist of the International Monetary Fund (IMF) is predicting that China's thirst for petroleum, combined with supply pressures, will keep oil prices volatile for the next 25 years, including spikes up to $US100 a barrel. The rate of growth in oil demand last year was faster than it has been in 25 years. The IMF forecasts China's oil consumption in 2030 to match current U.S. consumption, which is about a quarter of the world's oil production.

And if supply and political pressures don't hike the cost of oil, carbon taxes will. Europe has already started to charge $64 per tonne of CO2 emitted until 2007, with higher penalties coming in 2008 if a company exceeds its greenhouse gas emissions allowance.

Many unpredictable factors could intervene to stop these hikes from happening, but there's also a chance that the fear premium, based on the unpredictable security of supply from corrupt, politically hostile countries, could speed up the arrival of $100-per-barrel oil.

At some price point, consumers and businesses will be forced to cut their consumption to allow soaring demand to line up with the much slower growth of supply. This is all background for the current port truckers' strike, a damaging, desperate reaction to a slight increase in fuel prices compared to what's coming. The truckers got caught in the price squeeze and are trying to force their way out of it. Their frustration is matched by taxi drivers in Vancouver City. They recently won a price increase based on higher fuel costs, but say it's still not enough to cover their unavoidable higher costs.

Fuel costs clearly make up a significant portion of a trucker's or taxi driver's variable costs, but higher fuel costs will find their way into all of our businesses and bottom lines.

How ready are you?

Vancouver sustainability strategist Rob Abbott recommends every business develop and incorporate alternative energy rules into all capital expenditures, with any expenditure on new energy sources being on "non-carbon" sources.

CIBC World Markets economist Jeff Rubin, one of the forecasters predicting that crude oil prices will double in the next five years, with $100 per barrel a possibility by 2010, points out that this isn't the 1970s. Then, workers tried to win wage increases to protect their purchasing power against the ravages of inflation driven by oil prices. "In today's world," writes Rubin, "where production and jobs can easily be shifted to low-wage economies, North American wages will have to eat energy price increases, and in the process, stomach the loss of purchasing power that comes along with it."

What will your industry have to stomach?

Think about the tourism industry. Virtually every tourist arrives here thanks to oil. More expensive oil means more expensive trips. Northwest and Delta Air Lines are expected to file for Chapter 11 bankruptcy protection in mid-September, citing the need to cut costs and adjust to record high fuel costs.

Should we be focusing on attracting tourists who don't have far to come? Will convention travel growth continue? Can buses and trains possibly replace cars for nearby rubber-tire traffic? Will a lot of tourists just stay home?

What will we eat in a $100-per-barrel oil world? The food industry is particularly vulnerable to oil shocks, with the average food product travelling 1,500 miles to our table. By one estimate, a quarter of all the travel by heavy goods vehicles is to carry food around. Exotic foods are bound to become more expensive as the increasing costs of transportation are factored into their prices. Protecting the agricultural land reserve so we can produce more food locally takes on a new urgency as all import costs rise. Meanwhile, local food exporters will be scrambling to stay competitive in export markets requiring high transportation costs to reach the marketplace.

Conversely, if you're in a business that can rescue oil-captive companies in times of rising prices, opportunity isn't just knocking, it's pounding on the door. The alternative energy business will be coming into a much more favourable financial zone.

Lighter materials (carbon fibre cars) and lighter loads (Ikea is looking at inflatable furniture) will show up on everyone's agenda.

Anyone who can source supplies, materials and customers close to home will have an advantage. Every business and consumer will feel the impact of oil prices as high as $100 a barrel.

Businesses that plan on being profitable in 2010 should be prepared for that possibility. With it comes a vastly different economic landscape.

Peter Ladner is a Vancouver city councillor and vice-president, Business in Vancouver Media Group, pladner@biv.com. His column appears weekly.

Posted by Arthur Caldicott on August 13, 2005

Energy strategy a bright idea

Murray Campbell
Globe and Mail
13-Aug-2005

sqwalk.com
COMMENT: Canada has avoided talk of a national energy strategy ever since it was first tried in the 1970s by the government of Pierre Trudeau - and eventually succumbed to the self-centred bullying and influence of the oil companies and of Alberta.

The federal government is still afraid to talk energy strategy, but others are not - the Pembina Institute, for one. Some of the corporations, for another. And the Council of the Federation - Canada's Premiers - at last.

There's still a long way to go to an enlightened, visionary, sustainable policy for the country, but it's a start.
sqwalk.com


BANFF, ALTA.

The Council of the Federation is looking for some legitimacy. It wants Canadians to see that their provincial leaders are not just whiners looking to squeeze more money out of the federal government.

Luckily, it has seized an issue that has the potential to burnish its reputation. It can help Ontario out of a pickle and, in the process, save the country. It didn't get much notice but the decision of the premiers to strike a committee to look at energy strategy has the potential to make Canada a slightly smaller, less regionalized country. It might also help make it more prosperous.

Right now, Canada is a collection of fiefdoms when it comes to the transmission of electricity. This may have made sense historically because of the way the various provinces generate power. Some provinces - British Columbia, Manitoba, Quebec and Newfoundland - are blessed with abundant hydroelectric resources. Others, such as Manitoba and Saskatchewan, rely on the coal in their backyards. For its part, Ontario will take electricity any way it can to meet unceasing demand.

Interregional co-operation is rare. Look at a map of North America and you see lots of transmission lines from Canada into the United States. There are four major U.S. east-west lines but none in Canada. We've managed to build transcontinental railways, air corridors and a national broadcaster, but we've neglected to find a way to ship megawatts across the country.

As Ontario Energy Minister Dwight Duncan said yesterday: "It's crazy that we don't have an east-west grid."

This omission is thrown into stark relief every time Ontario struggles to keep the lights on. Its neighbours have very little capacity to help it avoid brownouts and blackouts whenever demand threatens to exceed supply. Yesterday's decision by Ontario Power Generation to abandon two 30-year-old reactors at the Pickering A nuclear generating station is simply another illustration of why Ontario needs help.

The 10-year forecast for energy resources in Ontario is gloomy. The province's nuclear fleet is aging and it has to decide very soon whether to refurbish existing units and whether to build new ones. It is also in a race against time to see if it will be able to replace the power lost when the plug is pulled on the coal-fired stations in 2008. It is working to get power from Manitoba, Quebec and Newfoundland but nothing is assured.

The 1,030 megawatts that the Pickering units might have supplied were not part of any supply predictions. But in an ideal world the units could have been brought back on line in three years for about $2-billion and the fact that this isn't going to happen will not allow Mr. Duncan to sleep more comfortably at night.

Ontario's plight might cause some across Canada to snicker, because it's always fun to see the mighty humbled. But this would be a wrong-headed reaction, because Canada - even those still hoping the eastern bastards freeze in the dark - needs Ontario.

The province provides 40 per cent of the revenue the federal government receives but gets back much less in services. It is Canada's economic powerhouse because industry has been able to count on an abundant supply of affordable energy.

Ontario will suffer if investors get spooked about the reliability or price of electricity. But so, too, will those provinces getting transfer payments from Ottawa that are underwritten by Ontario.

Newfoundland Premier Danny Williams says his colleagues recognize that they cannot insulate themselves from Ontario and that's why they agreed this week to develop a "pan-Canadian" energy strategy that would match demand and supply nationwide.

"We need to look at it nationally," he said yesterday as the premiers ended their talks. "We've never done that. Everybody's sort of been dealing within their own territory and that's why I think it's a great initiative."

It isn't controversial like the premiers' opposition to the U.S. softwood lumber position. It doesn't yet involve big money like the plan to revive postsecondary education. But the premiers have thankfully begun the work of making Canada stronger.

mcampbell@globeandmail.ca

Posted by Arthur Caldicott on August 13, 2005

Give nuclear power a chance

Give nuclear power a chance
Editorial, Esquimalt News,
Aug 10 2005
BC Sustainable Energy Association replies
Guy Dauncey, BCSEA, 15 Aug 2005



Give nuclear power a chance

Editorial
Esquimalt News
Aug 10 2005

sqwalk.com
COMMENT: Another plug for nuclear that avoids mentioning the two things that make nuclear so ill-advised: the industry's history of things going disastrously wrong, and its failure to address the question of what to do with spent fuel.
sqwalk.com


The petty visions of environmentalists and energy companies threaten to wrest B.C. from its potential as an energy supplier to the entire Northwest.

During the battle that eventually struck a dagger into the heart of Nanaimo-based Duke Point power plant proposal, environmentalists rightly contested the idea of burning fossil fuels to generate electrical power. After all, conversion of fossil-fuel to steam to electrical power rates as one of the least efficient methods of power conversion, doubly so when one factors in the permanent loss of fossil fuels and inevitable skyrocketing costs when fossil-fuel availability dwindles.

Duke Point opponents demanded investigation of hydroelectric, wind and tidal power to meet the needs of Vancouver Island and the province as a whole. Yet that push underscores a strikingly similar lack of vision, largely because wind and tidal power don't have the capacity to meet the province's future energy demands.

As for dams, the province has a plethora already. From the mighty W.A.C. Bennett Dam in the far north, to Revelstoke, down to modest-sized generation systems near Squamish and Campbell River, there are few rivers remaining suitable for sufficient hydroelectric generation on a scale necessary to meet energy demands. Further, dams are not pretty: they permanently destroy ecosystems on a large scale- something environmental groups must pause to ponder. Consider Williston Lake, a massive body of water created by the construction of the W.A.C. Bennett Dam that rates among the top five largest human-made lakes on the planet. So vast is the reservoir that it changed climates in the area forever.

But the reservoir also beckons with the promise of a solution: nuclear power.

The main challenge with nuclear power is the availability of a suitably large body of water to cool the generators. Ideally located next to an existing power-grid feeding the province, the perpetually cold artificial lake beckons as an ideal location for nuclear power generation.

Unlike the environmental impact of gas-powered generators or hydroelectric dams, the impact of nuclear power is measurable and manageable. Indeed, industry experts consider the compact CANDU reactors - designed and built in Canada - one of the safest and most environmentally sensitive power-generation systems available, and as proof point to decades of safe reactor operation in Ontario.

B.C. has the ideal foundations to embrace an energy-dependant future with a series of nuclear power plants that would allow B.C. to not only meet its own needs but export electrical power for decades to come.

Environmental groups and power company executives can either recognize this or continue to do as they have done: bicker over short-term visions and stopgap "solutions" that carry a much greater economic and environmental price for the entire province.

TOP



BC Sustainable Energy Association replies

Guy Dauncey
BCSEA
15 Aug 2005

Dear Sir,

On August 10th, your Editorial criticized “the petty visions of environmentalists”, that helped persuade BC Hydro to kill off its plans to build a natural gas fired power plant at Duke Point, Nanaimo, and then said that “wind and tidal power don’t have the capacity to meet the province’s future energy needs.” It went on to sing the praises of nuclear power for BC.

I am one of the environmentalists who put in a large amount of effort to stop the Duke Point proposal. The Duke Point plant would have produced 1,800 gigawatt hours of electricity a year, while generating 800,000 tonnes a year of polluting CO2, and other toxic gases.

My analysis of the potential energy which BC could obtain from wind, solar, tidal, geothermal, and other clean, sustainable sources of electricity, combined with a strong commitment to energy efficiency, using BC Hydro’s own data, and other studies, comes to 84,000 gigawatt hours. This would generate around 400,000 part-time and full-time jobs over a 30-year period. With 46 times more power than Duke Point would have provided, I think this might be sufficient to meet our needs.

Your enthusiasm for nuclear power should perhaps be tempered by the fact that no investors in the private sector will touch nuclear power without a cast-iron guarantee of government subsidies, for it is far too expensive and dangerous a product. No-one on the planet has yet come up with a way to keep the resulting radioactive waste secure for 100,000 years, which is one of several reasons why Germany is in the process of closing down all 17 of its nuclear reactors.

If any of your readers would like to work with us in the BC Sustainable Energy Association to build more support for safe, sustainable ways of generating energy, we would welcome your involvement (see www.bcsea.org).

Sincerely,

Guy Dauncey
President, BC Sustainable Energy Association
Victoria

TOP

Posted by Arthur Caldicott on August 13, 2005

August 09, 2005

Nfld. may go solo on huge hydro project

Dene Moore
Globe and Mail
09-Aug-2005

ST. JOHN'S, NFLD. - With a mid-summer heat wave pushing North America's electrical demand to record highs, Newfoundland Premier Danny Williams says his province is considering going ahead on its own to develop a massive hydroelectric project in Labrador.

He said the time is right for the Lower Churchill development, and that an in-house project will be among four possible proposals under close consideration in the coming months.

"Our financial situation is starting to improve," Mr. Williams said at a news conference yesterday to announce which of 25 proposals received earlier this year will proceed to an assessment phase.

With $2-billion from the federal government under a renegotiated offshore accord, he said the province's financial capability has improved greatly. "We're in a position to seriously consider it," Mr. Williams told reporters.

The price of energy is another important factor.

The completed development, which the province hopes to have running by 2014, will produce 2,824 megawatts of electricity from Gull Island and Muskrat Falls on the Churchill River - enough to power 1.4 million households a year.

Newfoundland and Quebec have been negotiating a deal on and off for more than two decades, and in November, 2002, the former Liberal provincial government had billboards printed and a public television address prepared to announce a $4-billion agreement.

But the deal was derailed by opposition Conservatives, including Mr. Williams, and public protests.

One of the major hurdles is public outrage over Churchill Falls, the previous hydro project developed with Quebec. Completed in 1972, Churchill Falls is one of the largest power installations in the world. Quebec has reaped nearly $1-billion in profit while Newfoundland has gained little. The agreement doesn't expire until 2041.

With a Lower Churchill deal still far in the distance, at least one municipal group has formally demanded any new deal redress the wrongs of Churchill Falls. The Combined Councils of Labrador also seeks priority for jobs and lower utility costs.

However, a deal that involves Quebec still is a strong possibility.

Among the four proposals to be considered by Newfoundland and Labrador Hydro-Electric Corp. over the next six to eight months is a joint proposal by Hydro Quebec, Ontario Energy Financing Co. and Montreal-based SNC Lavalin Group Inc. Proposals by Calgary-based TransCanada Corp. and a consortium comprising Macquarie North America Ltd., the Innu Development Partnership, Peter Kiewit Sons, and Innu Kiewit Constructors are also under consideration.

"We're at the very early stages of this process," said Ed Martin, president of the Crown corporation. "We are far from committing to commercial arrangements with anyone, just yet."

Still, Newfoundland hopes to start negotiations this month with the Innu of Labrador to resolve land claim issues outstanding that could affect any future development.

A 2003 blackout in Ontario and eight U.S. states made North American electrical capacity a priority for governments, and Ottawa has expressed interest in an east-west power grid.

Both Ontario and Quebec have warned of looming power shortages, and Ontario had two days of brownouts last week as temperatures soared to 40 C. Demand is also urgent in the northeastern U.S. New York is setting records weekly as temperatures soar and residents try to cool off.

"Our timing is ideal. It's kind of an endorsement of this project that there's such demand," said Dean MacDonald, chairman of the board of Newfoundland and Labrador Hydro. "All of them are in dire need of that energy."

Posted by Arthur Caldicott on August 09, 2005

Gwich'in say they'll meet Imperial in pipeline talks

Dave Ebner
Globe and Mail
09-Aug-2005

A first nations group in the Northwest Territories is complaining about its negotiations with Imperial Oil Ltd. regarding a land-access deal for a portion of the proposed Mackenzie Valley natural gas pipeline. The Gwich'in Tribal Council said in a in a press release yesterday that negotiating with Imperial "has not been easy." However, the Gwich'in said they would meet with Imperial next week despite their frustrations. The Gwich'in control land near the Mackenzie Delta and a portion of the pipeline would cross their territories. Imperial is the lead proponent of the $7-billion project, which is currently stalled as the company works to get several pieces in place.

Posted by Arthur Caldicott on August 09, 2005

Terasen boosts pipeline capacity

Terasen boosts pipeline capacity
Gordon Jaremko, Vancouver Sun, 09-Aug-2005
Terasen's plan to push pipeline expansion fits suitor's strategy
Dave Ebner, Globe and Mail, 09-Aug-2005




Terasen boosts pipeline capacity

Gordon Jaremko
Vancouver Sun
09-Aug-2005

EDMONTON -- Terasen Inc. has started work aimed at doubling the capacity of a pipeline in Alberta, getting a quick start on fulfilling oil sands growth ambitions that prompted the $6.9-billion takeover on Aug. 1 of the company by Houston-based Kinder Morgan Inc.

The $800-million expansion of the Corridor pipeline between Fort McMurray and Edmonton will double capacity by 2009 and allow for increased flows later.

Engineering, environmental planning and community consultation began on initial plans to raise shipments to 500,000 barrels per day from 260,000 by laying a new jumbo pipe, 105 centimetres in diameter, in Corridor's right-of-way.

Although the plan calls for the 450-kilometre line to be dedicated to the Athabasca Oil Sands Project at first, Terasen president John Reid has predicted Corridor traffic could double again to one million barrels eventually.

Talks are underway with Athabasca senior partner Shell Canada Ltd. on "meaningful incremental opportunities in terms of third-party volumes," Reid told a telephone conference call for analysts and media.

Corridor was built in 2002 solely to link the Athabasca project's Muskeg bitumen mine near Fort McMurray to its oil upgrader at Shell's Edmonton-area Scotford refinery, Terasen spokesman Philippe Reicher said.

But industry demand is on the rise for capacity to ship bitumen, a heavy oil, from the Fort McMurray region to Edmonton-area processing sites.

On top of a $4-billion, 140,000-barrels-daily expansion announced by Athabasca and a lineup of other production projects in the Fort McMurray region, construction is beginning on the $1.8-billion Heartland Upgrader at Fort Saskatchewan. Northwest Upgrader is proposing a second new plant northeast of Edmonton to turn bitumen into refinery-ready light oil.

Delivery capacity could be rapidly increased with low-cost additions of pumps to the new jumbo pipe that will be laid in the Corridor right-of-way, Reicher said. The added pipe will be more than double the size of the current line.

"We are embarking on a very exciting project," Terasen Pipelines president Rich Ballantyne said in a statement.

Terasen is also awaiting approval from the National Energy Board for a $210-million capacity addition on its Trans Mountain Pipe Line from Edmonton to Vancouver to increase oil sands shipments.

The NEB application is the first step in a staged, $2.57-billion growth plan that eventually includes a new Trans Mountain branch line across B.C. to a deep-water port at Kitimat or Prince Rupert for oil sands tanker exports to the U.S. and Asia.

TOP



Terasen's plan to push pipeline expansion fits suitor's strategy

Dave Ebner
Globe and Mail\
09-Aug-2005

CALGARY - Terasen Inc. is pushing ahead with an $800-million pipeline expansion to move more raw output from the Alberta oil sands to Edmonton for processing.

The announcement, made yesterday, fits within the overall strategy of Houston-based Kinder Morgan Inc., which last week unveiled a $3.1-billion (U.S.) deal to buy Vancouver-based Terasen for its exposure to growth in the oil sands.

There are "hellacious opportunities" for growth in the region, Richard Kinder, chairman and chief executive officer of Kinder, told investors on a conference call last week.

Terasen wants to roughly double the capacity on its Corridor pipeline by 2009 to about 500,000 barrels a day of diluted bitumen, from 260,000 currently.

The line could eventually carry upward of 1.5 million barrels of diluted bitumen a day, Rich Ballantyne, president of Terasen Pipelines, said in an interview yesterday.

The Corridor system, whose main line is 500 kilometres, connects the Athabasca Oil Sands Project, majority owned by Shell Canada, north of Fort McMurray with a Shell upgrader and refinery outside of Edmonton. Increasing capacity will require a new pipeline to be built alongside the existing line, and Terasen, in a press release yesterday, said engineering and environmental work has begun.

The expansion could cost $800-million, Terasen CEO John Reid said in late July on a conference call to discuss quarterly results.

There "isn't that much more money after that" that needs to be spent to further expand the line toward 1.5 million barrels of diluted bitumen, Mr. Ballantyne said. Once the new line is built - with a diameter of about one metre - it will only need additional pumping stations along the line to move more diluted bitumen through it, he explained.

That level of capacity also means Corridor could carry production from other companies beyond Shell, Mr. Ballantyne said, deals that Terasen is looking at right now.

Terasen said it plans to file regulatory documents this fall for the first expansion and hopes to begin cons tructioninlate2006.p

Athabasca, majority owned by Shell Canada, said in April it aims to nearly double its production of raw bitumen to 300,000 barrels a day by 2010. Athabasca produced a daily average of 164,200 barrels of bitumen in the April-June period.

TOP

Posted by Arthur Caldicott on August 09, 2005

Minister responds on Terasen

Richard Neufeld
The Province
09-Aug-2005

Re Michael Smyth's column on the sale of Terasen.[entitled "Liberal loophole allows sale of Terasen"]

Terasen Inc. has gas, pipeline and water utility-company subsidiaries, including Terasen Gas (formerly called B.C. Gas), which has always been a private company.

It acquired B.C. Hydro's gas division in 1988, expanded in Alberta, and renamed the gas division Terasen Gas.

Kinder Morgan, a U.S. firm, has made an offer to purchase Terasen Inc.

In B.C., no person or firm can own more than 20 per cent of any regulated utility without approval of the B.C. Utilities Commission an independent agency created to ensure ratepayers' interests are protected.

Investment Canada also reviews these acquisitions.

Michael Smyth refers to Bill 85, a bill passed based on the BCUC's recommendation following a public inquiry.

A key benefit of the bill was to put Terasen Inc. on equal footing with other regulated utilities.

The result was also a reduction in unnecessary regulatory requirements and revitalization of B.C.'s economy by encouraging job creation.

Richard Neufeld,
Minister
Energy and Mines

Posted by Arthur Caldicott on August 09, 2005

August 06, 2005

Higher natural gas prices boost B.C. treasury's fortunes

What's really driving the market is a shortage of gas in North America, industry official says

Scott Simpson
Vancouver Sun
August 05, 2005


British Columbia's treasury could be in for a $600-million windfall this year as hot weather in the United States drives natural gas prices far higher than originally forecast by the B.C. Finance Ministry.

Based on a Vancouver Sun analysis of the difference between current North American contract prices for natural gas, and the ministry's own, conservative projections, B.C. has reaped about $200 million more in gas royalties than expected through the first four months of the current fiscal year.

Last March, the province projected the average price of gas for the 2005-2006 fiscal year at $5.71 per gigajoule -- a B.C. homeowner burns an average of nine gigajoules of gas per month.

September contracts for natural gas on the New York Merchantile Exchange (Nymex), the trend-setting North American market, were selling on Wednesday for the equivalent of $10.80 Cdn per gigajoule.

Over the first four months of the current B.C. fiscal year, gas on the New York exchange has averaged $8.83 Cdn -- and Thursday's close represented a nine-month high.

Futures prices on Nymex show gas contracts well above that level for the remainder of the province's fiscal year.

The B.C. finance ministry is reluctant to comment on the impact of higher gas prices -- revenue figures will be released as part of a quarterly budget review in September.

Analysts with Calgary's First Energy Capital Corp. recently revised upwards their 2005 natural gas price forecast to $9.50 Cdn -- and projects a further increase by year's end.

"With loads of new gas-fired power generation capacity in place in the United States, demand for natural gas is likely to grow," a report issued in late July predicted.

First Energy also notes that at mid-2005, the per-hectare prices that exploration companies are paying for gas and oil leases in B.C. are higher than at any time since the California energy crisis of 2000.

"That reflects what industry perceives the value of the resource under that land to be worth," said David Molinski, assistant deputy minister in the oil and gas division of the B.C. Energy Ministry.

"They recognize that B.C. is a good place to do business, so they are pricing their bids for the land accordingly.

"This also indicates that there is a lot more competition now in B.C.'s oil patch to acquire land.

"But I also think B.C. has become a really competitive jurisdiction in the North American picture now and industry is choosing to go to B.C."

Drilling activity has gone up 24.3 per cent in B.C. in the last two years, according to the ministry.

"We're acquiring a lot more of the investment that's been happening in Canada, more of that is flowing to B.C."

Molinski said the wide array of factors that influence the flow of royalties, making it tough to predict where prices will go next.

The province lists Canadian Natural Resources Limited of Calgary as the busiest company in B.C. -- it has been active here since 1991.

"What's really driving the market is that there is a shortage of gas in North America and as a result gas prices are higher," said Steve Laut, president and chief operating officer of Canadian Natural Resources Limited.

"If you want to find gas in Canada you need to go north and you need to go west, and northeast B.C. fits right in there. It's one of the areas in Canada that's not as explored as southern or eastern Alberta.

"The B.C. government can take some of the credit for getting more activity there and obviously that generates more revenue for the government. Price does help the growth because you've got more cash flow to reinvest."

ssimpson@png.canwest.com

© The Vancouver Sun 2005

Posted by Arthur Caldicott on August 06, 2005

August 03, 2005

Kinder Morgan takeover of Terasen - Media medley 2

Proposed U.S. takeover good for Terasen, shareholders
Don Cayo, Vancouver Sun, 03-Aug-2005
Oilpatch abuzz with takeover talk
Paul Haavardsrud, Times Colonist (Victoria), 03-Aug-2005
Kinder Morgan bid for utility applauded
Scott Simpson, Times Colonist (Victoria), 03-Aug-2005
No changes expected after Terasen takeover
Gordon Hoekstra, Prince George Citizen, 03-Aug-2005
Kinder Morgan offer will bolster Terasen
Jon Harding, National Post, 03-Aug-2005
Takeover pushes Terasen shares to 15 per cent gain
Scott Simpson, Vancouver Sun, 03-Aug-2005
Terasen sale has downside
Kent Spencer, The Province, 03-Aug-2005
Natural resources shouldn't be sold off to foreigners
Richard Floyd, Vancouver Sun, 03-Aug-2005
Takeover pushes Terasen shares to 15 per cent gain
Scott Simpson, Vancouver Sun, 03-Aug-2005
Liberal loophole allowed sale of Terasen
Michael Smyth, The Province, 04-Aug-2005




Proposed U.S. takeover good for Terasen, shareholders

Don Cayo
Vancouver Sun
03-Aug-2005

Despite the predictable gnashing of teeth over what some British Columbians imagine to be a loss of sovereignty, I see little to dislike in Kinder Morgan's offer to buy B.C.'s Terasen Gas for 20 per cent more than the going price for its stock.

The offer is really for two companies -- Terasen Gas, which delivers natural gas to about 875,000 B.C. homes and businesses; and Terasen Inc., which has two key oil pipelines out of Alberta's tarsands area. The gas company is what most British Columbians care about, but it's the pipeline prospects that must be tempting Richard Kinder to offer nearly $7 billion for a company that lists its assets as worth $5 billion.

The purchase has yet to be approved by either the BC Utilities Commission or Terasen's shareholders. But the precedent of American-owned Duke Energy winning approval to take over Westcoast Energy in 2001 suggests the B.C. Utilities Commission is open to such a move. And shareholders are, given the generosity of the offer, unlikely to say no.

If the deal goes ahead, the impact will be nil for customers, almost nil for employees, and potentially sizeable, favourably so, for the pipeline operation.

The distribution side of the business is a regulated monopoly, and exactly the same regulations -- and the same regulator -- will continue to control the cost paid by B.C. consumers. Terasen, whatever owner, must continue to buy natural gas at market prices and pass that cost on, with no markup allowed. And it must continue to cover its costs and make its profit from a charge for delivery that is set by the regulator and is not subject to dramatic swings like the supply-and-demand-driven price of gas.

So even if Kinder Morgan wanted to start gouging its new customers -- and I can't imagine why a company would risk screwing up a good and steadily profitable business that it just bought -- the BC Utilities Commission stands in the way. And there's no reason to believe the commission would treat American owners any more kindly than the mostly Canadian shareholders that own the company now.

As for jobs, the handful of head-office executives who may well find themselves redundant will no doubt negotiate decent exit packages for themselves.

But, aside from those few cuts, a new owner won't have much room to swing the axe. Terasen's work simply doesn't lend itself to jobs that can be whisked away -- its 2,500 workers are almost all tied to a specific patch of geography. You can't lay a pipe or connect a gas fitting by phone from Houston or Bangalore.

There are, to be sure, some "exportable" jobs associated with gas distribution, but Terasen, under its former name of BC Gas, either already ditched them or never had them in the first place.

The company was formed in 1988 when Inland Gas bought BC Hydro's Lower Mainland Gas Division. But for more than a decade, the privately owned company -- it was never a Crown corporation -- farmed out its billing to BC Hydro. In late 2001, it switched that contract, plus an additional one for its 135-employee call centre in Kelowna, to a private company, Accenture.

As for the pipeline side of the business, Terasen is a significant player that's poised to get bigger. It has nearly $3 billion worth of expansions on its wish list awaiting regulatory approval, most notably a proposal to twin its Trans Mountain oil pipeline from Edmonton to the Lower Mainland and Puget Sound or, possibly, to extend it to Prince Rupert to deliver oil for export to Asia. While a new owner will no doubt want to review -- and possibly revise -- these plans, what Kinder Morgan brings to the table is much improved access to capital. The company will have about $30 billion in assets, compared with Terasen's $5 billion, and a better debt-to-equity ratio, which means it can borrow money more cheaply.

As Mines and Energy Minister Richard Neufeld noted when I spoke to him on the phone, "If we just had Canadian companies investing in oil and gas, we'd have a pretty small industry." Companies like Shell from the Netherlands, BP from the U.K. and Exxon from the U.S. have contributed greatly to the Canadian industry's growth.

The Kinder company has enjoyed phenomenal growth since it was formed in the late 1990s, and has built a reputation there as a good employer and a good company to deal with.

So what don't I like about this deal? Only that I don't hold any Terasen stock.

dcayo@png.canwest.com

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Oilpatch abuzz with takeover talk

Paul Haavardsrud
Times Colonist (Victoria)
03-Aug-2005

CALGARY -- Speculation a big slice of Canada's oilpatch is in the crosshairs of international buyers is driving fresh trading in the sector, helping push a passel of energy names to new highs.

A pair of oilsands-related takeovers, combined with Washington's efforts that helped thwart a $18.4-billion US takeover of Unocal Corp. by a Chinese company, is leaving investors wondering if more bids for Canadian shops are on the way. The benchmark Canadian energy index rose to a record high Tuesday.

The profile of northern Alberta's oilsands, already a hot investment theme for money managers, is being raised even further with pipeline giant Kinder Morgan Inc.'s $6.9-billion bid for Terasen Inc. Monday, followed by Total SA's $1.35-billion offer for Deer Creek Energy Ltd Tuesday.

"Terasen is, I think, the first full takeover of a company based on ... an oilsands exposure strategy," said Wilf Gobert, an analyst at Peters & Co. in Calgary. "Along with the Chinese bowing out of the Unocal deal ... this maybe underscores interest in looking at oilsands. There's a common thread."

With Canadian markets closed for Monday's holiday, energy stocks also spent Tuesday catching up to the U.S. oilpatch, which traded higher on the back of rising oil prices.

NYMEX crude for September delivery rose 33 cents to $61.90 a barrel Tuesday. Monday, the contract hit a record $62.30.

Such buoyancy wasn't lost on the S&P/TSX Energy Index. It rose nearly four per cent in Tuesday's session, pacing the broader index, which jumped nearly 200 points, its biggest gain in 15 months.

Big movers in the oilpatch included: Canadian Natural Resources Ltd., up $2.85, Suncor Energy Inc. ($2.97), Talisman Energy Inc. ($3.29), Petro-Canada ($3.97), Nexen Inc. ($3.76), Imperial Oil Ltd. ($4.50), Husky Energy Inc. ($3.60), and Opti Canada Inc. ($3.95).

"We're continuing to see a lot of interest in the oilsands, and I think yesterday the takeovers certainly added some additional interest," said Kate Warne, Canadian market strategist at Edward Jones in St. Louis. "I think to solely attribute [share price gains Tuesday] to merger and takeover announcements is probably incorrect, but to leave it out would also be incorrect."

Indeed, with the exception of Talisman, each of the biggest movers on the day boast a healthy exposure to the oilsands.

Long-rumoured to be looking at making a further move into the oilsands, Total's decision to finally pull the trigger on Deer Creek also has market players again musing that other major international shops could be readying their own overtures.

Among the energy giants perennially rumoured to be interested in snapping up Canadian companies are BP Plc., Royal Dutch/Shell Group, and Italy's ENI SpA.

CNOOC Ltd., which Tuesday announced its retreat from the politically charged Unocal saga, also means China's state-controlled oil company will see its name added to that well-established list.If the U.S. government is unwilling to see foreign powers invest in its backyard then, the thinking goes, it's easy to envision CNOOC, and its $20 billion in stray cash, turn an eye northward.

"We believe CNOOC is not finished," Thomas Burnett, president of New York-based institutional research firm Merger Insight told Bloomberg News. "They may look at Canada which is more receptive to bids from foreign companies."

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Kinder Morgan bid for utility applauded

Scott Simpson
Times Colonist (Victoria)
03-Aug-2005

VANCOUVER -- A $6.7-billion bid for Terasen Inc. got warm reviews on Tuesday from analysts and stock markets.

Shares in Terasen, the Vancouver-based operator of British Columbia's primary gas distribution utility, jumped in heavy trading as stock markets began to digest the friendly takeover bid announced a day earlier by Houston-based Kinder Morgan Inc.

Terasen shares jumped $4.60, with more than 12.3 million shares changing hands, and closed at a record $36 on the Toronto Stock Exchange.

In New York, Kinder Morgan rose $6.13 US on a volume of 5.2 million shares, closing at $94.73.

The deal will be voted up by Terasen shareholders in late October and finalized by year's end, assuming it receives all regulatory approvals including that of the B.C. Utilities Commission and federal assent under the Competition Act.

Analysts participating in a Terasen teleconference offered congratulations to president and CEO John Reid, who admitted the deal makes his own future uncertain.

According to Terasen, the company's shares are 60 per cent held by institutions -- such as mutual funds -- and 40 per cent held by retail or individual investors.

"We do believe the offer price from Kinder Morgan provides full and fair value for our shareholders based on both relative and absolute metrics," Reid said.

"We do believe that the opportunity for Terasen shareholders to acquire Kinder Morgan shares will enable our shareholders to hold shares in a larger, more liquid company operating in the North American energy infrastructure space."

The bid to Terasen shareholders is comprised of cash and shares of Kinder, one of the top performers on the S&P-500, and requires the U.S. company to assume more than $3 billion in Terasen debt as part of the transaction.

Kinder chair and CEO Rich Kinder said the deal was motivated by Terasen's pipeline connection to the Alberta oilsands, a sprawling natural resource he described as "hellaciously significant" to North America's energy future.

Dominion Bond Rating Service was more cautious, putting Kinder's debt rating "under review with negative implications."

"The negative implications reflect, among other factors, the higher balance sheet leverage with lower cash flow/debt support resulting from the transaction at KMI, and the relatively high purchase price proposed," DBRS said.

The service described the deal as Kinder's largest-ever financial transaction, but although it was voicing caution in the short term, it said it expects the deal to yield positive longer term benefits.

"Based on its preliminary review, DBRS expects the proposed transaction to have a positive impact on KMI's business risk as a result of the increased scope and scale of its regulated pipeline and gas distribution operations, and growth potential," DBRS said.

Dominion suggested the price offered for Terasen shares, roughly a 14 per cent premium to last Friday's close, was somewhat high -- and that's probably good news for the company's many shareholders.

Bob Hastings, analyst with Canaccord Capital, said the deal took the market by surprise.

"There were no rumours out there that something like that was going to happen, which is the way it's supposed to be, of course."

Hastings said the value of the bid was too great for Terasen directors to reject out of hand and it gives the shareholders the option of taking cash or else staying in the energy sector by acquiring Kinder shares.

"They have a fiduciary responsibility, an obligation, to their shareholders, to look at bids when they come in.

"This is a high price that shareholders wouldn't be able to realize otherwise -- and they still have the ability to participate through taking some stock back."

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No changes expected after Terasen takeover

Gordon Hoekstra
Prince George Citizen
03-Aug-2005

The $6.9-billion takeover of Terasen is not expected to negatively impact plans to expand pipeline capacity from Alberta's oilsands to B.C.'s west coast, including through northern B.C.

It's also not expected to affect the City of Prince George's deal with Terasen Gas, which is meant to generate about $25 million for the city over 17 years.

U.S.-based Kinder Morgan chairman and CEO Richard Kinder said the driving force for the takeover was to become a player in the expanding Alberta oilsands production. He noted Kinder Morgan's expertise is in pipelines.

"Terasen has identified more than $2.5 billion US of potential expansion and growth opportunities, and less than half of those are in our (buy-out) model," Kinder told analysts on a conference call. "We certainly hope and believe we'll be able to spend at least that much in the next several years and hopefully more as we identify continued growth opportunities," he said.

Terasen is one of two companies with plans to expand pipeline capacity from the Alberta oilsands to B.C.'s west coast. Terasen's $2.5-billion plans includes options for a southern or northern route, either to Prince Rupert or Kitimat. A competing proposal from Enbridge is focused solely on a northern B.C. route, also either to Prince Rupert or Kitimat. Enbridge's $3.6-billion proposal includes a condensate line, which would run parallel to the oil pipeline.

Condensate -- which would return in tankers from Asia -- is a liquid that can be used to dilute heavier oil to make it easier to ship by pipeline.

The proposals are expected to create between 1,200 to 2,000 construction jobs, and another 150 to 200 permanent jobs. Both proposals are meant to provide additional pipeline capacity, needed as crude production from Alberta's oilsands is expected to double by the end of the decade to about two million barrels a day.

Kinder noted that $50 billion US in spending is planned in the Alberta oilsands in the next five to 10 years.

Asked by an analyst about Terasen's, as well as Enbridge's, plans to increase pipeline capacity to B.C.'s coast, Kinder said he expected there to be increased movement of Alberta oilsands crude to the U.S., but also probably to Asia.

Kinder also said he didn't think the two proposals were mutually exclusive.

"We believe there may be opportunities to expand well beyond what we have in our model, and we think there's opportunities to go north," he said. "Enbridge is a fine company, but we certainly think, though, that we'll be able to get our share of the additional production coming out."

Kinder Morgan also said it thinks it has an advantage over Enbridge's proposal because it could phase in expanded pipeline capacity.

Terasen is currently working on a project to expand capacity into B.C., and then will decide on a northern or southerly route, said Terasen spokesman Cam Avery. While Avery said Terasen believes it has a good proposal now, Kinder Morgan's purchase of Terasen will give the plan a boost. "The ability with a bigger company, bigger balance sheet, better access to low-cost capital -- we think it makes it that much more attractive," he said.

The deal is subject to regulatory approval in Canada and the U.S., and it also needs approval from shareholders.

City of Prince George official Kathleen Soltis said Kinder Morgan's buyout of Terasen is not expected to impact its deal with Terasen Gas. The city got the green light in a referendum last summer to borrow $58.6 million to finance a leasing agreement with Terasen Gas designed to generate nearly $25 million over 17 years. Mayor Colin Kinsley said the city realized that utilities often change hands, so it needed language that provided strong protection of its interests. "We've got it covered six ways from Sunday," he said.

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Kinder Morgan offer will bolster Terasen

Jon Harding
National Post
03-Aug-2005

CALGARY -- Kinder Morgan Inc.'s $6.9-billion cash, share and debt bid for Canadian natural gas distributor Terasen Inc. packs financial muscle behind Terasen's growth plans and is seen by analysts as a potential trump card in the battle to become the first shipper of oilsands crude from Alberta to the West Coast.

The offer, made Monday, which includes Houston-based Kinder Morgan's assumption of more than $3-billion of Terasen debt, helped push Terasen stock past the $35.91-per-share price at which the bid is valued on a pro-rated basis. The stock jumped 14.65% to close at $36 on the Toronto Stock Exchange in heavy volume.

Vancouver-based Terasen is currently Canada's second-largest pipeliner of oil produced in the northeastern Alberta tarsands, behind Calgary-based Enbridge Inc.

Both are jockeying to expand their separate links to the major U.S. midwest refining hub and in the case of Enbridge, to build a $2.5-billion line, called Gateway, from Edmonton to a West Coast port 1,160 kilometres away in either Prince Rupert or Kitimat.

Terasen moves crude from oilsands projects on its Trans Mountain system to Burnaby, B.C., and Puget Sound on Washington State's coast.

It is proposing to twin the line to Burnaby, an option costing $2.3-billion, or build a line north to a new terminal in either Kitimat or Prince Rupert, an option with a price tag of about $2.57-billion.

Output from the oilsands is expected to double in the next five years from one million barrels a day today to two million and to continue to climb for years after, which means producers need new refining customers.

They have recently looked toward China and its energy-ravenous economy and to refineries in California.

PetroChina agreed in April to become a major shipper on the Gateway project, and in return, Enbridge said it would help China's largest oil company sign agreements with oil companies to secure up to 200,000 barrels a day of Canadian crude.

That development, along with the decision by Enbridge to seek commitments from producers for the remaining 200,000 barrels a day of Gateway capacity, was seen as a giving Enbridge an edge in what is turning into a tight race.

"A company isn't going to build a pipeline, run it half empty and have tolls that aren't economic for producers," said Lanny Pendill, an analyst with Edward Jones.

"If you get there first and secure the commitments, then it's a huge competitive edge."

But Terasen's deal with Kinder Morgan now may give its Trans Mountain expansion project a leg up, Mr. Pendill said.

"I never had concerns about Terasen's ability to do their projects, but maybe it would have meant issuing more equity, which could dilute the earnings benefit," he said. "Kinder Morgan has much deeper pockets."

The offer from Kinder Morgan was a premium of about 20% over the average price of Terasen's stock in the past 20 trading days.

Terasen chief executive John Reid told analysts the offer was too good to refuse.

"Ultimately it comes down to a value proposition and we felt this was a very attractive price," he said when asked why the Vancouver-based firm would sell at a time when its stock price was already at record highs.

Brian Purdy, research analyst at FirstEnergy Capital Corp. in Calgary, Kinder Morgan's long list of relationships with U.S. refiners will be attractive to Canadian producers.

"Refining capacity for heavy oil in the U.S. is pretty tight but if anyone is going to have an opportunity to find customers, it's Kinder Morgan. They're front and centre," he said.

- - -

TERASEN INC.
Ticker: TER/TSX
Closing price: $36, up $4.60
Volume: 12,367,473
Avg. 6 mo. vol.: 229,161

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Takeover pushes Terasen shares to 15 per cent gain

Scott Simpson
Vancouver Sun
03-Aug-2005

Investors drove up Terasen Inc. shares 15 per cent on Tuesday, fuelled by a $6.9-billion takeover deal by U.S. energy giant Kinder Morgan Inc.

Shares in Terasen, the Vancouver-based operator of British Columbia's primary gas distribution utility, jumped $4.60, with more than 12.3 million shares changing hands, to close at a record $36 in Toronto.

In New York, Kinder Morgan rose $6.13 US on a volume of 5.2 million shares, closing at $94.73.

The surprise deal, announced Monday, was greeted warmly by market-watchers.

Analysts participating in a Terasen teleconference offered congratulations to president and CEO John Reid, for a deal is widely seen as maximizing the value of the company for its investors.

According to Terasen, the company's shares are 60 per cent held by institutions -- such as mutual funds -- and 40 per cent held by retail or individual investors.

The deal offers Terasen shareholders $35.75 per share, or cash and Kinder Morgan shares, or Kinder shares in a proportionate formula of 65 per cent cash and 35 per cent shares.

"We do believe that the offer price from Kinder Morgan provides full and fair value for our shareholders based on both relative and absolute metrics," Reid said.

"We do believe that the opportunity for Terasen shareholders to acquire Kinder Morgan shares will enable our shareholders to hold shares in a larger, more liquid company operating in the North American energy infrastructure space."

The bid to Terasen shareholders is comprised of cash and shares of Kinder, one of the top performers on the S&P 500, and requires the U.S. company to assume more than $3 billion in Terasen debt as part of the transaction.

Kinder chair and CEO Rich Kinder said the deal was motivated by Terasen's pipeline connection to the Alberta oil sands, a sprawling natural resource he described as "hellaciously significant" to North America's energy future.

Dominion Bond Rating Service was more cautious, putting Kinder's debt rating "Under Review with Negative Implications."

"The negative implications reflect, among other factors, the higher balance sheet leverage with lower cash flow/debt support resulting from the transaction at KMI, and the relatively high purchase price proposed," DBRS said.

The service described the deal as Kinder's largest-ever financial transaction, but although it was voicing caution in the short term, it expects the deal to yield positive longer term benefits.

"Based on its preliminary review, DBRS expects the proposed transaction to have a positive impact on KMI's business risk as a result of the increased scope and scale of its regulated pipeline and gas distribution operations, and growth potential," DBRS said.

Dominion suggested the price offered for Terasen shares, roughly a 14-per-cent premium to last Friday's close, was somewhat high -- an interpretation that's probably good news for the company's shareholders.

In a Canaccord Capital letter to investors, energy sector analyst Bob Hastings described the deal as "a positive transaction" for Terasen shareholders and allows Kinder to expand its scale of operations "through stable, regulated, low risk assets."

ssimpson@png.canwest.com

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Terasen sale has downside

Kent Spencer
The Province
03-Aug-2005

Terasen Gas's proposed sale to an American company amounts to selling off a piece of Canada, say B.C. consumers worried by the move. But stock market investors liked what they saw yesterday and gave Terasen shares a substantial boost.

"The Americans are definitely looking out for their own good," said Sean Hevesy, 29, of Squamish yesterday.

"There will be serious implications in the coming years if there is an energy shortage."

Shelley Kean, 52, of North Vancouver said British Columbians invested a lot of money into one of Terasen's forerunners when it was part of Crown-owned B.C. Hydro. "Now that money will be spent by a Texas company on an ideology opposite to most Canadians," she said.

The pair were responding to a $6.9-billion bid announced earlier this week by energy giant Kinder Morgan of Houston, Tex., that wants to scoop up Vancouver-based Terasen Inc., an investor-owned pipeline utility which delivers natural gas to most British Columbians and is also involved in pipeline development to transport Alberta oilsands crude to U.S. and to Asian markets. Another subsidiary, Terasen Utilities, delivers water to 90 resorts, universities and airports.

The deal requires the OK of 75 per cent of Terasen shareholders as well as approval by the B.C. Utilities Commission. Kinder Morgan is offering shareholders $35.91 in cash or stock for each Terasen share. Terasen shares closed up $4.60 yesterday to $36.00 on the Toronto Stock Exchange.

And while some consumers were showing concerns about the deal, B.C. Energy Minister Richard Neufeld said the purchase showed confidence in B.C.'s future.

"Kinder Morgan is a pretty big player in the oil and gas industry," he said. "Consumers do not need to be concerned because [natural] gas prices will still be regulated by the B.C. Utilities Commission."

But NDP economic critic Mike Farnworth said the Liberals brought in legislation in 2003 that allowed foreign ownership of Terasen Inc. The company's Lower Mainland operation was part of B.C. Hydro until the Gas Division was sold to investor-owned Inland Natural Gas in 1988. The merged company was renamed B.C. Gas. That name was changed to Terasen a few years ago.

"The interests of B.C. consumers need to be taken into account in whether or not the sale can go through," Farnworth said.

Kinder Morgan chairman Richard Kinder is one of the world's richest individuals with a ranking on the Forbes Top 500 list.

A major supporter of U.S. President George W. Bush, Kinder quit as chairman of Enron in 1996. The energy-trading giant was rocked a few years later by scandal, suffering the largest bankruptcy in U.S. history.

Kinder, described by Forbes business magazine as a "no-nonsense" Vietnam veteran, pays himself $1 per year.

He said yesterday that the combination of Terasen's growth opportunities and his company's financial muscle will provide the scale and scope for the new company to tap Alberta's ever-growing oilsands potential.

Kinder said he expected production from the oilsands to double over the next five to seven years.

kspencer@png.canwest.com

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Natural resources shouldn't be sold off to foreigners

Richard Floyd
Vancouver Sun
03-Aug-2005

Americans have gone ballistic over the thought of a Chinese oil and gas company buying Unocal Corp., a major energy enterprise. However, Canadians note that Fortune magazine ranks Kinder Morgan, bidding for Terasen Inc., as "one of America's most-admired companies."

Two spins: Americans emphasize that the Chinese National Overseas Oil Corporation is a state-owned (Communist) business. Canadians blithely ignore the hand-in-glove relationship between Big Oil, of which Kinder Morgan is part, and the Bush ("We need an energy bill that encourages consumption") White House.

Two results: Americans fend off an evil takeover by outsiders. Canadians turn over another valuable asset.

Richard Floyd
Crescent Beach

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Takeover pushes Terasen shares to 15 per cent gain

Scott Simpson
Vancouver Sun
03-Aug-2005

The Texas billionaire behind the surprising bid for Terasen Inc. is bullish on British Columbia.

Kinder Morgan Inc. chair and CEO Rich Kinder reiterated in an analysts conference on Tuesday that his company's main motive in a $6.9-billion friendly bid for British Columbia's biggest natural gas utility is its ownership of pipeline links to the Alberta oil sands.

But Kinder said that as his company began to study Terasen, he began to recognize the value of the Vancouver-based utility's residential gas delivery business.

"We believe this is a stable, regulatory environment in Canada and we will be extraordinarily focused on expanding the infrastructure. We like the location. We think it's strategic," Kinder said.

"We think the whole Vancouver, western British Columbia area is poised for continued high demographic growth. We see steady organic growth there in the range of about two per cent. We see a low risk rate structure."

Neither Terasen nor Kinder Morgan expect significant layoffs as a result of the takeover, which could be finalized by year's end pending regulatory approvals from the B.C. Utilities Commission and federal agencies governing competition and foreign ownership.

Reid said in a Terasen analysts conference that he believes government reaction to the deal -- which still requires shareholder approval -- is generally favorable.

"It's a little early to tell as yet but I think it's positive," Reid told analysts. "We had some phone conversations [Monday] with various political leaders both in this province and in Alberta, and federally, and I didn't see anything coming out of those calls that would represent any sort of major hurdle at this stage. It is very preliminary, these are early reactions, but I don't see any issues."

Some Vancouver Sun readers voiced concern about a non-Canadian company owning the B.C. utility, expressing fears that it could lead to British Columbians being deprived of home heating fuel in favour of U.S. consumers.

However, B.C. Energy and Mines Minister Richard Neufeld said the company remains a regulated monopoly under the control of the B.C. Utilities Commission.

The BCUC will have final say on the conditions under which the deal can proceed.

Neufeld said the decision by a U.S. company to invest such a large sum in B.C. represents more evidence of British Columbia's surging economy.

"We live in a global economy and especially a North American economy when it comes to the energy market."

Neufeld added that foreign-owned companies such as Shell, BP and Exxon have operated in Canada for decades with no adverse impacts on the nation's sovereignty, he added.

Kinder stated that while the parent company would remain Kinder Morgan, headquartered in Houston, "we expect to add Canadian representation on our board."

"The Terasen Gas headquarters will remain in Vancouver, the Terasen Pipeline headquarters will remain in Calgary," he said.

Reid said Terasen will soon enter into discussions with the utilities commission about a transfer of ownership-- and he said the sale earlier in this decade of Westcoast Energy to Houston-based Duke is a precedent in favour of his company's deal.

"This isn't exactly a change in shares of the utility company. It's a change at the parent level which should make it a somewhat easier transaction in terms of regulatory approval.

"If we look back at the Duke-Westcoast precedent we are looking to that as a model on a go-forward so we have a degree of confidence following that route that we will get this done by the end of the year."

David Austin, an energy sector analyst who serves as legal counsel for independent power producers in B.C., said it was uncommon for a Canadian utility to be in the hands of a foreign owner.

"Inevitably what happens is that the foreign owner finds there is nothing sexy about owning a utility in Canada. More importantly, the foreign owner's stockholders and analysts say 'why are you holding a utility in Canada, because we cannot really track its performance very well?' "

It's conceivable, he added, that Kinder Morgan could put Terasen Gas back on the market in a few years while holding onto the company's pipeline assets.

ssimpson@png.canwest.com

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Liberal loophole allowed sale of Terasen

Michael Smyth
The Province
04-Aug-2005

The Gordon Campbell government cleared the decks for the Americanization of Terasen Gas two years ago by passing a law with a rather ironic -- some would say downright sneaky -- name.

The B.C. Hydro Public Power Legacy and Heritage Conservation Act reassured British Columbians that the Liberals had no plans to sell B.C. Hydro to Americans or anyone else.

But Terasen? That was a different story.

Inserted amid all the hype and hoopla about protecting Hydro's owned-by-B.C. heritage, the Liberals added a sub-clause in the law that removed restrictions against the foreign ownership of Terasen.

Terasen, of course, used to be called B.C. Gas. It also used to be owned by the people of the province when it was an arm of B.C. Hydro.

That ended in the 1980s, when Bill Vander Zalm, the Social Credit premier of the day, decided to privatize the government's gas business.

But Vander Zalm, now a fierce critic of foreign takeovers of B.C. Rail and other Crown assets, placed strict rules on the company's ownership and operation.

Under those rules, Terasen could not be sold or merged.

It could not have more than 20-per-cent foreign ownership.

And it could not move its head office out of B.C.

The Liberals quietly threw that all out the window in 2003.

"Terasen Inc. is the only B.C. company subject to these outdated restrictions," Energy Minister Richard Neufeld briefly explained in the legislature.

"The repeal will increase Terasen's access to investment dollars."

The overwhelmed NDP opposition -- all two members -- mustered a five-minute protest in the house.

"Day by day, we're losing control of our utilities," said NDP MLA Jenny Kwan.

Leonard Krog, then running for the NDP leadership, put up the most spirited fight.

"These legislative changes worth potentially millions of dollars are being made on behalf of a company that is a major donor to the Liberal party," said Krog.

"It has been done without a word of notice to British Columbians or Terasen customers."

But the Liberals just swatted away the NDP complainers like pesky fleas.

The Liberals' message: If you really want to own a natural-gas company, just go and buy its stock.

That's exactly what then-Liberal MLA Brian Kerr told a constituent upset about the Liberals' hands-off approach to Terasen.

"I had to inform her that . . . if she did want to continue to own it, she could go on the Toronto Stock Exchange."

Hopefully she took his advice. Terasen stock soared on news of the American takeover, taking the entire TSE along for the giddy ride.

For shareholders in the company, that's hopefully enough to soothe the sting of the latest Yankee intervention in our resource economy.

- - -

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

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Posted by Arthur Caldicott on August 03, 2005

August 01, 2005

Kinder Morgan to acquire Terasen - Media medley

Kinder Morgan - Terasen joint press release
U.S. firm offers $3-billion for Canada's Terasen
Catherine McLean, Globe and Mail, 01 Aug 2005
Houston-based Kinder Morgan to buy Terasen Inc., formerly B.C. Gas, for $6.9B
John Valorzi, Canadian Press, 01 Aug 2005
Energy Pipeline Operator to Buy Canadian Rival
Reuters, New York Times, 02 Aug 2005
U.S. company to buy B.C.'s Terasen Gas for $6.9 billion
Scott Simpson, Vancouver Sun, 02 Aug 2005
$6.9B on table for Terasen
Peter Brieger and Paul Vieira, National Post, 02 Aug 2005
U.S. giant bids for Terasen
Scott Simpson, Vancouver Sun, 02 Aug 2005
Texas energy firm gobbles up Terasen Gas in $7-billion deal
Kent Spencer, The Province, 02 Aug 2005




U.S. firm offers $3-billion for Canada's Terasen

Catherine McLean
Globe and Mail
August 1, 2005


Kinder Morgan Inc. unveiled an agreement Monday to buy Terasen Inc. for $3.1-billion (U.S.), giving the U.S.-based energy giant critical strategic involvement in the Alberta's oil sands.

Kinder Morgan is the latest company from outside the country's borders to secure a spot in this key market. Until Monday, Chinese firms had been the most aggressive suitors, making three separate investments this year. However, lately the oil sands have attracted more attention from the United States, as evidenced by Treasury Secretary John Snow's tour of the region last month.

Terasen's main pipeline from the oil sands runs from Edmonton to B.C.'s Lower Mainland. It operates another that runs south to the U.S. Midwest. With Kinder Morgan's backing, Terasen will have greater access to capital to expand pipelines and move more crude from the oil sands.

Larger rival Enbridge Inc. is also pushing ahead with expansion plans to send more oil sands crude to the U.S.

“It has great upside potential in the sense the oil sands play is going to get larger and larger,” Kinder Morgan chief executive officer Richard Kinder said Monday in an interview. “We think with Terasen's current footprint, the pipelines it has in place, and our financial wherewithal, we'll be able to dramatically increase our capacity to take more product coming out of Alberta.”

Houston-based Kinder Morgan started looking at the oil sands a year ago, according to Mr. Kinder. Over the past six to eight weeks, the two parties held discussions. The combined company will have 40,000 miles of pipelines and more than 1.1 million natural gas distribution customers.

Kinder Morgan is also assuming $2.5-billion in debt. Kinder Morgan said the value of the transaction is $35.91 (Canadian) a share, a 14-per-cent premium to Friday's closing price of $31.40. For each share, Terasen shareholders can choose $35.75 in cash, 0.3331 shares of Kinder Morgan, or $23.25 in cash and 0.1165 Kinder Morgan shares.

The deal will immediately be accretive in terms of earnings and cash flow per share, Mr. Kinder said. Kinder Morgan expects the combined company's earnings per share and dividend will grow at approximately 10 per cent annually.

“This transaction is a real validation in many ways of what it is that we're trying to do with the oil sands,” Terasen chief executive officer John Reid said Monday in an interview. “I believe the folks at Kinder Morgan see that, and think that in partnership we can move that so much further ahead. This transaction is about growth. It's about accelerating, further developing growth opportunities.”

Analysts are bullish on the outlook for production at the oil sands, which currently stands at one million barrels a day, about 1 per cent of global output. It could reach as high as 11 million barrels a day in the 2040s, analyst Steven Paget of FirstEnergy Capital Corp. wrote in a report a few weeks ago.

According to Terasen, Canadian oil sands production is projected to rise to about 2 million barrels of crude a day between 2010 and 2012.

Those forecasts are bringing in foreign investors. In April, China National Offshore Oil Corp. bought a one-sixth share in Calgary-based MEG Energy Corp. for $150-million. In May, China Petroleum & Chemical Corp. (Sinopec) took a 40-per-cent stake in an upstart project controlled by Synenco Energy Inc.

Kinder Morgan's deal must be approved by 75 per cent of Terasen shareholders who attend a special meeting held before Oct. 31. Regulatory approval is also required. The board of Vancouver-based Terasen is recommending shareholders vote in favour of the transaction.

Terasen said it has agreed to pay a termination fee of $75-million under certain circumstances, without elaborating. There has been speculation that the company could spin off a utility, Terasen Gas. However, Mr. Kinder said Kinder Morgan has no such plan.

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Houston-based Kinder Morgan to buy Terasen Inc., formerly B.C. Gas, for $6.9B

John Valorzi
Canadian Press
Monday, August 01, 2005

TORONTO (CP) - Houston-based Kinder Morgan Inc. is buying Canada's Terasen Inc. in a cash, share and debt deal that values the Vancouver company at nearly $7 billion and provides the financial muscle needed to rapidly grow the pipeline network sprouting from the Alberta oilsands.

In a blockbuster deal announced Monday afternoon, Kinder Morgan and Terasen detailed an agreement that will see the Houston company pay $35.91 Cdn in cash or stock for each Terasen share, creating a major North American energy transportation and distribution company.

The total purchase price, including assumption of debt, is about $5.6 billion US, or $6.9 billion Cdn, the companies said.

The acquisition of Terasen, a natural gas utility and oil pipeline company formerly known as B.C. Gas, is the second major acquisition of a Vancouver-based pipeline company by a U.S. energy giant in recent years.

Westcoast Energy, which operated natural gas pipelines on the West Coast and had other significant energy businesses across Canada, was acquired by Duke Energy several years ago.

Monday's announced acquisition of Terasen has been unanimously approved by each company's board of directors and by a special committee of independent directors created by the Terasen board to oversee the sale. The deal is expected to close by the end of the year, subject to Terasen shareholder approval and other regulatory approvals.

"For shareholders, it means a 20-per-cent premium over the price they've been getting the last 20 days which has been trading at its high so it's a great financial gain for shareholders," said Terasen spokesman Cam Avery.

The combined company will have about 64,000 kilometres of natural gas and petroleum transportation pipelines, more than 1.1 million natural gas distribution customers, about 150 terminals, 9,000 employees and a value of more than $19 billion US.

Including Kinder Morgan affiliate Kinder Morgan Energy Partners L.P. (NYSE:KMP), of which KMI is the general partner, the value of the total combined companies will be about $35 billion US.

Terasen operates British Columbia's major gas distributor, with about 875,000 customers.

"For gas customers, it won't make any difference at all because those are regulated companies and the gas business will continue to operate as Terasen gas in B.C.," said Avery.

But a key lure for Kinder Morgan was Terasen's growing presence in the oil pipeline business, where the Vancouver company's pipelines in B.C., Northern Alberta and the United States are well-positioned to ship growing production from the Alberta oilsands to markets in Canada, the United States and Asia.

"This transaction will combine two strong entities to create a premier energy company in North America with a bright future," said Kinder Morgan chairman and CEO Richard Kinder.

"It is a win-win transaction for both entities that is expected to produce immediate shareholder value through strong earnings and cash flow accretion, as well as provide exciting future growth opportunities. For Kinder Morgan, the merger will dramatically broaden our footprint into Canada."

He noted that the financial strength of the combined company will help finance new pipeline construction to service the oilsands sector.

"There is a definite need for additional pipeline infrastructure from the Alberta oilsands, and we have a great opportunity to use the capital strength of the combined company - along with our expertise in building and operating pipelines - to increase capacity on Terasen's existing pipeline system and help meet the growing demand of an oil-starved world," he said.

Canadian oilsands production is projected to double from current levels to about two million barrels of crude oil a day between 2010 and 2012. According to the National Energy Board, Canada's recoverable oilsands reserves are the largest in the world. They currently account for about 37 per cent of all Canadian oil production, and are expected to make up two thirds of domestic production by 2015.

Terasen president and CEO John Reid said the planned combination is a great opportunity for Terasen (TSX:TER) and its shareholders.

"This transaction creates significant immediate and long-term value for our shareholders and gives us the scale, resources and access to capital we need to accelerate our business strategy and lead the development of world-class infrastructure across Western Canada."

"The offer represents a significant premium to our recent share price at a time when Terasen is trading at all-time highs, and gives Terasen shareholders the opportunity to participate in the ongoing success of the combined company.

"Kinder Morgan is one of the largest and most respected energy transportation and storage companies in the United States, is the market leader in most of its businesses and has produced outstanding returns for its shareholders. We are very pleased to become a significant part of a much larger and stronger enterprise."

Avery said other petrolem companies would likely welcome the move.

"For the petroleum pipeline customers - these are the big oil companies - and they're all familiar with Kinder Morgan because Kinder Morgan are bigger pipeline players than we are," Avery said. "They'll probably welcome it because it means a bigger, more sound financially sound company taking pipeline proposals to them".

© The Canadian Press 2005

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Energy Pipeline Operator to Buy Canadian Rival

Reuters
New York Times
August 2, 2005

HOUSTON, Aug. 1 (Reuters) - An energy pipeline operator, Kinder Morgan, said on Monday that it had reached a deal to buy a Canadian pipeline company, Terasen, for $3.1 billion to expand its share of Canadian oil shipments.

The purchase also calls for Kinder Morgan to take on $2.5 billion in Terasen's debt.

Kinder Morgan's offer totals 35.91 Canadian dollars for each share of Terasen, a premium of about 20 percent over the average price of the last 20 trading days, the company said.

In addition to gaining Terasen's 2,800 miles of pipelines, which carry 680,000 barrels a day of petroleum and petroleum products, the deal will position Kinder Morgan to expand its network into Alberta's growing production of crude oil from oil sands.

That area was projected to double its production from current levels to about two million barrels a day between 2010 and 2012.

Alberta's oil sands reserves are believed to be the largest in the world and currently account for more than a third of Canada's oil production.

Terasen also owns a utility in western Canada that distributes natural gas to 875,000 customers in British Columbia.

Under the deal's terms, Terasen shareholders can elect to receive 35.75 Canadian dollars in cash per share, 0.3331 shares of Kinder Morgan common stock per share, or 23.25 Canadian dollars in cash plus 0.1165 Kinder Morgan common stock per share, the companies said.

The deal, which was unanimously approved by each company's board of directors, will require Terasen shareholders' approval in a vote to be held no later than Oct. 31.

The combined company will own 40,000 miles of natural gas and petroleum pipelines and reach more than 1.1 million natural gas distribution customers.

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U.S. company to buy B.C.'s Terasen Gas for $6.9 billion

Scott Simpson
Vancouver Sun
02-Aug-2005

More than 875,000 Terasen Gas customers in British Columbia will be paying their monthly heating bills to a company based in Houston, Tex., under a $6.9-billion deal announced Monday.

The deal would see Vancouver-based Terasen purchased by Kinder Morgan of Houston, a $35-billion company with a high-profile owner that was ranked this year by Fortune magazine as one of "America's most-admired companies."

Work on the deal began three months ago when Kinder Morgan approached Terasen.

It requires approval of 75 per cent of Terasen shareholders, who are being offered a premium of nearly 20 per cent over the current value of the company's shares. It would also require some approvals by the B.C. Utilities Commission.

Canadian investors own 99 per cent of Terasen Inc. shares, the firm says, with half of those stocks owned by individual shareholders and the other half owned by pension funds and mutual funds.

Terasen has two main components, a gas-delivery utility serving householders and commercial customers in B.C., and a pipeline company that provides service in both Canada and the United States.

The future of Terasen's pipeline operations represent the biggest prize in the deal because of the company's connections to the Alberta oil sands, its 2,700-kilometre Express pipeline into the U.S. Rocky Mountain states, and a growing U.S. desire for North American sources of petroleum.

Kinder Morgan chairman and CEO Richard Kinder said in an interview from Houston that the deal will have relatively little impact on Terasen's 2,553 employees.

"This is not a program where we are planning to cut a lot of jobs or anything else," Kinder said.

"These are assets and people we like very much. I think it's going to be, as [Terasen president and CEO] John Reid and I were talking earlier, a win-win for the shareholders and employees of both companies."

Kinder is one of the United States' wealthiest citizens and a solid backer of President George W. Bush.

His personal net worth exceeds $1.2 billion.

He was formerly a president of Enron Corp., the Houston-based energy trading company that was rocked by scandal in the early part of this decade due to allegations of manipulation of the California energy market.

However according to the website of Forbes business magazine, Kinder "wisely" left Enron in 1996, well before the scandal, because he was uncomfortable with the company's lack of emphasis on hard assets such as pipelines.

He created a new company that scooped up Enron's pipeline assets and never looked back, emerging as the United States first-ranked pipeline company.

"Vietnam vet careful to avoid Enron excesses: flies coach class, pays himself just $1 a year," says Forbes.

Kinder gets all of his compensation through the value of the company's shares -- average annual returns have been 40 per cent since 1999, 35 per cent since 1997.

Terasen's Reid said the deal won't bring any changes for the company's gas customers, who will still get their monthly bills on Terasen letterhead.

"At this point the immediate concern, I guess, is what this would mean to me as a customer of Terasen Gas -- are my gas bills going to go up, all those types of things," Reid said.

"The answer is absolutely no, there will be no change that is not positive. Service will continue at least at the present level.

"Going forward, the fact that we are part of a larger organization and everything that gives us access to means, ultimately, that we will have even better levels of service."

He described Kinder Morgan as "a very, very successful company, very much an operating company focused on the same types of assets, the same type of business as Terasen, focused on good customer service and efficiency.

"I think it's a business culture that will be consistent with ours."

The union representing some 400 workers at Terasen condemned the deal, saying the B.C. government should take action to protect B.C. jobs, the province's supply of natural gas and fair consumer pricing.

"This is a terrible way to celebrate B.C. Day, by seeing a former Crown Corporation and an important B.C.-owned and based company move to Houston, Texas," Andy Ross, president of Canadian Office and Professional Employees' Local 378, said in a news release.

"The provincial government has a lot to answer for, since it made this corporate runaway possible in the first place."

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$6.9B on table for Terasen

Peter Brieger and Paul Vieira
National Post
02-Aug-2005

One of the biggest energy distribution companies in the United States -- headed by the former president of Enron Corp. -- offered yesterday to buy Terasen Inc., the Vancouver oil and gas distribution giant, for $6.9-billion, including debt.

In another sign that takeover activity in North America's oil and gas sector appears set to continue, Houston's Kinder Morgan Inc. said Terasen, formerly B.C. Gas Inc., would give it access to the fast-growing production from Alberta's oilsands and a stable, cash-producing gas distribution business.

Under the proposed deal, investors have three options: they can tender each Terasen share they own for $35.75 in cash -- a 20% premium over the average closing price in the three weeks ended July 29; trade one Terasen share for 0.3331 shares of Kinder Morgan; or take $23.25 in cash and 0.1165 Kinder Morgan shares.

Yesterday, Kinder Morgan stock finished at US$52.31, down US10 cents, on the New York Stock Exchange, short of its 52-week high of US$53.96 while Terasen closed on Friday near its 52-week high of $31.40.

In its most recent quarter ended June 30, Kinder Morgan posted a profit of US$221.8-million, a 13.6% increase from the year-ago period, based on sales of US$2.1-billion.

The company is led by Richard Kinder, who left now-disgraced Enron in 1996 because he was reportedly uncomfortable with its "asset light" strategy.

Mr. Kinder, ranked as one of the 400 richest people in the world and one who enjoys close ties with the White House, built the company after buying Enron's liquid-gas pipeline operations with a college classmate.

Yesterday, he described the Terasen bid as a way to buy a stable business and "dramatically broaden our footprint into Canada," particularly in the oilsands.

Mr. Kinder will stay on as chairman and chief executive of the new company that will include Terasen, although some of the Canadian assets will retain the Terasen brand.

If the deal garners shareholder approval, earnings per share in 2006 are expected to be US$5 with almost US$800-million of free cash flow, Kinder Morgan said. The company's annual dividend would also rise to US$3.50 from US$3 a share.

According to U.S. Securities and Exchange Commission filings, Kinder Morgan has spent more than US$500-million in acquisitions since January, 2002; Terasen is its biggest catch yet.

Both companies said their respective boards have approved the deal. John Reid, Terasen's chief executive, has urged shareholders to accept the offer, which would create a company of 9,000 employees.

"The offer represents a significant premium to our recent share price at a time when Terasen is trading at all-time highs," he said.

"This transaction ... gives us the scale, resources and access to capital we need to accelerate our business strategy."

Vancouver-based Terasen, which reported $2-billion in 2004 sales, distributes natural gas to 875,000 customers -- about 95% of the British Columbia market. Through its pipeline division, the company transports oil from Alberta to B.C., Washington state and the U.S. Midwest. Together, the company would be the second-largest operator of natural gas pipelines in the United States with 40,000 miles of oil and gas pipelines and more than 1.1 million natural gas distribution customers.

The proposed transaction would also create the largest owner of storage terminals in the United States, handling 80 million tons of coal and storing up to 72 million barrels of petroleum products annually, Kinder Morgan said.

Kinder Morgan has a spotty record with U.S. state regulators. Last month, it was fined US$500,000 in California in relation to a pipeline explosion in California that killed five people. It is the subject of a U.S. nationwide review of its pipeline operations and maintenance practices as a result of those and other mishaps.

- - -

TERASEN INC.

Ticker: TER/TSX

Fri. close: $31.40, down 24 cents

Friday volume: 231,010

Avg. 6 mo. vol.: 131,580

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U.S. giant bids for Terasen

Scott Simpson
Vancouver Sun
02-Aug-2005

A solid connection to Alberta's booming oil sands was the driving force behind Kinder Morgan's stunning $6.9-billion bid for Terasen Inc., the chair and CEO of the Houston, Texas-based pipeline company said Monday.

The company is offering Terasen shareholders a premium of almost 20 per cent on the trading value of company shares over the past month, via options that include straight cash at $35.75 per share, or cash and Kinder Morgan shares, or Kinder shares.

Terasen has been trading in record territory in recent months, and closed at $31.40 last Friday in Toronto.

Richard Kinder, chair and CEO of Kinder Morgan, said in an interview from Houston that he hopes Terasen shareholders taking Kinder shares will hold onto them -- noting that the company is one of the Standard & Poors 500's best performers.

The deal requires 75 per cent shareholder support and cannot exceed 65 per cent cash or 35 per cent stock in Kinder Morgan Inc.

"If you look at the time we formed Kinder Morgan Inc. in July of 1999. . . we've had a compound annual return of 40 per cent which is, if the not the very best, then one of the very best in the S&P 500 from that time to this time," Kinder said.

It's the biggest deal in the Canadian pipeline sector since Houston-based Duke Energy bought Vancouver's Westcoast Energy in 2001 for $8.5 billion US.

The new, combined Terasen-Kinder Morgan entity would be worth $19 billion, Kinder said.

His company began hunting a year ago for ways to expand its profile in the Alberta oilsands play.

"We are strictly a mid-stream company but we have made a practice of trying to find important trends to ride. Certainly we think given the type of production increases we've already seen and expect to see over the next five to seven years in the oilsands, that's something we want to be involved in given the size of our pipeline operations around North America.

"Obviously alternatives ranged from going in and trying to start from scratch to buying a company. The more we saw Terasen, the more we liked them because it's a unique combination."

"You have assets not just in the oilsands play in terms of their pipelines," but in the company's B.C. gas distribution company as well, he said.

"We like that business, too. So what we saw in Terasen was a good stable company with good assets, good people, not much overlap with what we do, and yet we saw a good potential for the future in expanding and extending the pipeline infrastructure.

"We see, and I think this is pretty well the consensus, growth in production from the oilsands from about one million barrels a day to about two million barrels in five to seven years.

"We plan on doing the best we can to capture a significant amount of those growth volumes to go through pipelines that we would either expand present lines or build new lines."

The combined company will have about 64,000 kilometres of natural gas and petroleum transportation pipelines, 1.1 million natural gas distribution customers including 875,000 residential customers in B.C., and 150 terminals around the continent according to a joint news release.

The deal has unanimous approval of the board of directors of each company and by a special committee of independent directors, struck by Terasen, to oversee the deal.

The transaction will require Terasen shareholder approval prior to closing, which is expected by year's end.

The deal is contingent on approval by 75 per cent of Terasen shareholders, as well as assent from the B.C. Utilities Commission.

"We think this an excellent transaction. We think we are creating a real leader in the energy transportation business in North America," said Terasen president and CEO John Reid.

"The combination of the two and the geographical and industry coverage that it's going to give the two of us together and the ability to drive growth further, I think, has to be exciting for both sides."

Terasen at present has plans in the works for more than $2 billion worth of pipeline expansion projects including twinning its Trans Mountain petroleum pipeline from Edmonton to Greater Vancouver and Puget Sound, and Reid said the new parent company will be in a better financial position to finance such projects.

It's the latest move for a company with deep roots in British Columbia. Terasen announced in March 2003 that it was changing its name from BC Gas.

The company was formed 17 years ago in a merger of private and crown-owned gas distribution companies.

In the Lower Mainland, the gas company was previously owned by the province and operated as part of BC Hydro. The Interior B.C. component was a shareholder-owned company, Inland Natural Gas. The two companies were merged into a single, shareholder-owned entity in 1988.

ssimpson@png.canwest.com

A BLOCKBUSTER DEAL:

Monday's $6.9-billion deal to sell B.C.'s Terasen Inc. to the U.S.'s Kinder Morgan Inc. has been unanimously approved by each firm's board of directors and a special committee of independent directors. Here are the details:

THE PAYOUT:

- Terasen shareholders can receive $35.75 per share, a 20-per-cent premium. They can also elect to take 0.3331 shares of KMI or a share/cash combo of $23.25 in cash plus 0.1165 shares of KMI.

- Total purchase price, including assumption of debt, is $6.9 billion

THE FINE PRINT:

- Deal must be approved by regulators

- Kinder becomes CEO of the combined entity

- 75% of shareholders must approve the deal on or before Oct. 31.

- Terasen won't seek competing bids and has agreed to pay a $75-million termination fee under certain conditions if the deal fails.

THE PLAYERS:

John Reid

CEO, Terasen Inc., Vancouver

Heads a firm with:

- 875,000 customers

- 2,553 employees

- 8,000 kilometres of gas and petroleum transmission pipelines

- $5 billion in assets

- Operates 90 water and wastewater infrastructure services in 50 communities in Western Canada.

- Market cap of $3.3 billion.

Richard Kinder

CEO, Kinder Morgan Inc., Houston, Texas

Kinder Morgan Inc. and its partner firms Kinder Morgan Energy Partners and Kinder Morgan Management operate a series of companies with:

- 6,500 employees

- 56,300 km of natural gas and other pipelines.

- 240,000 retail gas customers

- 145 terminals for gas, coal and other energy products.

- Combined market cap of more than $22 billion US.

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Texas energy firm gobbles up Terasen Gas in $7-billion deal

Kent Spencer
The Province
02-Aug-2005

The union representing more than 400 workers at Terasen Gas yesterday demanded the provincial government protect their jobs following the sale of Terasen to a U.S. company.

"Premier Gordon Campbell should immediately demand that B.C. jobs be protected in this sale, and that B.C. businesses and residents be guaranteed first right to natural gas from this province and at a fair price," said Andy Ross of the Canadian Office and Professional Employees Union.

Terasen, a natural-gas utility and oil pipeline company that supplies gas to 875,000 customers in B.C., was bought by Houston, Tex.-based Kinder Morgan for cash, stock and debt in a $6.9-billion Cdn deal.

Ross called it "a terrible way to celebrate B.C. Day -- by seeing a former Crown corporation and an important B.C.-owned and based company move to Houston, Tex."

He said "a corporate boardroom in Texas" will decide what's in the best interest of shareholders, not B.C. customers or workers."

"I'm hopeful the head office won't be closed down, but I won't be surprised if it is," he said.

Ross said there was protection against foreign ownership built in when B.C. Gas was split off from B.C. Hydro in 1988, but that protection was removed in 2003 by the B.C. Liberals.

"They have a lot to answer for," he said. "People have been lining up to buy Terasen. I think the name was changed from B.C. Gas to Terasen so it wouldn't tie into B.C."

The Terasen sale is the second major acquisition of a Vancouver-based pipeline company by a U.S. energy giant.

Westcoast Energy, which also operated pipelines, was acquired by Duke Energy several years ago.

"It's interesting and sad," said Vancouver energy analyst David Austin. "There is no major gas or oil-related company with headquarters in B.C. any more."

Austin said B.C. residents shouldn't fear sudden price hikes.

"Given that gas prices are fully regulated by the B.C. Utilities Commission, it doesn't matter who owns it," he said.

But Austin is concerned about the future of employees at Terasen's head office in Vancouver.

"When Duke bought Westcoast, it gutted the whole head-office function," he said.

Kinder Morgan said the head office of Terasen Gas will remain in Vancouver and the name will stay the same.

Kinder Morgan chairman Richard Kinder said his company was interested in Terasen's new pipelines, which transport oil from large reserves in the Alberta oilsands to the U.S. midwest.

Kinder said Terasen's pipelines would "help meet the growing demand of an oil-starved world."

Company spokesman Larry Pierce said North American-based oil is needed as opposed to off-shore supplies.

"Demand is increasing all the time," he said.

Kinder Morgan, which specializes in pipelines, natural gas distribution and storage terminals, will have about 64,000 kilometres of pipelines as a result.

Terasen president John Reid said the deal "marks a significant milestone in our history."

Kinder Morgan has offered $35.91 per Terasen share, a 20-per-cent premium on recent closing averages.

Terasen shareholders, who must approve the deal on Oct. 31, will be able to collect $35.75 cash, 0.331 shares of Kinder Morgan stock or a combination of both cash and stock.

The stock traded as low as $18.08 in 2003 and ended 2004 at $27.71.

The transaction has been unanimously approved by both companies' boards of directors and should be completed by the end of 2005.

The Lower Mainland portion of Terasen Gas was a public utility called B.C. Gas from 1950 to 1988. It was sold by Premier Bill Vander Zalm's government in 1988 and combined with a company called Inland Natural Gas, which served the Interior.

B.C. Gas was renamed Terasen Gas two years ago, a name that means "sent from the Earth."

Terasen is also a large private-sector water operator, supplying 90 locations. It also runs the sewage system for Langford on Vancouver Island.

kspencer@png.canwest.com

QUICK FACTS:

- Price tag: $6.9 billion Cdn, assuming debt. $35.91 in cash or stock per Terasen share.

- Terasen: Formerly B.C. Gas. Vancouver firm is a major gas distributor in B.C. and operates oil pipelines to the Alberta oilsands and into U.S.

- Kinder Morgan: Based in Houston, Tex. Major energy transportation and storage company with more than 56,000 kilometres of natural gas and products pipelines and 145 terminals. KMI owns the general partner interest of Kinder Morgan Energy Partners, a major pipeline operator.

- Combined company: About 64,000 km of natural gas and petroleum pipelines, more than 1.1 million natural gas distribution customers, about 150 terminals, 9,000 employees and a value of more than $19 billion US.

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Posted by Arthur Caldicott on August 01, 2005

July 28, 2005

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

Posted by Arthur Caldicott on July 28, 2005

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.

Posted by Arthur Caldicott on July 28, 2005

July 27, 2005

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.

Posted by Arthur Caldicott on July 27, 2005

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

Posted by Arthur Caldicott on July 27, 2005

July 26, 2005

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

sqwalk.com
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.
sqwalk.com



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

Posted by Arthur Caldicott on July 26, 2005

July 24, 2005

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

Posted by Arthur Caldicott on July 24, 2005

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.

Posted by Arthur Caldicott on July 24, 2005

July 23, 2005

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.)

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Posted by Arthur Caldicott on July 23, 2005

Dissident native group blocks access to coal property

Scott Simpson
Vancouver Sun
22-Jul-2005

sqwalk.com
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

sqwalk.com


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 on July 23, 2005

Leaky Terasen pipe repaired after 100,000 litres of crude oil seeps into Sumas marsh

Vancouver Sun
22-Jul-2005


sqwalk.com
COMMENT: Why is this news? Back in the year 2000, when we were confronted with the GSX Pipeline, we looked into safety and regulatory issues for pipelines generally, natural gas pipeline particularly, and the situation in British Columbia, specifically. Here's some old footage from www.sqwalk.com

The GSX was introduced not long after a gas liquids pipeline exploded in Bellingham, killing three youths. A natural gas pipeline exploded near Carlsbad, New Mexico killing 12 people who were camping nearby. The then Westcoast Energy (now Duke Energy) Southern Mainline pipeline exploded on the Coquihalla, raining stones and debris on cars parked nearby. A Pembina Pipelines oil pipeline ruptured into the Pine River near Chetwynd. Plenty of reason to be concerned about safety and pipeline regulation.

We discovered that in North America, pipelines have an "incident" - an unintended loss of contents - once every couple of days. Someone is injured every four days. Someone is killed every seventeen days. It isn't a pretty record. And this is the record primarily from jurisdictions that have a long history of pipelines and pipeline regulation.

In BC, the regulatory situation is deplorable. The Oil and Gas Commission, whose job it is to monitor pipeline safety, was unable to provide any summary or detail record about pipeline incidents. It took a year of Freedom of Information requests and an appeal to the Office of Information and Privacy Commissioner to dislodge information from the OGC.

The OGC does not have the professional resources required to do the work properly, and nor does it have the will to do the job properly. The OGC measures its achievements by permits issued and speed of processing of applications. When push comes to shove, the OGC is not there to challenge, deter, or add cost or impediments to an industry that is now the province's largest provider of revenue to the province.

A report from June 2005 entitled "This land is their land" by the Sierra Legal Defense Fund condems BC's lax regulatory environment. It examines government’s failure to protect the interests of non-industry stakeholders and the environment in its headlong rush for oil and gas revenue.

This most recent Terasen incident is illustrative of a troubling situation with pipelines. Many were built decades ago, in rural areas, under standards that are unacceptable today. Population increase and urban sprawl has resulted in intense suburban development taking place around these old pipelines. Whether it's a leaking oil pipeline or an exploding gas pipeline, the proximity to people of these old facilities is a concern. - Arthur Caldicott
sqwalk.com


ABBOTSFORD - After seeping more than 100,000 litres of crude oil into a Sumas Mountain marsh, a damaged Terasen pipeline leading to its Abbotsford oil storage was repaired Thursday.

Crews cut out the damaged section and are monitoring the flow of oil through the repaired 20-inch pipe for two days, said Mike Helmer, an assistant chief with Abbotsford's Fire Rescue Service.

The city's fire and rescue members have been on the site to control the hazardous material since a leak was first reported.

"There were a number of complaints from local citizens who noticed the smell [of crude oil]. A Terasen employee searched the area and found a sheen on the marsh," said Helmer. Terasen alerted Helmer, who alerted city officials and the Provincial Emergency Response Program and set into motion a Level 1 emergency response. A fire crew and auxiliary members, city police and city engineers went to the Terasen pipelines tank farm on Sumas Mountain, where crews began to try to prevent spill damage. Helmer said Terasen workers found a hole the size of a toonie in the pipe, which is one metre under the soil. Nine households in the vicinity were evacuated as a precaution from the fumes. The damaged pipe is one of two transfer pipes that divert oil from a main pipeline drawing crude from Alberta to the Lower Mainland.

Posted by Arthur Caldicott on July 23, 2005

July 21, 2005

JIESC responds to DPP complaint to BCUC

Reply Attention of: R. Brian Wallace
Direct Phone: 604.641.4852
Direct Fax: 604.646.2506
E-mail: RBW@bht.com

Our File: 04-3082

Date: July 20, 2005

BC Utilities Commission
6th Floor – 900 Howe Street
Vancouver, BC V6Z 2V3
Attention: Mr. Robert J. Pellatt
Commission Secretary

Dear Sirs/Mesdames:

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

We write on behalf of the Joint Industry Electricity Steering Committee (JIESC) to respond to a letter dated 12 July 2005 from Duke Point Power (DPP) to the Commission.

The JIESC, along with all major customer groups who participated in the Duke Point EPA hearing, opposed the approval of the Electricity Purchase Agreement (EPA) with DPP. The JIESC continues to believe that the termination of the DPP EPA is in the best interest of all customers. In its letter, DPP continues to argue the merits of its project relative to other options. The JIESC disagrees strongly with DPP’s arguments, but does not propose to re-engage in this debate before the Commission since the matter has been rendered moot by BC Hydro’s decision to terminate the DPP EPA.

The JIESC is concerned by DPP’s request that a complete explanation of the termination of the EPA “be provided to the Commission, given the clearly identified need, the ability of DPP to meet this need and the significant financial implications for BC Hydro and its customers.” DPP’s request does not reflect the desires or interests of BC Hydro’s customers, but reflects only the interests of DPP whose interests have not been disclosed to the Commission in this request. The JIESC and BC Hydro’s other customers are quite capable in speaking for themselves and do not need DPP assistance.

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.

The Commission will soon be undertaking a review of BC Hydro’s Resource Expenditure and Acquisition Plans (REAP) and its Integrated Electricity Plan (IEP). These processes will provide an opportunity to review BC Hydro’s supply choices for the future, in the full context of all alternatives and free of DPP’s rhetoric.

In summary, the DPP EPA has already consumed far too much of stakeholders' time and resources. The Commission should not initiate a further process related to this matter since such a process does not have a clear purpose and it will only consume additional scarce stakeholder resources.

Yours truly,
Bull, Housser & Tupper LLP
R. Brian Wallace
RBW/sg/1323083

cc. Duke Point Power
BC Hydro

Download letter as PDF

DPP's letters to BCUC and BC Hydro

Posted by Arthur Caldicott on July 21, 2005

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.

Posted by Arthur Caldicott on July 21, 2005

July 20, 2005

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

Posted by Arthur Caldicott on July 20, 2005

July 18, 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

Posted by Arthur Caldicott on July 18, 2005

BC Hydro: F2006 Open Call for Power

BC Hydro
July 18, 2005

sqwalk.com
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
sqwalk.com

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

Posted by Arthur Caldicott on July 18, 2005

July 17, 2005

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.

Posted by Arthur Caldicott on July 17, 2005

Independent producers vital to the grid

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

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

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.

Posted by Arthur Caldicott on July 17, 2005

July 13, 2005

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

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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

Posted by Arthur Caldicott on July 13, 2005

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

Posted by Arthur Caldicott on July 13, 2005

July 12, 2005

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.

Posted by Arthur Caldicott on July 12, 2005

July 11, 2005

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

Posted by Arthur Caldicott on July 11, 2005

July 09, 2005

Hydro project will provide power for band's future

Don Cayo
Vancouver Sun
Friday, July 08, 2005

sqwalk.com
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.
sqwalk.com

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

Posted by Arthur Caldicott on July 09, 2005

July 06, 2005

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

Posted by Arthur Caldicott on July 06, 2005

July 05, 2005

Norske powered by Gary Collins?

Bill Tieleman
24 Hours
Tuesday July 5, 2005

sqwalk.com
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.
sqwalk.com

"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.

Posted by Arthur Caldicott on July 05, 2005

'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

Posted by Arthur Caldicott on July 05, 2005

July 04, 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

Posted by Arthur Caldicott on July 04, 2005

July 03, 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


sqwalk.com
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.
sqwalk.com

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

Posted by Arthur Caldicott on July 03, 2005

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

Posted by Arthur Caldicott on July 03, 2005

July 01, 2005

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

Posted by Arthur Caldicott on July 01, 2005

June 30, 2005

Hydro's earnings surge by $291 million for year

Gerry Bellett, Vancouver Sun, 30 Jun 2005
Brian Lewis, The Province, 30 Jun 2005



Hydro's earnings surge by $291 million for year

Gerry Bellett
Vancouver Sun
30-Jun-2005

Despite low water levels in the Pacific Northwest in the past year and higher energy costs, BC Hydro announced a net income of $402 million for the fiscal year 2005, an increase of $291 million over fiscal 2004, according to Hydro's annual report released Wednesday.

While the consolidated net income of $402 million for the fiscal year ending March 31, 2005 was lower than the company's 2004 service plan forecast, the dividend paid back to the province was $339 million compared with $73 million last year.

Net income in 2004 was $111 million.

Alister Cowan, BC Hydro chief financial officer, described 2005 as a successful year "even with the challenges such as higher energy costs."

"This will allow us to return an increased dividend to the provincial government, which can then be used to help fund key provincial priorities such as health care and education," said Cowan in a statement.

The report said Hydro's energy costs for the year were $1.959 billion -- an increase of $379 million over the previous year. Much of the increased costs resulted from higher electricity imports, which for fiscal 2005 were 6,896 GWH compared with 5,349 GWH the year before.

The increase in electricity imports reflects the fact that "we were coming off a low-water year as well as ongoing operating decisions to import electricity when it is cheaper than running more expensive resources like Burrard Thermal," said Cowan.

He said Hydro's long-term goal was energy self-sufficiency.

Trade revenues and sales volumes were both up compared with the year before.

Trade revenues were set at $1.021 billion compared with $871 million in fiscal 2004, with some of the increase being the result of a three per-cent increase in average sales prices, which rose to $63 per MWh from $61 per MWh in 2004.

Sales volumes also rose to 29,706 GWh from 28,373 GWh the previous year, an increase of five per cent.

Hydro said it maintained its strong commitment to the environment and social responsibility during the past fiscal year and has announced that one of its long-term goals is a policy of "no net incremental environmental impact" plus a reduction in electricity consumption through such means as the Power Smart program.

"We exceeded our overall Power Smart energy conservation target again this year, achieving savings of 1.355 gigawatt-hours of electricity or enough to meet the needs of over 130,000 homes," said Cowan.

He said Hydro did even better in the area of clean electricity, with "about 61 per cent of our incremental load acquired this year from B.C. Clean sources."

BC Hydro president and CEO Larry Bell said among the key accomplishments of the last year was the completion of "our first revenue requirements process in over 10 years before the B.C. Utilities Commission."

"The result -- a 4.85 per-cent rate increase -- provided the funds necessary to continue operating our business in the most efficient way for our customers while still keeping their electricity rates among the lowest in North America," said Bell.

gbellett@png.canwest.com

TOP



Electricity - Hydro puts $339m in surplus pot

Brian Lewis
The Province
30-Jun-2005


The provincial government's record $2.6-billion surplus for the recently completed fiscal year, which was disclosed in yesterday's audited financial statements, was given a significant boost by B.C. Hydro ratepayers.

In releasing its fiscal 2005 financial statements, Hydro said a stronger earnings year allowed it to pay $339 million into Victoria's coffers under the utility's obligation to pay the province a special dividend each year.

That figure compares with a $73-million dividend payment in the previous year.

The $339-million payment was in addition to a consolidated net income of $402 million that Hydro generated during the year ending March 31, 2005. While that figure was below earlier Hydro forecasts, it represented an increase of $291 million over 2004 earnings. Included in the earnings was a one-time payment of $137 million from Alcan Inc. as a result of an arbitration award under a power purchase and sales agreement.

Hydro's bottom line was also affected by higher energy costs of $379 million and a significant part of those extra costs was due to increased electricity imports to meet domestic demand.

"Through our long-term goal of energy self-sufficiency, B.C. Hydro will be working to de-crease this reliance on imports and the costs that it brings," said Alister Cowan, Hydro's chief financial officer.

Export revenues rose to $1.02 billion from $871 million last year.

blewis@png.canwest.com

TOP

Posted by Arthur Caldicott on June 30, 2005

June 28, 2005

Neufeld defends Duke decision

Richard Neufeld
The Province
28-Jun-2005

The cancellation of the Duke Point power project did not cost B.C. ratepayers $120 million, as suggested by Mike Smyth.

The $120 million was the direct result of two failed NDP projects that our government was forced to write off almost two years ago.

Fifty million dollars of that write-off was directly related to the Georgia Strait Crossing Project, the NDP-initiated pipeline that was not required to meet Vancouver Island's gas needs.

The remaining $70 million was almost entirely attributable to the NDP's decision to commit to purchase two turbines.

The cancellation of the Duke Point Power project is unrelated to these costs, and will not have any affect on B.C. Hydro rates.

B.C. Hydro has said it is confident it can maintain reliability planning criteria on Vancouver Island.

It intends extending the life of the current transmission cables, and will make load curtailment agreements with industrial customers until the new cables are constructed.

Richard Neufeld,
B.C. Minister of Energy, Mines and Petroleum Resources

Posted by Arthur Caldicott on June 28, 2005

June 27, 2005

Tomgram: Michael Klare on a Saudi Oil Bombshell

Tom Englehardt
www.TomDispatch.com
June 26, 2005

Right now, the price of a barrel of crude oil is flirting with $60; a Chinese state-controlled oil company has made an $18.5 billion bid for the American oil firm, Unocal -- you remember, the company that fought to put a projected $1.9 billion natural gas pipeline through Taliban Afghanistan and hired as its consultant Zalmay Khalilzad, presently our Afghan ambassador and soon to be our ambassador to Iraq; world energy consumption, according to last week's British Financial Times, surged 4.3% last year (the biggest rise since 1984), oil use by 3.4% (the biggest rise since 1978); in the meantime, Exxon -- which just had the impunity to hire Philip Cooney after he was accused of doctoring government reports on climate change and resigned as chief of staff of the White House Council on Environmental Quality ("The cynical way to look at this," commented Kert Davies, U.S. research director for Greenpeace, "is that ExxonMobil has removed its sleeper cell from the White House and extracted him back to the mother ship.") -- has quietly issued a report, The Outlook for Energy: A 2030 View, predicting that the moment of "peak oil" is only a five-year hop-skip-and-a-pump away; "Oil Shockwave," a "war game" recently conducted by top ex-government officials in Washington, including two former directors of the CIA, found the United States "all but powerless to protect the American economy in the face of a catastrophic disruption of oil markets," which was all too easy for them to imagine ("The participants concluded almost unanimously that they must press the president to invest quickly in promising technologies to reduce dependence on overseas oil..."); and oil tycoon Boone Pickens, chairman of the billion-dollar hedge fund BP Capital Management, is having the time of his life. ("I've never had so much fun…") Over the last five years, he claims, his bet that oil prices would rise has "made him more money... than he earned in the preceding half century hunting for riches in petroleum deposits and companies," and he is predicting that prices will only go higher with much more "pain at the pump." Ah, the good life. And if you don't quite recognize the new look of this fast-shifting energy landscape, then how are you going to feel if the Age of Petroleum turns out to be drawing -- more rapidly than most people imagine -- to a close?

Well, hold your hats, folks. Below Michael Klare, an expert on "resource wars" and the author of the indispensable Blood and Oil: The Dangers and Consequences of America's Growing Petroleum Dependency, discusses a new bombshell book by oil industry insider Matthew Simmons, and his unsettling news that everything you've heard about those inexhaustible supplies of Saudi oil, which are supposed to keep the world floating for decades, simply isn't so. This is real news and absorbing its implications is no small matter.

Imagine, just for the sake of argument, where we might be today, energy-wise, if Americans -- and American legislators –- had actually taken Jimmy Carter's famed 1979 "moral equivalent of war" speech on energy conservation seriously, but rejected his Carter Doctrine and the Rapid Deployment Joint Task Force that went with it -- both of which set us on our present path to war(s) in the Middle East. Here's part of what Carter said to the American people on television that long-ago night:


"Beginning this moment, this nation will never use more foreign oil than we did in 1977 -- never. From now on, every new addition to our demand for energy will be met from our own production and our own conservation. The generation-long growth in our dependence on foreign oil will be stopped dead in its tracks right now and then reversed as we move through the 1980s, for I am tonight setting the further goal of cutting our dependence on foreign oil by one-half by the end of the next decade -- a saving of over 4-1/2 million barrels of imported oil per day… To give us energy security, I am asking for the most massive peacetime commitment of funds and resources in our nation's history to develop America's own alternative sources of fuel -- from coal, from oil shale, from plant products for gasohol, from unconventional gas, from the sun… I'm proposing a bold conservation program to involve every state, county, and city and every average American in our energy battle. This effort will permit you to build conservation into your homes and your lives at a cost you can afford…"

Well, it never happened. Now consider Matt Simmons' news and where we are today. Tom (Tom Englehardt)

Matt Simmons' Bombshell
The Impending Decline of Saudi Oil Output
By Michael T. Klare

For those oil enthusiasts who believe that petroleum will remain abundant for decades to come -- among them, the President, the Vice President, and their many friends in the oil industry -- any talk of an imminent "peak" in global oil production and an ensuing decline can be easily countered with a simple mantra: "Saudi Arabia, Saudi Arabia, Saudi Arabia." Not only will the Saudis pump extra oil now to alleviate global shortages, it is claimed, but they will keep pumping more in the years ahead to quench our insatiable thirst for energy. And when the kingdom's existing fields run dry, lo, they will begin pumping from other fields that are just waiting to be exploited. We ordinary folk need have no worries about oil scarcity, because Saudi Arabia can satisfy our current and future needs. This is, in fact, the basis for the administration's contention that we can continue to increase our yearly consumption of oil, rather than conserve what's left and begin the transition to a post-petroleum economy. Hallelujah for Saudi Arabia!

But now, from an unexpected source, comes a devastating challenge to this powerful dogma: In a newly-released book, investment banker Matthew R. Simmons convincingly demonstrates that, far from being capable of increasing its output, Saudi Arabia is about to face the exhaustion of its giant fields and, in the relatively near future, will probably experience a sharp decline in output. "There is only a small probability that Saudi Arabia will ever deliver the quantities of petroleum that are assigned to it in all the major forecasts of world oil production and consumption," he writes in Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. "Saudi Arabian production," he adds, italicizing his claims to drive home his point, "is at or very near its peak sustainable volume . . . and it is likely to go into decline in the very foreseeable future."

In addition, there is little chance that Saudi Arabia will ever discover new fields that can take up the slack from those now in decline. "Saudi Arabia's exploration efforts over the last three decades were more intense than most observers have assumed," Simmons asserts. "The results of these efforts were modest at best."

If Simmons is right about Saudi Arabian oil production -- and the official dogma is wrong -- we can kiss the era of abundant petroleum goodbye forever. This is so for a simple reason: Saudi Arabia is the world's leading oil producer, and there is no other major supplier (or combination of suppliers) capable of making up for the loss in Saudi production if its output falters. This means that if the Saudi Arabia mantra proves deceptive, we will find ourselves in an entirely new world -- the "twilight age" of petroleum, as Simmons puts it. It will not be a happy place.

Before taking up the implications of a possible decline in Saudi Arabian oil output, it is important to look more closely at the two sides in this critical debate: the official view, as propagated by the U.S. Department of Energy (DoE), and the contrary view, as represented by Simmons' new book.

The prevailing view goes like this: According to the DoE, Saudi Arabia possesses approximately one-fourth of the world's proven oil reserves, an estimated 264 billion barrels. In addition, the Saudis are believed to harbor additional, possible reserves containing another few hundred billion barrels. On this basis, the DoE asserts that "Saudi Arabia is likely to remain the world's largest oil producer for the foreseeable future."

To fully grasp Saudi Arabia's vital importance to the global energy equation, it is necessary to consider the DoE's projections of future world oil demand and supply. Because of the rapidly growing international thirst for petroleum -- much of it coming from the United States and Europe, but an increasing share from China, India, and other developing nations -- the world's expected requirement for petroleum is projected to jump from 77 million barrels per day in 2001 to 121 million barrels by 2025, a net increase of 44 million barrels. Fortunately, says the DoE, global oil output will also rise by this amount in the years ahead, and so there will be no significant oil shortage to worry about. But over one-fourth of this additional oil -- some 12.3 million barrels per day -- will have to come from Saudi Arabia, the only country capable of increasing its output by this amount. Take away Saudi Arabia's added 12.3 million barrels, and there is no possibility of satisfying anticipated world demand in 2025.

One could, of course, suggest that some other oil producers will step in to provide the additional supplies needed, notably Iraq, Nigeria, and Russia. But these countries together would have to increase their own output by more than 100% simply to play their already assigned part in the Department of Energy's anticipated global supply gain over the next two decades. This in itself may exceed their production capacities. To suggest that they could also make up for the shortfall in Saudi production stretches credulity to the breaking point.

It is not surprising, then, that the Department of Energy and the Saudi government have been very nervous about the recent expressions of doubt about the Saudi capacity to boost its future oil output. These doubts were first aired in a front-page story by Jeff Gerth in the New York Times on February 25, 2004. Relying, to some degree, on information provided by Matthew Simmons, Gerth reported that Saudi Arabia's oil fields "are in decline, prompting industry and government officials to raise serious questions about whether the kingdom will be able to satisfy the world's thirst for oil in coming years."

Gerth's report provoked a barrage of counter-claims by the Saudi government. Their country, Saudi officials insisted, could increase its production and satisfy future world demand. "[Saudi Arabia] has immense proven reserves of oil with substantial upside potential," Abdallah S. Jum'ah, the president of Saudi Aramco, declared in April 2004. "We are capable of expanding capacity to high levels rapidly, and of maintaining those levels for long periods of time." This exchange prompted the DoE to insert a sidebar on this topic in its International Energy Outlook for 2004. "In an emphatic rebuttal to the New York Times article [of February 24]," the DoE noted, "Saudi Arabia maintained that its oil producers are confident in their ability to sustain significantly higher levels of production capacity well into the middle of this century." This being the case, we ordinary folks need not worry about future shortages. Given Saudi abundance, the DoE wrote, we "would expect conventional oil to peak closer to the middle than to the beginning of the 21st century."

In these, and other such assertions, U.S. oil experts always come back to the same point: Saudi oil managers "are confident in their ability" to achieve significantly higher levels of output well into the future. In no instance, however, have they provided independent verification of this capacity; they simply rely on the word of those oil officials, who have every incentive to assure us of their future reliability as suppliers. In the end, therefore, it comes down to this: America's entire energy strategy, with its commitment to an increased reliance on petroleum as the major source of our energy, rests on the unproven claims of Saudi oil producers that they can, in fact, continuously increase Saudi output in accordance with the DoE's predictions.

And this is where Matthew Simmons enters the picture, with his meticulously documented book showing that Saudi producers cannot be trusted to tell the truth about future Saudi oil output.

First, a few words about the author of Twilight in the Desert. Matthew ("Matt") Simmons is not a militant environmentalist or anti-oil partisan; he is Chairman and CEO of one of the nation's leading oil-industry investment banks, Simmons & Company International. For decades, Simmons has been pouring billions of dollars into the energy business, financing the exploration and development of new oil reservoirs. In the process, he has become a friend and associate of many of the top figures in the oil industry, including George W. Bush and Dick Cheney. He has also accumulated a vast storehouse of information about the world's major oil fields, the prospects for new discoveries, and the techniques for extracting and marketing petroleum. There is virtually no figure better equipped than Simmons to assess the state of the world's oil supply. And this is why his assessment of Saudi Arabia's oil production capacity is so devastating.

Essentially, Simmons argument boils down to four major points: (1) most of Saudi Arabia's oil output is generated by a few giant fields, of which Ghawar -- the world's largest -- is the most prolific; (2) these giant fields were first developed 40 to 50 years ago, and have since given up much of their easily-extracted petroleum; (3) to maintain high levels of production in these fields, the Saudis have come to rely increasingly on the use of water injection and other secondary recovery methods to compensate for the drop in natural field pressure; and (4) as time goes on, the ratio of water to oil in these underground fields rises to the point where further oil extraction becomes difficult, if not impossible. To top it all off, there is very little reason to assume that future Saudi exploration will result in the discovery of new fields to replace those now in decline.

Twilight in the Desert is not an easy book to read. Most of it consists of a detailed account of Saudi Arabia's vast oil infrastructure, relying on technical papers written by Saudi geologists and oil engineers on various aspects of production in particular fields. Much of this has to do with the aging of Saudi fields and the use of water injection to maintain high levels of pressure in their giant underground reservoirs. As Simmons explains, when an underground reservoir is first developed, oil gushes out of the ground under its own pressure; as the field is drained of easily-extracted petroleum, however, Saudi oil engineers often force water into the ground on the circumference of the reservoir in order to drive the remaining oil into the operating well. By drawing on these technical studies -- cited here for the first time in a systematic, public manner -- Simmons is able to show that Ghawar and other large fields are rapidly approaching the end of their productive lives.

Simmons' conclusion from all this is unmistakably pessimistic: "The ‘twilight' of Saudi Arabian oil envisioned in this book is not a remote fantasy. Ninety percent of all the oil that Saudi Arabia has ever produced has come from seven giant fields. All have now matured and grown old, but they still continue to provide around 90 percent of current Saudi oil output … High-volume production at these key fields ... has been maintained for decades by injecting massive amounts of water that serves to keep pressures high in the huge underground reservoirs . . . When these water projection programs end in each field, steep production declines are almost inevitable."

This being the case, it would be the height of folly to assume that the Saudis are capable of doubling their petroleum output in the years ahead, as projected by the Department of Energy. Indeed, it will be a minor miracle if they raise their output by a million or two barrels per day and sustain that level for more than a year or so. Eventually, in the not-too-distant future, Saudi production will begin a sharp decline from which there is no escape. And when that happens, the world will face an energy crisis of unprecedented scale.

The moment that Saudi production goes into permanent decline, the Petroleum Age as we know it will draw to a close. Oil will still be available on international markets, but not in the abundance to which we have become accustomed and not at a price that many of us will be able to afford. Transportation, and everything it effects -- which is to say, virtually the entire world economy -- will be much, much more costly. The cost of food will also rise, as modern agriculture relies to an extraordinary extent on petroleum products for tilling, harvesting, pest protection, processing, and delivery. Many other products made with petroleum -- paints, plastics, lubricants, pharmaceuticals, cosmetics, and so forth -- will also prove far more costly. Under these circumstances, a global economic contraction -- with all the individual pain and hardship that would surely produce -- appears nearly inevitable.

If Matt Simmons is right, it is only a matter of time before this scenario comes to pass. If we act now to limit our consumption of oil and develop non-petroleum energy alternatives, we can face the "twilight" of the Petroleum Age with some degree of hope; if we fail to do so, we are in for a very grim time indeed. And the longer we cling to the belief that Saudi Arabia will save us, the more painful will be our inevitable fall.

Given the high stakes involved, there is no doubt that intense efforts will be made to refute Simmons' findings. With the publication of his book, however, it will no longer be possible for oil aficionados simply to chant "Saudi Arabia, Saudi Arabia, Saudi Arabia" and convince us that everything is all right in the oil world. Through his scrupulous research, Simmons has convincingly demonstrated that -- because all is not well with Saudi Arabia's giant oilfields -- the global energy situation can only go downhill from here. From now on, those who believe that oil will remain abundant indefinitely are the ones who must produce irrefutable evidence that Saudi Arabia's fields are, in fact, capable of achieving higher levels of output.

Michael T. Klare is a professor of peace and world security studies at Hampshire College and the author of Blood and Oil: The Dangers and Consequences of America's Growing Petroleum Dependency (Metropolitan Books).

Copyright 2005 Michael T. Klare


Posted by Arthur Caldicott on June 27, 2005

Change of Energy

Alisa Gordaneer
Monday Magazine
Jun 22 2005

BC Hydro shocked us all late last week, when it announced that the Duke Point power plant project was toast. No, it didn't use those very words-presumably, power companies don't care for analogies that call to mind anything that implies a mishap with electricity-but the essential meaning was the same: There would be no gas-powered generating plant near Nanaimo after all. Almost as soon as a group of environmentalists won the right to appeal the project, the company announced it wasn't happening after all. You'd almost think, based on how quickly they backed down, that they might have been worried about what would be revealed by an environmental appeal. Could it have been proven that the power plant would be environmentally hazardous? Is it possible it wasn't terribly necessary after all? We're not likely to find out now.

It's thanks to the efforts of a group of environmentalists-the GSX Concerned Citizens Coalition, the B.C. Sustainable Energy Association, and the Society Promoting Environmental Conservation-that the project is dead. And hey, nobody even had to lie down in front of trucks, or chain themselves to a pipeline. How very civilized and new millennium.

Now, even though the Duke Point project is no more, the Hydro company still seems undaunted, and may try to pull a similar project out of its hat elsewhere in B.C.. Clearly, more paperwork for environmentalists is in the works, as are more questions about the value of this particular means of electricity generation.

Remember, this project was meant to create more power here on Vancouver Island. For what? All our big-screen TVs, air-conditioners and home cappuccino machines? Nice-but it's becoming clear such plans come with an environmental price tag we may not be able to afford. Now that Duke Point is, yes, toast, we can look realistically at two different, more sustainable options. First, we can see the possibility for more alternative energy here on Vancouver Island. Second, if we're worried about there being enough power for all those toys, we can consider the bigger question: whether we really need them in the first place. Now that's energy well spent. M

Posted by Arthur Caldicott on June 27, 2005

June 26, 2005

Duke Point's demise puts Site C back in picture

Brian Lewis, The Province, 26 June 2005
canada.com, 27 June 2005
Paul Willcocks, Prince George Citizen, 28 June 2005
Globe and Mail, 28 June 2005




Duke Point's demise puts Site C back in picture

Brian Lewis
The Province
26-Jun-2005

What the heck is going on at B.C. Hydro? Part of its mandate is to ensure that B.C. has a reliable supply of electricity at the lowest-possible cost.

Until a few years ago, all of our demand was met by domestically-produced power from our vast hydro-electric resources. We even had surpluses to sell to the electricity-hungry U.S.

But now, an increasing share of B.C. electricity demand is being met by higher-cost, market-priced imported power. And, frankly, this scenario will worsen before it gets better because there appear to be some serious short-circuits in the way Hydro operates.

Its recent decision to cancel the $285-million Duke Point power plant on Vancouver Island -- after spending about $120 million on it -- is the latest example.

The Duke Point folly began with an even larger project that included a Washington State-to-Vancouver Island natural-gas pipeline to feed its generators. The Georgia Strait pipeline caused such a public backlash that it was shelved earlier.

But Duke Point itself was being pushed even though it would only serve for a few years to meet Island demand until a new transmission line could be built from the Mainland. Other cheaper alternatives, on which Hydro must now rely, were dismissed by the utility.

Finally, it took the B.C. Court of Appeal to bring some sense to this issue. It recently gave opponents of Duke Point leave to appeal the spring decision by the B.C. Utilities Commission to give the project, near Nanaimo, a green light.

It did so on the grounds that the BCUC's hearing process was unfair. The Commission, by the way, is supposed to be the public's shield against questionable projects.

It failed.

Because of concerns that Duke Point wouldn't be completed on schedule, Hydro's board of directors has now axed the project.

Regardless, we'll still need more electricity if B.C.'s economy is to continue flourishing.

So, where do we go from here?

Welcome to Site C, the long-shelved hydro-electric mega-project slated for the Peace River near Fort St. John.

The project, which regulators turned down in the early 1980s because there wasn't enough demand for its 900-megawatt capacity, is back on the front-burner in Hydro's ivory tower.

Yes, major environmental concerns will rise again since Site C requires more Peace River flooding. But even in these earliest of planning days it looks as if Hydro's tripping over its own feet again.

In recent consultations with the energy community and other stakeholders, Hydro pitched Site C's latest costs at about $2.3 billion even though costs in original 1981 application were pegged at $2.7 billion.

I'm told that when Hydro was pressed to reconcile this astounding difference, it had simply dropped some big ticket items that were included in 1981 including interest costs during construction, inflation and, most importantly, the costs of building the required new transmission line to the Lower Mainland.

Nor, I'm also told, has it done a basic economic/financial model on the project. Adding these items to the bill could easily put Site C's price tag at $4 billion, sources say.

It may be that even at this price, Site C would be B.C.'s best option for new electricity supply.

But, given its record, domestic electricity isn't the only commodity in short supply at Hydro. Public confidence is a tad rare too,

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

TOP



Peace River dam idea revived

canada.com
June 27, 2005

VICTORIA -- B.C. Energy Minister Richard Neufeld is musing about the possible revival of one of the most controversial hydroelectric projects in recent history.

Neufeld says the "Site C" proposal to dam the Peace River may have to be revived now that B-C Hydro has decided to scrap the Duke Point gas power plant scheme on Vancouver Island.

Neufeld says the province is looking at a shortage of hydroelectricity in the future, adding that water power is a good way to develop electricity.

Twenty years ago B.C. Hydro caved in to public pressure and shelved the $2.1 billion "Site C" hydroelectric proposal.

But studies on the 900 megawatt facility were dusted off again last year.

However Hydro spokeswoman Elisha Moreno says the area has not been selected as a "preferred option."

The proposal calls for a third dam on the Peace River near Fort St. John and the flooding of thousands of hectares of land.

Broadcast News 2005

TOP



Peace River super dam closer to reality

Paul Willcocks
Prince George Citizen
28-Jun-2005

VICTORIA -- A massive dam across the Peace River is a step closer to reality after the collapse of a Vancouver Island power plant, Energy Minister Richard Neufeld said Monday.

Neufeld said the cancelled Duke Point project leaves B.C. Hydro needing more power, and the Site C megaproject is one solution.

"I would think Site C is something we better look at in real terms," Neufeld said from Calgary, where he is part of a trade mission by B.C. oil and gas service companies.

The $2.1-billion megaproject would tap the last great hydroelectric power source in B.C., with a huge earthen dam spanning the Peace River and producing 900 megawatts of power. That's the equivalent of three or four gas-powered plants.

The Site C project, which would be built near Fort St. John, was abandoned in 1991 after a battle with environmental groups.

But Neufeld said B.C. Hydro has updated its plans for the project and is looking at including the dam in its next energy plan, which will be submitted to the B.C. Utilities Commission by the end of this year.

Hydro is spending $1.9 million this year to update its plans for the dam, and hopes to spend another $5.5 million next year.

The corporation sought public comments on the Site C dam earlier this year as it toured northeastern communities.

The dam is likely to be the centre of controversy again if the government moves ahead with the project.

B.C. Hydro's own plan noted that environmental issues remain.

Thousands of acres of land would be flooded, about 25 farm families would lose their homes, and summer water temperatures in the river below the dam would rise, affecting fish.

The project would require extensive consultations with First Nations, who fear the loss of hunting grounds.

But Hydro power is generally considered less environmentally damaging than coal or gas-fired thermal plants, the most likely alternatives. The Kyoto Accord, which aims to restrict the production of greenhouse gases, also encourages development of the project.

And the Peace River has already been dammed, so no wild rivers will be affected.

Hudson's Hope Mayor Lenore Harwood, whose community would be affected by flooding, told BC Hydro earlier this year that she would rather see improvements to boost capacity at existing dams and more emphasis on reducing demand.

Site C still faces many hurdles.

The utilities commission is charged with taking a tough look at B.C. Hydro's plans and cost projections to make sure the dam is the best alternative for consumers. The ultimate approval would have to come from the cabinet, with the first tough decisions expected by early next year.

TOP



B.C. Hydro may reopen plans for Peace River dam



Globe and Mail
June 28, 2005

Victoria -- B.C. Energy Minister Richard Neufeld is musing about the possible revival of one of the most controversial hydroelectric projects in recent history.

Mr. Neufeld said the Site C proposal to dam the Peace River may have to be revived now that B.C. Hydro has decided to scrap the Duke Point gas power plant scheme on Vancouver Island.

Twenty years ago B.C. Hydro yielded to public pressure and shelved the $2.1-billion Site C hydroelectric proposal.

But studies on the 900-megawatt operation were dusted off again last year. Hydro spokeswoman Elisha Moreno said the area has not been selected as a "preferred option."

The proposal calls for a third dam on the Peace River near Fort St. John and the flooding of thousands of hectares of land.

TOP

Posted by Arthur Caldicott on June 26, 2005

Television coverage of Duke Point Power decision

BCTV
17-Jun-2005 17:08 BC HYDRO has decided to abandon its plans for a
gas-fired generator plant south of Nanaimo. The project was scheduled
for construction at Duke Point to improve the power supply for the
Vancouver Island, but opponents believed the plant would have been
unnecessary and hazardous to the environment.(681K)
21-Jun-2005 05:34 PREMIER CAMPBELL is rejecting calls for a public
inquiry into BC Hydro's decision to scrap the Duke Point power plant
near Nanaimo. Meanwhile, MLA Leonard Krog says BC Hydro needs to look
into other renewable power sources. Krog comments. (1617K)
SHAW - VOICE OF BC
22-Jun-2005 20:31 POWER GENERATION - The demise of the Duke Point power
project has put the spotlight on BC Hydro and the use of alternative
sources of energy. Carole James, who is critical of the management at
the Crown corporation for not looking into alternatives to the gas-fired
power plant, says wind power is an option that should be explored.
Furthermore, the NDP leader is encouraging the provincial government to
remind BC Hydro that part of its mandate is to look at alternative
sources of energy. Includes a recorded comment by Jock Finlayson.(3229K)

Posted by Arthur Caldicott on June 26, 2005

Media medley following Duke Point decision

Vancouver Sun
24-Jun-2005 Mayor was out of step on the need for power plant (p. A16)
25-Jun-2005 Hydro's bright lights will surely share the pain (p. E06)
The Province
24-Jun-2005 Duke Point mess begs answers (p. A10)
Times Colonist (Victoria)
25-Jun-2005 Death of project won't bring chaos (p. A11)
25-Jun-2005 Hydro vision gives way to hallucinations (p. A11)
25-Jun-2005 Boondoggle demands judicial inquiry (p. A11)
25-Jun-2005 Restraint runs both ways (p. A11)
The Daily News (Nanaimo)
24-Jun-2005 Route designer never took transit (p. A06)
CKNW
24-Jun-2005 19:09 CKNW Nightline BC DUKE POINT POWER - Michael says BC'ers don't' realize what a "boondoggle" the now cancelled Duke Point Power Project was as $120m in taxpayer's money was thrown away in an attempt to develop the proposal. Michael says the Auditor General needs to do an inquiry on this project but don't hold your breath for that to happen. Richard Neufeld and Premier Campbell are mentioned.


Death of project won't bring chaos

Thomas Hackney
Times Colonist (Victoria)
25-Jun-2005

B.C. Hydro's dramatic cancellation of the Duke Point Power electricity purchase agreement has triggered outrage and heated rhetoric, including demands for inquiries, visions of never-ending regulatory reviews and the by-now-standard myth about looming blackouts.

Perhaps people are so used to reliable electricity that their attention can only be caught by much sound and fury. If so, the facts will put all but true enthusiasts to sleep.

The B.C. Transmission Corporation confidently expects to maintain service to the Island with existing means until the new sub-sea electrical cables can be brought on line by October 2008. The Island's residential and commercial customers do not face more blackouts.

Industrial customers may be asked to curtail their electricity use at times, but they prefer that to paying higher rates for the new power plant. Public concerns with the transmission reinforcement have focused on technical aspects of the project, not its basic purpose.

Phase One of the new cable system will bring the Island 600 MW of electricity from the mainland, and Phase Two will bring another 600 MW -- plenty to power us for quite a few years.

Granted, this does not address the ultimate source of the electricity, but another colourful myth -- that there aren't enough resources on the mainland -- is also groundless. Power producers are lining up to bid for contracts with B.C. Hydro, and Hydro itself can make some very cost-effective capacity upgrades at the Revelstoke and Mica dams.

Calls for an inquiry are understandable, given the $120 million of write-offs and the frustrated regulatory outcome. But an inquiry would be unlikely to do much good. Until the Energy Plan of November 2002, Hydro was under government orders to build on-Island generation.

Then overnight, Hydro was forced to justify the plan before the Utilities Commission. While it was right to take the issue off cabinet's desk, the timing of the decision was highly disruptive to the process -- and Hydro can't be blamed for that.

Meanwhile, less dramatic but far more important is the present series of reviews of B.C. Hydro's electricity plans. Major decisions will be taken on whether and how to incorporate wind power into the grid. The right plan could bring about a whole new industry in B.C. The competition includes coal-fired generation, and cabinet has reserved the right to decide on the controversial Site C, the last major dam development in B.C.

A new tariff will be tabled toward year-end, which may re-jig the relative rates paid by residential, commercial and industrial customers.

These things may not make good headline material, but they will shape our future far more than the Duke Point fiasco will.

Thomas Hackney is president of the GSX Concerned Citizens Coalition.


Hydro's bright lights will surely share the pain

Peter W. Pratchett
Vancouver Sun
25-Jun-2005

Re: Duke Point fiasco requires an inquiry to shed light on BC Hydro and regulators, June 22

So BC Hydro has written off most of its $120 million investment on the failed Duke Point power project. Any bets as to how much of a bonus the BC Hydro brass will award themselves this year for successfully spending so much of Joe Public's money? Any bets as to how much unionized workers will be asked to forego in terms of wage increases in upcoming contracts?

Peter W. Pratchett

Vancouver


Hydro vision gives way to hallucinations

Richard Berg
Times Colonist (Victoria)
25-Jun-2005

The cancellation of the Duke Point power project points to the utter failure of B.C. Hydro and the provincial government to make the capital investments necessary to avoid a catastrophic electrical shortfall after the year 2014. And a reliance on private power producers and private financing for the building of what should be major public power projects is irresponsible and dangerous.

Vital capital expenditures requiring a total of $5 billion or more are repowering Burrard Thermal (thermal or nuclear), building Peace Site C, and making transmission improvements and upgrades to the Island and from the B.C. Interior. Such projects take years to bring into realization (12 years for Site C).

But instead of the vision of the late W.A.C. Bennett, premier in the 1950s and 1960s, we have the hallucinations and deferrals (procrastinations) of the provincial government and its lackeys, a hapless, ineffective B.C. Hydro and the British Columbia Transmission Corporation, which recently caved in on the proper routing for new 230 Kv cables to the Island.

Unless repowered, Burrard Thermal, originally producing 960 megawatts, will shut down in 2014, leaving no backup power for the Lower Mainland and Vancouver Island, and no easy way of meeting peak winter demand for electricity.

The problems with transmission cables mask the facts of a lack of proper planning, no provision for public financing and the consequent higher electrical rates, and no approvals for the new projects needed to generate up to 22,000 gigawatt hours of extra electricity by 2025. Once Burrard Thermal shuts down and present excess capacity is used up, the lights go out.

Richard Berg,

Port Alberni.


Boondoggle demands judicial inquiry

Bob Ritchie
Times Colonist (Victoria)
25-Jun-2005

Wow! Good news for the residents of Vancouver Island. B.C. Hydro has cancelled the proposal to construct the very costly power plant at Duke Point.

This electricity generating plant was to be powered by very expensive natural gas.

Despite its approval by the Public Utilities Commission and the desires of the provincial energy minister, it's construction was challenged in the courts. The case eventually got to the B.C. Court of Appeal, which ruled the approvals were flawed and they were to come under a full review. BC Hydro decided against going through the process a second time and abandoned it.

If it had been built, Hydro customers would have been committed to paying over $40 million per year whether the plant produced electricity or not. Plus, we were apparently responsible for paying the cost of the natural gas that produces the electricity.

To show what a boondoggle this project was, Energy Minister Richard Neufeld has since told us that he wasn't worried as we had a secure power supply to 2034. Millions of dollars have been wasted on this sad joke and many of us feel that the new attorney general, Wally Oppal, should call for a judicial inquiry.

Bob Ritchie,
Qualicum Beach.


Restraint runs both ways

Chris McDowell
Times Colonist (Victoria)
25-Jun-2005

It's been fairly hard to miss lately the stories in the news concerning B.C. Hydro and their decision to not go ahead with the Duke Point development in Nanaimo. In the public announcement of their decision, they said we Vancouver Island residents will need to exercise restraint in our power consumption.

In light of what I have witnessed recently, "restraint" is an odd word for B.C. Hydro to use.

My wife and I have lived at this address in Saanich for more than 19 years. When we first moved in, the Hydro employee whose job it was to read the meters would go from house to house by foot and enter the data from the meter into a hand-held unit. A couple of years ago (maybe more) Hydro issued mountain bikes to the meter readers. Upon seeing this I was pleased to see the change to a more efficient "green" method.

Lately, Hydro seems to have switched to a relatively non-green and terribly wasteful method of collecting the residents' electrical use data. The meter reader for our street now drives from house to house in a small SUV. I can understand the use of vehicles in the more rural communities where the properties are some distance apart, but driving from one driveway to the next where the homes are side by side?

Hydro was crying the blues not so long ago saying they needed a rate increase. "Restraint?" It goes both ways.

Chris McDowell,

Saanich.

Posted by Arthur Caldicott on June 26, 2005

June 25, 2005

Death of project won't bring chaos

Thomas Hackney
Times Colonist (Victoria)
25-Jun-2005

B.C. Hydro's dramatic cancellation of the Duke Point Power electricity purchase agreement has triggered outrage and heated rhetoric, including demands for inquiries, visions of never-ending regulatory reviews and the by-now-standard myth about looming blackouts.

Perhaps people are so used to reliable electricity that their attention can only be caught by much sound and fury. If so, the facts will put all but true enthusiasts to sleep.

The B.C. Transmission Corporation confidently expects to maintain service to the Island with existing means until the new sub-sea electrical cables can be brought on line by October 2008. The Island's residential and commercial customers do not face more blackouts.

Industrial customers may be asked to curtail their electricity use at times, but they prefer that to paying higher rates for the new power plant. Public concerns with the transmission reinforcement have focused on technical aspects of the project, not its basic purpose.

Phase One of the new cable system will bring the Island 600 MW of electricity from the mainland, and Phase Two will bring another 600 MW -- plenty to power us for quite a few years.

Granted, this does not address the ultimate source of the electricity, but another colourful myth -- that there aren't enough resources on the mainland -- is also groundless. Power producers are lining up to bid for contracts with B.C. Hydro, and Hydro itself can make some very cost-effective capacity upgrades at the Revelstoke and Mica dams.

Calls for an inquiry are understandable, given the $120 million of write-offs and the frustrated regulatory outcome. But an inquiry would be unlikely to do much good. Until the Energy Plan of November 2002, Hydro was under government orders to build on-Island generation.

Then overnight, Hydro was forced to justify the plan before the Utilities Commission. While it was right to take the issue off cabinet's desk, the timing of the decision was highly disruptive to the process -- and Hydro can't be blamed for that.

Meanwhile, less dramatic but far more important is the present series of reviews of B.C. Hydro's electricity plans. Major decisions will be taken on whether and how to incorporate wind power into the grid. The right plan could bring about a whole new industry in B.C. The competition includes coal-fired generation, and cabinet has reserved the right to decide on the controversial Site C, the last major dam development in B.C.

A new tariff will be tabled toward year-end, which may re-jig the relative rates paid by residential, commercial and industrial customers.

These things may not make good headline material, but they will shape our future far more than the Duke Point fiasco will.

Thomas Hackney is president of the GSX Concerned Citizens Coalition.

Posted by Arthur Caldicott on June 25, 2005

$100-M Terasen facility `up in air'

Robert Barron
Daily News
June 23, 2005

The future of Terasen's proposed $100 million liquefied natural gas storage facility in Cassidy is "up in the air" now that BC Hydro has terminated the agreement to build a gas-fired electrical generation plant at Duke Point, says a company spokesman.

Dean Pelkey said, now that the power plant project has been terminated, Terasen will have to reexamine the demand for natural gas on Vancouver Island, and associated load factors at present and into the future before any decisions are made on whether the facility will be built.

"Depending on our findings over the next few months, we may decide to move forward with the construction of the facility immediately, or postpone it for a year or two," he said.

"We still believe the storage facility is needed to help supply the natural gas needs on the Island and we think it's just a matter of when the facility will be built."

The proposal from Terasen, formerly Centra Gas, is to build a storage tank capable of holding one-billion cubic feet of liquefied natural gas near Timberlands Road.

The facility was intended to feed natural gas to the Duke Point plant, as well as increase Vancouver Island's natural gas supply security to meet current and future gas requirements.

Pelkey said, while the project has already been given the green light to proceed from the B.C. Utilities Commission, he expects Terasen will have to reapply for permission to proceed with the facility with a revamped business plan, if Terasen decides to continue.

"We'd apply to the BCUC for the same project, but we'd have to show it still makes economic sense and the demand is there to justify its construction without the Duke Point project," he said.

Posted by Arthur Caldicott on June 25, 2005

June 22, 2005

Make pipe decision

Peter Morton
Washington Bureau Chief
National Post
22-Jun-2005

WASHINGTON - The Alaska government is growing impatient with Ottawa over the delay in making a decision on the Canadian leg of the massive US$20-billion Alaska natural gas pipeline, the state governor said yesterday.

And Alaska is keen on taking an ownership stake in the Canadian leg through British Columbia and Alberta, Gov. Frank Murkowski told the Financial Post in an exclusive interview in Washington.

Mr. Murkowski revealed that if TransCanada Corp. gets the approval to build the entire 5,600-kilometre pipeline, it might be eligible for US$18-billion in U.S. government loan guarantees.

"It's a quid-pro-quo thing," Mr. Murkowski said, adding that TransCanada has not said whether Alaska would be offered an equity interest in the longer Canadian portion of the pipeline.

Mr. Murkowski said he was promised by Prime Minister Paul Martin in February the government would make up its mind "in a week to 10 days" but he is still waiting. "We urged them to make a decision," he said.

The outspoken governor made it clear he believes it would be simpler for Mr. Martin to give TransCanada the rights for the Canadian pipeline portion because regulatory permits were issued 25 years ago. "It appears there is considerable advantage to the value of those grandfathered [rights]," he said.

As a result, Mr. Murkowski said the regulatory process would be streamlined, avoiding the process disputes and aboriginal claims that have bogged down the $7-billion Mackenzie Valley gas pipeline.

He was referring to the 25-year-old Northern Pipeline Act that gives the rights and the corridor for the Canadian leg of the Alaskan pipeline to Calgary-based TransCanada.

The governor said Jean Chretien, the former prime minister, "forcefully" said in a letter to TransCanada that those rights would be honoured by the current Canadian government.

Mr. Murkowski went to Ottawa in February to press the federal government to make a decision on whether Ottawa would give the regulatory authority for the Canadian leg to the agency responsible for the Northern Pipeline Act or the National Energy Board.

Enbridge Inc., TransCanada's rival in the proposed pipeline, and the owners of the Alaska North Slope gas -- ExxonMobil Corp., BP PLC and ConocoPhillips -- want to see a more open process to allow for competitive bids.

The Alaska government is concerned there would not be enough material or labour to handle both the Mackenzie Valley project and the Alaska pipeline, billed as the largest construction project in North America.

"You can't have both projects hitting the market at the same time," he said.

The state government is negotiating with TransCanada and the producers over the Alaskan leg of the pipeline. The state has agreed to take an equity stake if the producers own the Alaskan leg in exchange for giving up gas royalties.

It is not clear whether the North Slope producers would guarantee TransCanada gets the rights to ship their gas if it gets the nod to build the pipeline.

"We have always said that there is some flexibility on the Alaska side, but today we have not negotiated any other ownership structure for the Canadian side, where we own 100% of the rights" said Kurt Kadatz, a spokesman for TransCanada. "Obviously, this is a very large, complex deal and we have been in constant communication with the state of Alaska as well as Alaska producers. If the governmet wants to talk to us about flexible arrangements, we would listen to what they has to say."

Mr. Murkowski said the three producers would prefer to own at least the Alaskan leg of the pipeline to maintain control but have yet to sort out among themselves which would be the managing or leading partner.

The North Slope contains at least 36 trillion cubic feet of gas and could have as much as 200 trillion. The 4.5-billion-cubic-foot-a-day pipeline could provide as much as 10% of U.S. demand when it kicks in in about 10 years.

The Alaskan pipeline is part of a much broader corridor Mr. Murkowski would like to see built through the state and the Yukon. He would the rail lines from northern British Columbia extended into his state as well as the creation of a fibre-optics communications corridor.

Pat Daniel, chief executive of Enbridge Inc., Canada's second-largest pipeline company, which is also vying to participate in building the pipeline, said last week a decision from Ottawa was imminent.

Posted by Arthur Caldicott on June 22, 2005

Little guys win one

Editorial
Cowichan Valley Citizen
June 22, 2005

An amazing victory was achieved by Valley residents such as Arthur Caldicott, Steve Miller and the many others who fought the various incarnations of B.C. Hydro's gas-fired generating plant at Duke Point.

These are people with families and regular day jobs. Nonetheless, they successfully challenged Hydro's expert consumption forecasts and proved the 252-megawatt plant is not needed.

Not only that but they developed a viable alternative plan of their own, and succeeded in convincing the powers that be that Vancouver Island's electrical demands can be met with upgraded cables and other sources, such as NorskeCanada's proposed cogeneration plant.

To achieve all this they developed highly detailed reports and position papers and sat through days and days of monotonous hearings fraught with danger from the heavy hitters and their high-powered legal teams.

Through it all they maintained a cool, competent, informed professionalism oddly lacking in the so-called professionals.

B.C. Hydro has now spent hundreds of millions of taxpayer dollars on a failed cogen plant in Port Alberni, a failed pipeline from Washington State and a failed gas plant at Duke Point.

Our provincial government needs to examine whether Hydro officials lied and bullied their way through these processes, pursuing personal ambitions at tremendous public expense.

If heads roll, we know of some competent, honest replacements.

Posted by Arthur Caldicott on June 22, 2005

June 21, 2005

Premier warns against pointing fingers

Canadian Press
Monday, June 20, 2005


VICTORIA (CP) -- Premier Gordon Campbell says there are lessons to be learned from B.C. Hydro's decision to abandon the proposed Duke Point power project near Nanaimo.

B.C. Hydro cancelled the project last week, saying a continuing appeal process meant there was too great a risk the plant would not be built in time and that other arrangements would have to be found to ensure the supply of power on Vancouver Island.

Alberta-based Pristine Power, which was supposed to build the power plant, and Nanaimo Mayor Gary Korpan were critical of B.C. Hydro after it made its announcement on Friday.

But Campbell said he doesn't want to find someone to blame and rejected calls for a public inquiry into the matter.

"I certainly understand the comments of the mayor of Nanaimo, but I think we should start by saying, you know, what can we learn and recognize everyone wants to learn from this," he said from Philadelphia, where he was attending a bio-technology conference on Monday.

"It's not looking for blame, it's looking for how we can do better in the future."

Korpan was especially critical of Hydro for wasting an estimated $120 million on the project.

"It has been a total waste of everyone's time, money and worry," he said on Friday. "How B.C. Hydro management has any credibility in the business community or with the public now eludes me."

Environmental groups have said the Duke Point plant would cause too much pollution and electrical needs could be met by renewable power sources and through conservation.

© Canadian Press 2005

Posted by Arthur Caldicott on June 21, 2005

June 18, 2005

BC Hydro abandons Duke Point plant; $120M investment lost

Scott Simpson, Vancouver Sun, 18 Jun 2005
Chronology, Vancouver Sun, 18 Jun 2005



BC Hydro abandons Duke Point plant; $120M investment lost

Scott Simpson
Vancouver Sun
June 18, 2005

Board of directors decided to avoid another battle with project's opponents

BC Hydro abandoned its trouble-plagued Duke Point electricity project Friday, walking away from a $120-million investment and raising doubts about the supposed "risk" of blackouts on Vancouver Island.

Hydro's board of directors decided to notify its private sector partner in the $285-million project that it was quitting, rather than face another legal battle with project opponents -- this time in the B.C. Court of Appeal.

The project has been steadily opposed by community and environmental groups, as well as the province's major industrial consumers of electricity -- mainly on the premise that it was costly and unnecessary.

It would have added about three per cent to each Hydro customer's monthly power bill.

Earlier this week, the appeal court granted Duke Point opponents leave to appeal the project, albeit on narrow legal grounds.

The court's decision opened a window in Hydro's contract with Duke Point Power of Calgary, enabling the B.C. Crown corporation to abandon a process that began in 1994 and racked up $120 million in regulatory and equipment costs.

These costs were all borne by B.C. taxpayers via writeoffs entered into Hydro's financial books.

"Under these circumstances, the provincial government has to take a close look at the way this was handled by BC Hydro and the B.C. Utilities Commission," said Hydro critic David Austin.

Until the board of directors' decision, Hydro senior staff had steadfastly defended the project -- portraying it as Vancouver Island's best defence against potential failure of aging transmission lines that deliver electricity from the mainland.

Hydro vice-president Bev Van Ruyven is confident it can provide reliable service to the Island by 2008, when a new high voltage cable is set down across the Strait of Georgia from Tsawwassen.

In the interim, it will ask industrial consumers including NorskeCanada to scale back their consumption of electricity during peak winter demand -- which is what Norske had long proposed as the cheapest alternative to building a new power plant.

Dan Potts, who represents B.C.'s major industrial consumers of electricity, said he suspects the Hydro board killed Duke Point because rising natural gas prices made it too expensive.

"I think over time it became apparent that, really, it is not a sound economic choice to proceed with this plan," Potts said.

Duke Point Power president Jeff Meyers said he was "shocked" that Hydro had exercised its right to terminate the contract -- he said the appeal was confined to "narrow legal grounds" and was unlikely to succeed.

He also took issue with Hydro's claim that the appeal process would prevent the Duke Point plant from being completed on time for the winter of 2007.

"We would have been happy to demonstrate to Hydro that we can meet our schedule," Myers said.

Nanaimo Mayor Gary Korpan, whose city welcomed the jobs and taxes the project was promised to deliver, expressed outrage. He called the entire process a "total waste of everyone's time" and said Hydro "lied" to residents when it stated that the project was urgently needed.

"If there is any vestige of decency left at BC Hydro, those executives who did this need to apologize to the citizens of Vancouver Island and then resign," Korpan said in a prepared statement.

He called on the provincial government to launch a public inquiry into Hydro's handling of the entire process -- with the aim of recovering the money that was "wasted on this travesty."

Hydro spent $50 million on preparations -- later abandoned -- for a natural gas pipeline from Washington state to Vancouver Island to feed Duke Point, and $70 million on turbines and other equipment for the plant itself.

In addition, Hydro pays $5.5 million to Duke Point Power, and loses the opportunity to sell the turbine equipment to the company for the comparative bargain price of $50 million.

Community opposition to the project was led by GSX Concerned Citizens Coalition whose president, Tom Hackney, said he was not surprised by Hydro's decision.

"There have been times in the past when it looked like BC Hydro had a very strong momentum to get their project through but we have been very close to the evidence for and against the power plant -- and we were always very confident that we had a strong case against it," Hackney said.

B.C. Energy Minister Richard Neufeld blamed the New Democrats, who initiated the Duke Point process and committed most of the $120 million before the Liberals took power in 2001.

He said he supported Hydro and noted that as the process to build Duke Point dragged on, through BC Utilities Commission hearings and then the courts, it became obvious that it would be just as expedient to run a new high voltage cable to the Island.

Opposition leader Carole James acknowledged that the NDP had initiated the project, but noted that it was the Liberals' decision to privatize it and to persist with it despite four years of widespread public opposition.

"They continued to waste money on it. In my mind it's another example of this government's ideological drive to push privatization. It was another example of another project, like the Coquihalla Highway, until people complained too loudly and then had to back off.

"That shouldn't have to be the only way you get the government to recognize a mistake."

ssimpson@png.canwest.com

Duke Point points
- Project cost: About $285 million
- Plant: Would have produced enough power for 252,000 homes.

© The Vancouver Sun 2005

TOP



BC Hydro has wrestled with a natural gas co-generation plant on Vancouver Island for over 10 years

Scott Simpson
Vancouver Sun
June 18, 2005

Chronology of the Duke Point gas-fired electricity generating station project:

1994 A request for proposals for independent power producer projects is issued.

1995 BC Hydro raises concern about Vancouver Island's critical supply issues.

1996 A gas strategy was developed and included: Natural gas-fired co-generation plant at Campbell River; second natural gas-fired co-generation plant at Port Alberni; other potential gas-fired generation on the Island; and, new supply of natural gas to Vancouver Island for these plants.

September 1998 BC Hydro and Port Alberni Cogeneration Project sign a key agreement to build the plant at Port Alberni.

[NOTE: an important part of the story is omitted in this interval from 2000 to 2002]

Early 2000 BC Hydro fails to reach agreement with Atco and Pan-Canadian, the two companies which would build Port Alberni Cogeneration

Nov. 2000 BC Hydro and Calpine jointly announce Port Alberni Generation

Nov. 2001 BC Hydro abandons the Port Alberni Generation in response to overwhelming public opposition in Port Alberni and at the Environmental Assessment Office. Port Alberni refuses to rezone the land targeted for the project.

Jan. 2002 A rezoning proposal to accommodate a plant in North Cowichan faces overwhelming public opposition and is defeated.

Jan. 31, 2002 BC Hydro and Calpine announce that the Duke Point area is the preferred location for the plant

April 10, 2002 BC Hydro announced agreement of the Vancouver Island Generation Project at Duke Point.

Sept. 20, 2002 U.S. federal regulators (Federal Energy Regulatory Commission) approved the U.S. portion of the project.

March 12, 2003 As required by the provincial energy plan, BC Hydro applies for a certificate of public convenience and necessity for the B.C. project.

Sept. 8, 2003 BC Utilities Commission denies application.

Nov. 28, 2003 The Canadian National Energy Board approves the application to construct and operate a natural gas pipeline to Vancouver Island, subject to regulatory approvals for the Vancouver Island Generation Project.

Dec. 15, 2003 The National Energy Board authorizes construction and operation of the Canadian portion of the project.

Dec. 22, 2003 An unconditional environmental assessment certificate is granted for the project.

Dec. 20, 2004 BC Hydro abandons Georgia Strait crossing project at a cost of $50 million.

Feb. 17, 2005 B.C. Utilities Commission rules that $285 million Duke Point Power project can proceed.

June 14, 20005 B.C. Court of Appeal grants opponents of Duke Point power project leave to appeal the BC Utilities Commission decision in favour of the project.

June 17, 2005 BC Hydro board of directors votes to abandon Duke Point power project, at a cost to taxpayers of $120 million.

© The Vancouver Sun 2005

TOP

Posted by Arthur Caldicott on June 18, 2005

June 17, 2005

Media Coverage of Duke Point project cancellation

CKNW, 17 Jun 2005
CBC, 17 Jun 2005
Canadian Press, 17 Jun 2005
Scott Simpson, Vancouver Sun, 18 Jun 2005
Chronology, Vancouver Sun, 18 Jun 2005
Andrew Duffy, Times-Colonist, 18 Jun 2005
Andrew Duffy, Opinion, Times-Colonist, 18 Jun 2005
Les Leyne, Times-Colonist, 18 Jun 2005
Editorial, Times-Colonist, 18 Jun 2005
Reuters, Globe and Mail, 18 Jun 2005
Wendy McLellan, The Province, 19 Jun 2005
Andrea Rondeau, Cowichan Citizen, 19 Jun 2005
Vaughn Palmer, CKNW, 20 Jun 2005
Editorial, Vancouver Sun, 22 Jun 2005
Robert Barron, Nanaimo Daily News, 22 Jun 2005
Michael Smyth, The Province, 24 Jun 2005



Hydro Kills Duke Pt Plan

CKNW News
Jun, 17 2005 - 11:00 AM


VICTORIA(CKNWAM980) - BC Hydro is abandoning the proposed gas-fired generator plant at Duke Point near Nanaimo. The proposal has faced bitter opposition on Vancouver Island, and earlier this week, the BC Court of Appeal ruled that opponents could challenge the BC Utilities Commission's approval.
Now, Hydro executives have met and determined the continuing appeals mean the risk is now too great that the plant will not be built on time, so it's scrapping the project.

Instead, the utility says it will now focus on trying to extend the life of the current transmission cable to Vancouver Island, and arranging with industrial customers to cut back on their usage.

Opponents have argued the gas-fired plant is too environmentally hazardous and unnecessary anyway, since there are many alternatives to that technology, such as wind-driven turbines.

Meanwhile, the BC Transmission Company is also working on plans for new power cables to the Island, but that project itself faces opposition.

TOP



Island power project dead

CBC News
Jun, 17 2005 - 1:29 PM

VANCOUVER – B.C. Hydro has killed its plans for a controversial natural gas-fired electrical power plant near Nanaimo on Vancouver Island.

<i>Duke Point, south of Nanaimo
Duke Point, south of Nanaimo

The corporation's decision stems from a court decision earlier this week allowing environmentalists to appeal the B.C. Utilities Commission decision to allow the project to proceed.

FROM FEB. 17, 2005: Duke Point power project gets green light

LINK: Tuesday's B.C. Court of Appeal decision

A senior vice president with Hydro says the appeal increased the risk that the power plant would not be completed on time.

Bev Van Ruyven says without Duke Point, Vancouver Island could face problems with getting reliable power. But she says Hydro has plans in place to try to stop that from happening.

"We have other options that we can now go towards, contingency options. We are also building a cable to the Island which we have a higher probability that that will be in service in the winter of '08.

<i>B.C. Hydro headquarter in  Vancouver
B.C. Hydro headquarter in Vancouver
"And we have an ability to move forward with other plans that will be able to provide reliable service to Vancouver Island.":

LINK: B.C. Hydro release

Van Ruyven says Hydro will consider proposals for another new power plant in B.C., but it won't necessarily be on Vancouver Island.

She says Hydro also hopes to persuade major industrial customers to reduce electrical use.

LINK: GSX Concerned Citizens Coalition backgrounder

Opponents of the Duke Point power project had complained it would create additional greenhouse emissions, and that the Island's electrical needs could be met by developing alternative energy sources.

INTERVIEW: B.C. Almanac's Belle Puri speaks with B.C. Hydro's Bev van Ruyven and with Dan Potts of the Joint Industry Electricity Steering Committee which led the court battle.

TOP



Nanaimo power plant project abandoned

Canadian Press
Friday, June 17, 2005

VANCOUVER (CP) -- B.C. Hydro abandoned plans Friday for the proposed Duke Point power project near Nanaimo.

The move follows a court ruling that allows opponents to appeal a decision that gave the go-ahead to the natural gas-fired electrical plant.

B.C. Hydro said the continuing appeal process means there's too much risk the plant will not be built in time.

Hydro vice president Bev Van Ruyven said cancelling the project means the utility will have to make other arrangements to provide power on Vancouver Island, which means trying to extend the life of the current transmission cable from the B.C. mainland until a new line goes into service and by getting industrial customers to reduce electrical use.

"Our priority throughout has been the reliability of electricity supply to our customers on Vancouver Island and the risks to that are now too great," she said in a statement. "Given that, we have decided to exit from the project, something we are able to do as part of our contract with Duke Point Power without any additional cost."

Alberta-based Pristine Power was supposed to build the power plant, and the company's president, Jeff Meyers, disputed Hydro's contention the plant could not be built in time.

"We just felt that because the appeal was on a very narrow issue and it could be resolved in a few weeks, we just thought that they would just hang in here," said Meyers.

"They have said that it's gone on for too long and Duke Point is not reliable for 2007, and that is just a falsehood. That is not true. We have contracts to back up our construction schedule. We have some of the most reputable contractors in the world on this thing and it's just not true."

Nanaimo Mayor Gary Korpan also criticized Hydro's handling of the project, which he said has cost tens of millions of dollars.

"It has been a total waste of everyone's time, money and worry," he said. "How B.C. Hydro management has any credibility in the business community or with the public now, eludes me. If there is any vestige of decency left at B.C. Hydro, those executives who did this need to apologize to the citizens of Vancouver Island and resign."

Energy Minister Richard Neufeld said the decision is disappointing but understandable, and represents a culmination of events, including the increased price of natural gas.

"I think they reviewed the whole project and decided it would be in the best interest of the ratepayers to actually walk away from it," he said outside a cabinet meeting in Victoria.

Environmental groups had said the Duke Point plant would cause too much pollution and electrical needs could be met by renewable power sources and through conservation.

© Canadian Press 2005

TOP



BC Hydro abandons Duke Point plant; $120M investment lost

Scott Simpson
Vancouver Sun
June 18, 2005

Board of directors decided to avoid another battle with project's opponents

BC Hydro abandoned its trouble-plagued Duke Point electricity project Friday, walking away from a $120-million investment and raising doubts about the supposed "risk" of blackouts on Vancouver Island.

Hydro's board of directors decided to notify its private sector partner in the $285-million project that it was quitting, rather than face another legal battle with project opponents -- this time in the B.C. Court of Appeal.

The project has been steadily opposed by community and environmental groups, as well as the province's major industrial consumers of electricity -- mainly on the premise that it was costly and unnecessary.

It would have added about three per cent to each Hydro customer's monthly power bill.

Earlier this week, the appeal court granted Duke Point opponents leave to appeal the project, albeit on narrow legal grounds.

The court's decision opened a window in Hydro's contract with Duke Point Power of Calgary, enabling the B.C. Crown corporation to abandon a process that began in 1994 and racked up $120 million in regulatory and equipment costs.

These costs were all borne by B.C. taxpayers via writeoffs entered into Hydro's financial books.

"Under these circumstances, the provincial government has to take a close look at the way this was handled by BC Hydro and the B.C. Utilities Commission," said Hydro critic David Austin.

Until the board of directors' decision, Hydro senior staff had steadfastly defended the project -- portraying it as Vancouver Island's best defence against potential failure of aging transmission lines that deliver electricity from the mainland.

Hydro vice-president Bev Van Ruyven is confident it can provide reliable service to the Island by 2008, when a new high voltage cable is set down across the Strait of Georgia from Tsawwassen.

In the interim, it will ask industrial consumers including NorskeCanada to scale back their consumption of electricity during peak winter demand -- which is what Norske had long proposed as the cheapest alternative to building a new power plant.

Dan Potts, who represents B.C.'s major industrial consumers of electricity, said he suspects the Hydro board killed Duke Point because rising natural gas prices made it too expensive.

"I think over time it became apparent that, really, it is not a sound economic choice to proceed with this plan," Potts said.

Duke Point Power president Jeff Meyers said he was "shocked" that Hydro had exercised its right to terminate the contract -- he said the appeal was confined to "narrow legal grounds" and was unlikely to succeed.

He also took issue with Hydro's claim that the appeal process would prevent the Duke Point plant from being completed on time for the winter of 2007.

"We would have been happy to demonstrate to Hydro that we can meet our schedule," Myers said.

Nanaimo Mayor Gary Korpan, whose city welcomed the jobs and taxes the project was promised to deliver, expressed outrage. He called the entire process a "total waste of everyone's time" and said Hydro "lied" to residents when it stated that the project was urgently needed.

"If there is any vestige of decency left at BC Hydro, those executives who did this need to apologize to the citizens of Vancouver Island and then resign," Korpan said in a prepared statement.

He called on the provincial government to launch a public inquiry into Hydro's handling of the entire process -- with the aim of recovering the money that was "wasted on this travesty."

Hydro spent $50 million on preparations -- later abandoned -- for a natural gas pipeline from Washington state to Vancouver Island to feed Duke Point, and $70 million on turbines and other equipment for the plant itself.

In addition, Hydro pays $5.5 million to Duke Point Power, and loses the opportunity to sell the turbine equipment to the company for the comparative bargain price of $50 million.

Community opposition to the project was led by GSX Concerned Citizens Coalition whose president, Tom Hackney, said he was not surprised by Hydro's decision.

"There have been times in the past when it looked like BC Hydro had a very strong momentum to get their project through but we have been very close to the evidence for and against the power plant -- and we were always very confident that we had a strong case against it," Hackney said.

B.C. Energy Minister Richard Neufeld blamed the New Democrats, who initiated the Duke Point process and committed most of the $120 million before the Liberals took power in 2001.

He said he supported Hydro and noted that as the process to build Duke Point dragged on, through BC Utilities Commission hearings and then the courts, it became obvious that it would be just as expedient to run a new high voltage cable to the Island.

Opposition leader Carole James acknowledged that the NDP had initiated the project, but noted that it was the Liberals' decision to privatize it and to persist with it despite four years of widespread public opposition.

"They continued to waste money on it. In my mind it's another example of this government's ideological drive to push privatization. It was another example of another project, like the Coquihalla Highway, until people complained too loudly and then had to back off.

"That shouldn't have to be the only way you get the government to recognize a mistake."

ssimpson@png.canwest.com

Duke Point points
- Project cost: About $285 million
- Plant: Would have produced enough power for 252,000 homes.

© The Vancouver Sun 2005

TOP



BC Hydro has wrestled with a natural gas co-generation plant on Vancouver Island for over 10 years

Scott Simpson
Vancouver Sun
June 18, 2005

Chronology of the Duke Point gas-fired electricity generating station project:

1994 A request for proposals for independent power producer projects is issued.

1995 BC Hydro raises concern about Vancouver Island's critical supply issues.

1996 A gas strategy was developed and included: Natural gas-fired co-generation plant at Campbell River; second natural gas-fired co-generation plant at Port Alberni; other potential gas-fired generation on the Island; and, new supply of natural gas to Vancouver Island for these plants.

September 1998 BC Hydro and Port Alberni Cogeneration Project sign a key agreement to build the plant at Port Alberni.

[NOTE: an important part of the story is omitted in this interval from 2000 to 2002]

Early 2000 BC Hydro fails to reach agreement with Atco and Pan-Canadian, the two companies which would build Port Alberni Cogeneration

Nov. 2000 BC Hydro and Calpine jointly announce Port Alberni Generation

Nov. 2001 BC Hydro abandons the Port Alberni Generation in response to overwhelming public opposition in Port Alberni and at the Environmental Assessment Office. Port Alberni refuses to rezone the land targeted for the project.

Jan. 2002 A rezoning proposal to accommodate a plant in North Cowichan faces overwhelming public opposition and is defeated.

Jan. 31, 2002 BC Hydro and Calpine announce that the Duke Point area is the preferred location for the plant

April 10, 2002 BC Hydro announced agreement of the Vancouver Island Generation Project at Duke Point.

Sept. 20, 2002 U.S. federal regulators (Federal Energy Regulatory Commission) approved the U.S. portion of the project.

March 12, 2003 As required by the provincial energy plan, BC Hydro applies for a certificate of public convenience and necessity for the B.C. project.

Sept. 8, 2003 BC Utilities Commission denies application.

Nov. 28, 2003 The Canadian National Energy Board approves the application to construct and operate a natural gas pipeline to Vancouver Island, subject to regulatory approvals for the Vancouver Island Generation Project.

Dec. 15, 2003 The National Energy Board authorizes construction and operation of the Canadian portion of the project.

Dec. 22, 2003 An unconditional environmental assessment certificate is granted for the project.

Dec. 20, 2004 BC Hydro abandons Georgia Strait crossing project at a cost of $50 million.

Feb. 17, 2005 B.C. Utilities Commission rules that $285 million Duke Point Power project can proceed.

June 14, 20005 B.C. Court of Appeal grants opponents of Duke Point power project leave to appeal the BC Utilities Commission decision in favour of the project.

June 17, 2005 BC Hydro board of directors votes to abandon Duke Point power project, at a cost to taxpayers of $120 million.

© The Vancouver Sun 2005

TOP



Hydro pulls plug on Duke Point



Andrew A. Duffy
Times Colonist
June 18, 2005

Risks 'too great' for power plant, mayor outraged

B.C. Hydro cancelled its Duke Point power plant project Friday, and said it would turn to conservation measures and upgrading of power lines to maintain a reliable electricity supply for Vancouver Island.

Because the Nanaimo-area project faced a legal challenge, the risk of not completing it in time to deal with a projected supply shortfall in 2007 was too great, Hydro said.

Hydro had won regulatory approval to go ahead with the $250-million, 252-megawatt gas-fired generation plant, after spending 10 years and $125.5 million trying to get it off the ground.

The project faced a barrage of opposition from community and environmental groups, who said it was too costly, unnecessary, and would damage the environment. This week, the B.C. Court of Appeal granted opponents leave to appeal the approval.

"When the leave to appeal was granted ... we realized there was a risk of this not getting built on time," said Bev Van Ruyven, Hydro's vice-president of distribution.

"Our priority throughout has been the reliability of electricity supply to our customers on Vancouver Island and the risks to that are now too great."

Until Friday, Hydro had maintained the project was the best way to provide customers with reliable capacity to meet the Island's anticipated supply shortfall in 2007, when some of the undersea electricity cables that run from the mainland are deemed unreliable. Hydro will now look at its contingency plans -- options that include having industrial users contracted to lower power use at peak times, the short-term improvement of the deteriorating undersea cables and establishing new on-Island generation.

Van Ruyven said Hydro exercised an escape clause to get out of the agreement it signed with Calgary-based Pristine Power, the company that was to build the plant.

The decision was met with outrage and shock by those who have followed the plight of the power plant.

"I'm pissed right off," growled Nanaimo Mayor Gary Korpan who has called on Premier Gordon Campbell and Energy Minister Richard Neufeld for a public inquiry into Hydro's actions. "This is incomprehensible."

Korpan said he couldn't understand why Hydro abandoned the project when it was so close to the end, particularly after years of warning Islanders it was needed and was the most cost-effective means of ensuring long-term power supply.

Friday's decision means Hydro walks away from the $50 million Pristine was to pay for Hydro's work on getting permits for the project as well as the plant's turbines which Hydro bought for $69 million.

Hydro estimates it can get $14 million for the turbines. But Van Ruyven tried to stress the corporation will save in the long run as it is no longer tied into a 25-year agreement that would have seen it pay Pristine between $30 million to $40 million a year for power from the Duke Point plant.

© Times Colonist (Victoria) 2005

TOP



Hydro drops a bombshell

Andrew A. Duffy
Times-Colonist
18 Jun 2005

News that the Duke Point Power Plant project had been cancelled by B.C. Hydro drew sharp criticism Friday, even to the point of Nanaimo Mayor Gary Korpan calling for an inquiry.

"Time after time, B.C. Hydro said to the public that Vancouver Island was at severe risk of insufficient electricity supply," Korpan said in a written statement. "It is absolutely clear that we on Vancouver Island have been lied to for these last several years."

That's why Korpan wants to see an inquiry.

"At the very least we need an inquiry to find out what the costs were and why we went through this whole thing for nothing."

He wasn't the only one fuming.

Jeff Myers, president of Pristine Power, admits he was stunned with the move, noting Hydro is concerned they won't have the plant done in time.

Pristine is the company that was contracted to build the plant. The time frame has been changed because of the ruling that there was legal cause for an appeal process requested by opponents of the project.

"That's simply not true," he said of the suggested delay. "In fact we
guaranteed it for August 2007 and they don't require it until November ... it just doesn't make any sense." Myers noted that an appeal date had been set for July 8, with a note the hearing had to be expedited.

"This is very surprising and I still don't understand it," he said. "Why not at least go through (the appeal)."

Bev Van Ruyven, Hydro's vice president of distribution, would only say that the delay meant Hydro was out of its comfort zone in terms of the timeline for completion.

"We don't even know if (Pristine) could start it in July, we have no control of the Appeal Court," she said.

And while the opponents of the plant admitted they were surprised by Hydro's move, they were heaping praise on the corporation for finally having seen the light.

"We're very happy, we've been struggling for five years to oppose gas-fired power plants on the Island," said GSXCCC president Tom Hackney.

The GSXCCC has argued renewing the undersea cables as quickly as possible was always the best solution.

The JIESC, which represents the large industrial users of power and advocated demand-side management and renewing the cables as the best solution, was also pleased.

"This was a very, very expensive (stop-gap) measure," said executive director Dan Potts.

"It would have added $50-60 million to Hydro's annual costs and we don't think there's a need for it."

TOP



Cutting losses risks cutting power

Les Leyne
Times-Colonist
18 Jun 2005

Hey, auditor general. Want to sink your teeth into something really juicy, a lot more interesting than the usual value-for-money auditing exercises?

Check out something that used to be known as the "Duke Point" power project.

Start by trying to find out where $120 million over the last 10 years went. That's the amount B.C. Hydro has written down so far in the long, chaotic struggle to execute some kind of long-range plan to keep a reliable supply of electricity flowing the length of Vancouver Island.

As of Friday, it looks as if that money and a few million more has been flushed down the drain. And $120 million for nothing is only one of the things that doesn't add up.

Start with the $50 million within that loss that was sunk into the proposed underwater gas pipeline to the Island, which was a whole separate derailment.

B.C. Hydro's deal with the limited partnership that was supposed to build "Duke Point" stipulated that the public utility could recoup that loss. The private company was going to pay them that sum to make up the loss. Whatever happens next, B.C. Hydro is unlikely to get another offer like that. So why did they walk away Friday?

The cancellation of the project was widely expected, but it is still startling to see them abandon a deal with $50 million lying on the table for them.

The stated reasons are that the continuing court appeals meant the risk is too great that it won't be built in time. But they don't add up either.

The Court of Appeal had already set July 8 as the date for a one-day hearing on one narrow procedural question. Allow a couple of weeks for an expedited decision on that, and you could easily anticipate a final court decision on the intervenor appeals well before the July 31 "drop dead" option date that is fixed in contracts.

As Pristine Power head Jeff Myers said: "They were running in a $100-million marathon and they were right within sight of the finish line, and then quit and walked off the course."

The worries about deadline risks don't add up elsewhere, either. B.C. Hydro had absolutely iron-clad assurances from the limited partnership that it would have the plant up and running by the summer of 2007.

But somehow they convinced themselves internally that their partners were going to drop the ball, so they bailed out. Hydro issued reassurances that the bail-out doesn't incur additional costs. But that prospective $50 million they are walking away from sure looks like a loss.

The future options that B.C. Hydro is now outlining don't add up either. They're talking about extending the life of the current transmission cable and making load curtailment arrangements with industrial customers as short-term measures.

Those concepts have been examined ad nauseam over the last several years, and Hydro's own experts were lined up three-deep at times warning they simply wouldn't work. Not only that, the B.C. Utilities Commission formally rejected those ideas.

The new transmission lines in the works have various communities up in arms and are a lot harder to approve than anyone realizes, and even if they are built won't likely be up until 2010.

Hydro's longer-term solution is to look at how the next call for a new energy supply to the private sector needs to be adjusted to take into consideration Friday's decision.

Here's how it will be adjusted: All the costs are going to go up because private companies and their bankers are going to factor in a heavy B.C. premium to recognize the weird vagaries that crop up when anyone tries to do business with B.C. Hydro.

NorskeCanada emerges as a big winner. It fronted a coalition of Island industries that fought *Duke Point* tooth and nail, partly because of natural gas concerns, and partly because it can curtail its consumption and make money selling the unused capacity back to B.C. Hydro.

But that doesn't necessarily add up to a win for residents.

Determined citizens' groups who fought this project are big winners today, as well. But two or three years from now, when Island consumption is well beyond Hydro's forecasts (we hit the 2008 projection last winter) and a new supply is years behind the original schedule, we'll see if everyone is cheering the victory.

There's enough here for an auditor general to gorge on for months. Come to think of it, maybe the transportation safety board should lead the probe, because this is now officially a train wreck.

Just So You Know: If Norske and B.C. Hydro -- at each other's throats for years now -- sit down to do a new deal, Islanders should watch with bated breath. Norske will be the fourth private partner for B.C. Hydro.

Atco got burned for $5 million after Hydro broke off a Port Alberni venture, Calpine walked away with losses after B.C. Hydro flounced away from their partnership, and the *Duke Point* limited partnership's losses are in the "single-digit millions" now that Hydro has severed them, too.

In light of that, Hydro is a strong contender in the quote of the year sweepstakes, for this parting remark about its newest ex-partner: "We hope we will be able to work with them again in the future."

leyne@island.net

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At the end of a pointless exercise

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Editorial
Times-Colonist
18 Jun 2005

Hydro's abandonment of Duke Point plant might mean we have to believe in fairies

After four years of effort and $120 million down the drain, B.C. Hydro has pulled the plug on the proposed Duke Point power plant in Nanaimo.

The last straw appears to have been court approval of yet another appeal by opponents of the plant, who will not take Yes for an answer. With the prospect of even more delay, B.C. Hydro decided it had had enough.

So where does that decision leave Vancouver Islanders, who import two thirds of the roughly 2,100 megawatts of power we use at any given time?

Opponents of the project say that we'll be fine; that we don't need the extra power; that, at $45 million a year in fees for a private operator, it was too expensive; that the two power fines from the mainland can be upgraded in time to avoid brownouts; that the import of natural gas as the plant's fuel was uneconomical; that the plant would have been bad for the environment; that we're all better off using less power anyway.

B.C. Hydro has argued correctly that the population of Vancouver Island is growing, and will at some point need more power than the mainland can reliably produce. After all, the mainland population is growing, too, and facing its own power expansion opponents.

B.C. Hydro also argued that, if not absolutely necessary now, Duke Point would have been a backup source of power, and that it was also intended as a stopgap during the several power vulnerable months while the mainland lines are being upgraded in 2007.

In other words, we can get along without the plant, as long as there are no emergencies (like a tsunami or major earthquake) that interrupt the supply from the Mainland or damage the plants already on the Island that deliver about 690 megawatts. It would also help if the population of the Island remained steady, which doesn't seem likely to happen. Or perhaps most of us will trade our cars in for bicycles and walking shoes (also unlikely).

The environmentalist opposition to Duke Point and, indeed, any expansion of power generation except wind, solar and waves is ironic. Green thinking often invokes a precautionary principle: We shouldn't do something if it might harm the environment. It's a recipe for economic and social stagnation, but then, for environmentalists, that's often the point. We can save the planet by bringing economic growth to a halt.

With Duke Point, B.C. Hydro was invoking its own precautionary principle: Should the major supply of electricity fail, Duke Point could have taken up some of the slack.

B.C. Hydro's mandate is to ensure that the people of B.C. have adequate power. With the failure of Duke Point, the utility will now have to spend untold millions more, and endure more years of hearings and environmental opposition, to find yet another site on the Island to ensure that we have adequate power.

Unless, of course, we prefer to believe in the electricity fairy, who brings us all the non polluting power we need with a wave of her wand.

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B.C. Hydro drops plans to build power plant

Globe and Mail
Saturday, June 18, 2005


British Columbia Hydro and Power Authority dropped plans yesterday to build a 262-megawatt natural gas power plant on Vancouver Island that had run into opposition from environmentalists and industrial ratepayers. The provincially owned utility said it will not go ahead with the $285-million Duke Point power plant after a court granted opponents the right to file another appeal of a ruling that would have permitted construction. B.C. Hydro wanted the plant in operation in 2007 to meet the island's rising electricity demand, and said "the continuing appeal process means the risk is too great the plant will not be built in time." The plant was to have been built near Nanaimo. Reuters

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Duke Point deal dead

Wendy McLellan
The Province
19 June 2005

B.C. Hydro will fire up its contingency plans for Vancouver Island after walking away from a contract to build a gas-fired power plant near Nanaimo.

Hydro blamed the continuing court appeals from opponents of the Duke Point Power project for the decision announced Friday. "There comes a point where you say, 'Enough is enough,'" said Bev Van Ruyven, Hydro senior vice-president.

She said the months of delays were increasing the risk that the plant wouldn't be completed in time to provide power during an anticipated one-year shortage beginning in the winter of 2007.

Earlier this week, the B.C. Court of Appeal agreed to hear arguments from industry, environmental and community groups opposed to the $280-million project. The hearing date was set for July 8.

Hydro's contract with an Alberta-based independent power producer to build Duke Point allowed for cancellation of the deal without penalty if an appeal was granted.

Van Ruyven said Hydro will investigate other ways to save electricity during peak times until the transmission cables are in place in 2008. Norske Canada has already proposed reducing power use during peak hours at its Vancouver Island mills and Hydro will begin working with rate payers to reduce their consumption.

Jeff Myers, vice-president of Duke Point Power LLP, said his firm would have met the deadline to complete the project despite the delay in beginning construction.

"This was our first big deal, and to have it end like this is just devastating for our company financially, and for our reputation," he said. "We spent two years and $5 million on this, and we could deliver on time -- it was guaranteed."

wmclellan@png.canwest.com

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Hydro pulls the plug on Duke Pt. plant

Andrea Rondeau
Cowichan Valley Citizen
19 June 2005

Concerned Citizens Coalition claim victory "milestone in Canadian environmental history"

Opponents of at 252 megawatt power plant that was to be built at Duke Point for $280 million by Duke Point Power Ltd. were celebrating Friday after BC Hydro announced the project has been cancelled.

"I think actually that this is a milestone in Canadian environmental history," said Steve Miller, Vice President of the Concerned Citizen's Coalition, a group that's been fighting the plant. "I don't think something this big has been able to be stopped by people as small as us in Canada before."

...

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Build Nothing Anywhere Ever

Vaughn Palmer
CKNW
20 June 2005

VAUGHN PALMER says BC Hydro has spent $120m trying to develop a gas-fired generating capacity on Vancouver Island and so far the only thing that's been generated is a lot of opposition from the Build Nothing Anywhere Ever crowd.

Why should anyone care? We're all paying for it.

Since the announcement, there've been a lot of calls for a public inquiry into what went wrong.

$120 million is just a starting point on the real costs.

Windmill farms? People don't realize how bloody noisy they are.

CKNW audio vault

On the CKNW website, you will have to register a name and email address, before you are allowed access to the audio vault.

You will need Windows Media Player installed on your computer.

The Vaughn Palmer session is on Monday, 20 June 2005 at 7:00 am. Palmer comes on at about 7:10 and the segment runs three minutes.

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Duke Point fiasco requires an inquiry to shed light on BC Hydro and regulators

Editorial
Vancouver Sun
22-Jun-2005


Last week's inexplicable decision by BC Hydro to pull the plug on the Duke Point power project suggests such misguided planning and operational ineptitude that a review of the process that brought it to this point should be on top of the auditor-general's to-do list.

BC Hydro had made a compelling technical case for building the $285-million, 252-megawatt, natural gas-fired plant. It argued that Vancouver Island needed reliable generating capacity to see it through a shortfall until new high-voltage cable could be laid from the mainland across the Strait of Georgia. Developing island energy self-sufficiency would fulfil increasing demand from a growing population and industrial users. And once the new cable was in place, electricity could flow both ways. After all, the mainland population is growing too and might need backup in the future.

In essence, it is the same case BC Hydro has been making since 1995 when it first called for tenders for a proposal to address Vancouver Island's future energy requirements.

The BC Utilities Commission rejected a proposal by BC Hydro's own subsidiary, Vancouver Island Energy Corp., in 2003 but approved the latest plan by Duke Point Power Limited Partnership, majority owned by a consortium led by Pristine Power of Calgary.

In the reasons for its decision released in March, the utilities commission deemed the project to be in the public interest. Presumably, then, the decision to abandon the project is not in the public interest.

It leaves Vancouver Island at the mercy of what BC Hydro calls short-term contingency options. These include extending the life of the existing aging cables, an arrangement with Norske Skog to curtail consumption (in effect, Norske sells the power it doesn't use back to BC Hydro) and, if required, diesel-powered mobile generators to produce additional power.

The utilities commission has already formally rejected these alternatives as viable options for providing the island with dependable long-term capacity.

Without the power plant, a vital component of the island's energy infrastructure, economic growth will be constrained, as will the level of services. Businesses will be wary about investing on the island without some assurance that the lights will come on every day.

The reason given for BC Hydro's stunning reversal is that the B.C. Court of Appeal gave opponents of the Duke Point power project leave to appeal the utilities commission's decision. And even if they lost, they could take the case to the Supreme Court, raising the risk that the deadline would not be met and the project would not be completed on time, costing the utility more money.

But these reasons are not convincing. First, the appeal is limited to a narrow procedural matter and may not succeed. Second, the court had already agreed to expedite the process and set the hearing for July 8 in order to accommodate a July 31 deadline set in BC Hydro's agreement with its Duke Point partners. Third, as a public-private partnership, the contractor, Pristine Power, bore the entire risk of construction delays.

The BC Hydro board has much to answer for in this perplexing decision. Was the rising cost of natural gas a factor? That's not plausible. Like electricity, natural gas trades on commodities markets so producers can buy or sell contracts to lock in prices. Besides, there are no energy sources that provide comparable reliability at less cost. There's no such thing as cheap new power anymore.

The utilities commission is not blameless in this fiasco. Instead of convening a no-holds-barred, wide-open process, it conducted restricted hearings, with some sessions held in camera. That lack of transparency opened the door to challenge the fairness of the procedure in court.

BC Hydro has written off most of its $120 million investment in the Duke Point power project, an accounting entry that will soon show up on consumers' electricity bills.

It will also pay the Duke Point Power Partnership $5.5 million for terminating the agreement and forego $50 million on the sale of the turbines and related plant equipment purchased for the earlier incarnation of the project.

In an outraged statement, Gary Korpan, the mayor of Nanaimo, questioned whether BC Hydro management has any credibility left in the business community. He also demanded BC Hydro executives apologize to the citizens of Vancouver Island.

We have one more request -- a formal review by the auditor-general into BC Hydro's management practices and decision-making procedures, as well as the regulator's handling of the affair. We want to know why we have had to endure a decade of wasted time, effort and money.

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Hydro's $120-M write off

Robert Barron
The Daily News (Nanaimo)
22-Jun-2005

The $120-million BC Hydro spent in failed attempts to build a gas-fired electrical generation plant at Duke Point was "written off" by the Crown corporation a year and a half ago and has had no financial impacts on Hydro customers, says Bev Van Ruyven.

Van Ruyven, Hydro's senior vice-president of distribution, said the expenses are related to Hydro's planned Vancouver Island Generation Project -- the $370-million, 265-megawatt gas plant proposal for Duke Point that was denied by the B.C. Utilities Commission in 2003 -- and the related $340-million GSX natural gas pipeline across the Strait of Georgia that was supposed to feed it.

"We spent $70-million on physical assets for the VIGP, as well as property acquisition for the project and regulatory processes," she said. "We also spent an additional $50-million on the processes related to the GSX proposal. These expenses were written off as sunk costs and came off Hydro's dividends to the government and was not passed on to our customers."

Hydro nixed a deal with Alberta-based Pristine Power last week to build a $280-million, 252-megawatt plant citing time constraints after a panel from the B.C. Court of Appeal allowed an appeal against the new plant proposal to proceed.

Pristine's proposal for the plant was chosen from 23 private sector bidders, offering a variety of energy generation projects for Vancouver Island, after a lengthy Call for Tender process last year by Hydro after the failure of the VIGP to pass regulatory processes.

While acknowledging Hydro's contingency plans to meet Vancouver Island's energy needs - curtailment and conservation - are almost identical to the alternatives laid out by a number of the plant's opponents, Van Ruyven said "obviously" Hydro always had a Plan B.

"Load reduction, whereby some of our major customers would reduce their load during peak periods, is one contingency we planned on in the event the plant didn't proceed," she said.

Hydro had claimed since announcing plans for a gas plant at Duke Point in 2002 the plant was essential to Vancouver Island's energy mix past the winter of 2007-08, and said Islanders faced the possibility of brown and black-outs passed that point if new power sources weren't in service by then.

The Crown corporation said 240 megawatts of electricity will disappear when the high voltage direct current HVDC cable system, which supplies about 25% of Vancouver Island's energy needs and is in deteriorating condition, goes out of service in 2007.

However, Van Ruyven said B.C. Transmission Corporation has since guaranteed "operational flexibility" on the HVDC cable system with upgrades that will extend its life-span.

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Duke Point mess begs answers

Michael Smyth
The Province
24-Jun-2005

Gordon Campbell used to rant and rave about the previous NDP government's mismanagement of B.C. Hydro, especially when the New Democrats decided to invest in a risky power project in Pakistan.

Taxpayers lost $10 million on the doomed plant and in the wake of the ensuing "Hydrogate" scandal, Campbell promised to clean up and professionalize B.C. Hydro.

"We have to make sure it is being run in a professional manner," he said in 2001.

Which begs the question: What's so "professional" about Hydro flushing $120 million of your money down the drain?

That's how much British Columbians lost after Hydro's cancellation last week of the planned Duke Point plant near Nanaimo. It's an astonishing waste of cash that makes the Hydrogate boondoggle look like chump change.

The Duke Point debacle throws into question the competency of Hydro's senior managers and its board. The situation calls for a public inquiry, yet the government's response so far has been to duck and cover.

That's unacceptable with so many unanswered questions.

For example: Why did B.C. Hydro abandon a project it argued for years was desperately needed to prevent a Vancouver Island energy shortage?

Hydro produced stacks of studies, graphs and charts showing Vancouver Island will face an energy crunch by 2007. The arguments persuaded Hydro's board and the B.C. Utilities Commission, and the $285-million plant was given the green light.

The decision angered environmentalists concerned about pollution and the usual regulatory battle erupted. But Hydro's explanation last week that legal wrangling was endangering the plant's construction deadlines is absurd.

The B.C. Court of Appeal had scheduled a one-day hearing for July 8. Duke Point's backers expressed confidence in a positive ruling and said the construction timetable would be OK.

Why, oh, why would Hydro not wait few more weeks for the outcome of that hearing before pulling the pin on a project?

That's like running a marathon and deciding to quit with 100 metres to go because you're afraid of tripping over the finish line.

The environmentalists cheering this absurd decision, by the way, may end up wishing they'd never got their way. Now that Duke Point is dead, B.C. Hydro is working on other plans to meet the island's looming energy crunch.

That includes the possible use of monstrosities called "distillate-fired mobile units." These are massive 23-megawatt generators towed around on barges that guzzle diesel fuel to pump out power and lung-searing pollution.

No wonder Nanaimo Mayor Gary Korpan said the decision to kill Duke Point left him "pissed right off." He later apologized for his language. But it's others who should apologize and British Columbians deserve answers.

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Posted by Arthur Caldicott on June 17, 2005

Pristine Power Inc: Hydro decision premature and costly

Attention News/Business Editors:

BC Hydro decision to terminate Duke Point project premature and costly

VANCOUVER, June 17 /CNW/ - Today's decision by BC Hydro to abandon the Duke Point Power Project is disappointing, premature and comes with long-term energy implications for Vancouver Island and BC's ratepayers, said Jeff Myers, President of Pristine Power Inc., speaking for the Duke Point Power Limited Partnership.

"We are extremely disappointed with BC Hydro's decision to terminate the Duke Point Power Project," said Myers. "There is a very clear need for this project. The business case is very strong and the need for this type of project will only increase."

"We do not agree with BC Hydro's decision and its assessment of risk with respect to the potential for delay. We reject the assertion that the project would not be built on time. The in-service date was guaranteed," said Myers. "The appeal court challenge was expedited with a hearing date already set for July 8 and we were confident that BC Hydro and our partnership would succeed on the very narrow procedural issue in question."

To ensure the project was in the public interest, the Duke Point Power Project went through an extraordinary amount of checks and balances including a rigorous, competitive bidding process, an environmental assessment and an extensive public hearing.

"The fact remains, the BCUC determined that the project is clearly in the public interest and is the best, most cost-effective source of dependable capacity to meet Vancouver Island's long-term electricity needs," said Myers.

"Gone is a vital piece of energy infrastructure for Vancouver Island," said Myers. "Vancouver Island residents should be concerned. BC Hydro's own load forecast predicts a looming supply deficit on Vancouver Island that will reach 280 MW in 2008."

"Short-term contingencies such as extending the life of existing cables, load curtailment and mobile diesel generators come with their own set of risks and new costs to deliver this essential service on Vancouver Island," said Myers.

"The BCUC has clearly stated that these contingencies do not constitute a viable option to provide Vancouver Island with dependable, long term capacity. Furthermore, the Commission has noted that the in-service date of the BC Transmission Company's proposed undersea cable could be delayed beyond 2010."

For further information: Michael Goehring, Tel: (604) 970-8115

Posted by Arthur Caldicott on June 17, 2005

News Releases on Duke Point cancellation

GSX Concerned Citizens Coalition
Duke Point Power plant cancelled

BC Sustainable Energy Association
BC Hydro Abandons Vancouver Island Gas Strategy

David Suzuki Foundation
David Suzuki Foundation congratulates B.C. Hydro on dropping Duke Point project

Energy Solutions for Vancouver Island
Why the Duke Point Power Plant failed

Sierra Club of BC
website - Georgia Strait Pipeline (GSX)
e-letter - The Hazards of Duke

Society Promoting Environmental Conservation (SPEC)
SPEC posts three wins in June



The Hazards of Duke

sqwalk.com
COMMENT: This was originally posted by Sierra Club as an e-bulletin. I cannot find it on the SCBC website - Arthur Caldicott
sqwalk.com

Sierra Clubbers lead battle to stop Duke Point power plant

Duke Point is dead. After six years, BC Hydro has shelved plans to build a gas-fired power plant at Duke Point near Nanaimo. With it goes the last vestige of a plan that would have seen 900 Megawatts of gas-fired power generation on Vancouver Island and a pipeline across the Strait of Georgia.

In 1999, volunteer Sierra Clubbers Tom Hackney and Bo Martin decided to intervene in the federal regulatory process surrounding the Georgia Strait Crossing Pipeline, or “GSX”, which would deliver gas to several power plants on Vancouver Island. The two thought the idea of burning fossil fuels was absurd when power conservation was less expensive and resulted in less environmental damage.

In 2000, Vancouver Island citizens joined the fight, shocked by the idea of a pipeline through backyards, past schools and across fields. People were furious at BC Hydro’s claim that decisions to build the pipeline were unalterable.

The BC Chapter, other organizations and local citizens formed the GSX Concerned Citizens Coalition. The coalition brought evidence to the National Energy Board’s review of the pipeline and, subsequently, the BC Utilities Commission’s reviews of two successive power plant proposals for Duke Point. It also helped citizens organize against proposed sitings of the plant in Port Alberni and North Cowichan.

The coalition delayed GSX so long that BC Hydro cancelled it in 2004, citing unfavourable economics - one of the coalition's key arguments!

BC Hydro then scaled back its plans to one power plant at Duke Point. Again, the coalition fought the proposal through the BC Utility Commission’s review process, but in February 2005 the Commission approved the project.

The story doesn’t end there. The tenacious coalition applied to the BC Court of Appeal for leave to appeal the decision. On June 14, the Court granted leave to appeal. The coalition's appeal never went ahead. Three days later, BC Hydro publicly announced it was cancelling plans for a gas-fired power plant at Duke Point.

Read BC Hydro's press release
Read the coalition's press release

B.C. has some of the planet's greatest renewable energy resources. As the Duke Point struggle showed, it is time to face the future and reduce our reliance on fossil fuels.

Footnote: In 2006, independent power producer on Vancouver Island will once again bid for the privelege of supplying BC Hydro with electricity. However, for the first time, the BC Utilities Commission will consider the liability of greenhouse-gas emissions and the cost of offsetting those emissions in its assement of the proposals. Undoubtedly, this is a result of the GSX Concerned Citizens Coalition's hard work.

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Posted by Arthur Caldicott on June 17, 2005

GSXCCC: Duke Point Power plant cancelled

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

For Immediate Release: June 17, 2005

Duke Point Power plant cancelled

For Immediate Release: June 17, 2005
Duke Point Power plant cancelled

Victoria – The GSX Concerned Citizens Coalition and its allies are celebrating BC Hydro's announcement that it will cancel the electricity purchase agreement with Duke Point Power Limited.

"We commend BC Hydro for cancelling the Duke Point power project," said coalition president Tom Hackney. "It's hard to cancel a committed project, but this is the right move. With mounting concerns about global climate change, BC should not be building new fossil fuel electricity generation."

"We looked carefully at the evidence in three regulatory reviews over five years," said Steve Miller, coalition vice-president. "BC Hydro overstated the demand for electricity on the Island and they overstated the risk of blackouts. We are confident the Island's supply will remain secure with the expected October 2008 installation of the new sub-sea cables linking us to mainland supply."

"The Duke Point plant and its earlier incarnations were economically indefensible," said Arthur Caldicott, Director. "Natural gas supplies are in crisis in North America and we can expect rising and volatile gas prices. We have abundant sustainable energy resources in BC, and they are not subject to fuel price fluctuations."

The GSX Concerned Citizens Coalition formed in 2000, with dozens of individual members and member groups including the Sierra Club of Canada, BC Chapter, the Georgia Strait Alliance, the Council of Canadians (Victoria, Cowichan and Mid-Island Chapters), and others.

The Coalition participated in the BC Utilities Commission's January 2005 review of the Duke Point Power Electricity Purchase Agreement. When the Commission approved the purchase agreement, on 17 February, the Coalition, along with the BC Sustainable Energy Association and Society Promoting Environmental Conservation filed with the BC Court of Appeal for leave to appeal the decision. The industry consumer group, Joint Industry Electricity Steering Committee also filed an appeal.

On 14 June, the BC Court of Appeal granted leave to appeal the decision on grounds that the Commission may have inappropriately kept some of the relevant information in the review confidential. Following this, the Board of Directors of BC Hydro decided to abandon the project.

- 30 -

For further information, contact:
Arthur Caldicott – (250) 743-5551
Peter Ronald – (250) 361-3621

Download the GSXCCC news release

Other news releases link

Posted by Arthur Caldicott on June 17, 2005

BC Hydro abandons Duke Point Power Project

June 17, 2005

Continued appeals force BC Hydro to abandon Duke Point Power Project

"Risk of project not being ready on time now too great"

VANCOUVER – BC Hydro today announced it is abandoning the proposed Duke Point Power Project because the continuing appeal process means the risk is too great the plant will not be built in time. This follows the decision on Tuesday by the B.C. Court of Appeal to hear an appeal of the project by a number of intervenors.

"Our priority throughout has been the reliability of electricity supply to our customers on Vancouver Island and the risks to that are now too great," said Bev Van Ruyven, BC Hydro Senior Vice President, Distribution. "Given that, we have decided to exit from the project, something we are able to do as part of our contract with Duke Point Power without any additional cost."

Canceling the project does come with reliability of supply implications. This is, however, something that will be focused on from both a short and longer term perspective.

"From a short term reliability perspective, we need to ensure that there will be enough supply on Vancouver Island until the new transmission line comes in," added Van Ruyven. "We will do that by trying to extend the life of the current transmission cable and making load curtailment arrangements with industrial customers that may be needed between 2007 and when a new transmission lines comes into service."

"For the longer term, we will look at how the next call for new energy supply to the private sector needs to be adjusted to take into consideration today's decision. As well, we will use the upcoming second round of our Integrated Electricity Planning workshops to discuss – particularly on Vancouver Island – how our next portfolio of resources can take into consideration today's decision. This will get us more input to help make a decision."

In making this decision, BC Hydro would like to recognize all the efforts of DPP throughout the last year.

"DPP has been very professional throughout this process," concluded Van Ruyven. "We hope we will be able to work with them again in the future."

Contact:
Stephen Bruyneel
Director, Corporate Communications and Public Affairs
Phone: 604 623-4344
stephen.bruyneel@bchydro.com

BC Hydro news release

Notice to BCUC to Terminate EPA
BC Hydro remains committed to supplying its customers on Vancouver Island with reliable cost-effective electricity. To that end it will begin to plan the implementation of short-term contingency options to secure additional reliability through to the in-service date of the proposed 230 kV transmission project. These options will be implemented sequentially to respond to the most current supply-demand forecasts. They include a load curtailment arrangement with Norske Skog, and perhaps other industrial customers, and temporary generation, if and when needed. Under current assumptions BC Hydro anticipates a one-year gap in its ability to meet the N- 1 planning criteria. However, it need not commit to that course of action until the in-service date for the 230 kV project becomes more certain. If BC Hydro concludes that the one-year gap is appropriate in the circumstances, it wil bring the matter forward to the Commission.

The most immediate consequence of the decision to terminate the EPA is that BC Hydro is obliged to reconsider the evidence it had planned to file Wednesday in support of the F2006 call for energy described in the 2005 REAP. Fundamental issues of the F2006 call, including quantity, timing and terms and conditions, all require reconsideration by BC Hydro in light of its termination of the EPA.

Posted by Arthur Caldicott on June 17, 2005

June 15, 2005

What you can do about Duke Point

The most effective thing you and others can do now, from June 13 to July 31, 2005, is write or call to key decision-makers.

Encourage them to seize this window of opportunity to terminate the agreement with Duke Point Power Partnership, without penalty. (By agreement on March 3, BC Hydro now has this right.)

Point out that there are more appropriate, less expensive, more environmentally benign alternatives to what is really just a short term bridging issue between 2007-2008, than this 25 year deal for the most expensive power in North America - which will necessitate, all by itself, a two percent electricity rate increase in BC if it goes ahead.

Write to:

Premier Campbell at Legislative Buildings, Victoria, BC V8V 1X4

Richard Neufeld, Minister of Energy & Mines, also at Legislative Buildings, Victoria, BC V8V 1X4

Your MLA - you can find her or his address and phone number here (though this information may be unreliable as new MLAs are updated in the system.)

Larry Bell, Chair, and the Directors of BC Hydro, at 333 Dunsmuir Street, Vancouver, BC V6B 5R3, or fax to Corporate Secretary's Office (604) 623-4467

Bob Elton, President and CEO, BC Hydro, also at 333 Dunsmuir Street, Vancouver, BC V6B 5R3, or fax to Corporate Secretary's Office (604) 623-4467

It's a little more work, but infinitely more effective, for you to write a letter. Email does not have the same impact.

Sample letter:



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

15 June 2005

The Chair and Board of the BC Hydro and Power Authority
Vancouver, BC
by fax: (604) 623-4467

Re: The Duke Point Power Electricity Purchase Agreement

Dear Mr. Bell and Board Members,

The GSX Concerned Citizens Coalition requests that BC Hydro cancel the electricity purchase agreement with Duke Point Power LP.

As you will be aware, the BC Court of Appeal has granted leave to the GSX Concerned Citizens Coalition and its allies and to the Joint Industry Electricity Steering Committee to appeal the Utilities Commission’s decision of 17 February. Now, under the terms of the electricity purchase agreement, BC Hydro has the right to terminate the agreement with no liability to Duke Point Power LP.

BC Hydro should exercise this option now. As you know, the opposition to the Duke Point Power proposal and other gas-fired generation projects on Vancouver Island has been widespread and protracted, and strongly supported with evidence. Not only have environmental groups and local Islanders opposed these projects – based largely on environmental considerations, including global climate change – but at the same time, on-Island industries are opposed, though they would supposedly be the main beneficiaries.

There are strong economic arguments against the Duke Point plant, including the price uncertainty of the gas commodity. As well, it is fundamentally wrong to build more fossil fuel-based generation in the context of global climate change. At the same time, the BC Transmission Corporation is confident of maintaining the Island’s electricity supply without the Duke Point plant.

The GSX Concerned Citizens Coalition has some forty individual members on Vancouver Island and ten members groups: Sierra Club of Canada, BC Chapter; the Canadian Parks and Wilderness Society, BC; the Georgia Strait Alliance; the Council of Canadians (Cowichan, Mid-Island and Victoria Chapters); the Nanaimo Citizens Organizing Committee; the Pender Island Conservancy Association; Shawnigan Lake Watershed Watch; and the Watershed Sentinel.

We urge you to cancel this project, so that BC Hydro can move toward an environmentally sustainable future, according to the commitments articulated by your president, Mr. Bob Elton.

Sincerely,

Thomas Hackney, President



GSXCCC funding appeal


Posted by Arthur Caldicott on June 15, 2005

Media coverage of Duke Point appeal decision

Vancouver Sun, 15 Jun 2005
Robert Barron, Nanaimo Daily News, 15 Jun 2005
Les Leyne, Times-Colonist, 16 Jun 2005



Duke Point power project opponents allowed to appeal its approval

Vancouver Sun
Wednesday, June 15, 2005


BC Hydro is mulling its next step after a B.C. Court of Appeal panel ruled Tuesday that opponents of the Duke Point power project on Vancouver Island did not get a fair hearing when the project was originally considered by the B.C. Utilities Commission.

The appeal court judges voted two-to-one in favour of groups including GSX Concerned Citizens Coalition who sought to appeal the BCUC decision -- albeit on narrow grounds pertaining to the amount of information Hydro originally provided on the cost of the project.

Hydro said in a statement it will schedule a meeting of the Crown corporation's board of directors "as soon as possible" and will have no further comment until that meeting has taken place.

Project opponents have 30 days to file their appeals with the court.

"A successful appeal would overturn the Utilities Commission's decision and nullify the approval of the Duke Point Power electricity purchase agreement," the citizens coalition said in a statement.

Hydro wants Duke Point, a gas-fired electricity generating plant, to meet peak-time power needs on the Island while opponents say cheaper and more environmentally friendly alternatives exist.

© The Vancouver Sun 2005

TOP



Power plant appeal gets new life

Robert Barron
Daily News
Wednesday, June 15, 2005

Now that a three-judge panel has agreed Tuesday to allow an appeal process to move forward against the proposed Duke Point power plant, BC Hydro officials are meeting "as soon as possible" to determine the Crown corporation's next moves.

Hydro spokeswoman Elisha Moreno said a board meeting will be called to analyze the decision by the B.C. Court of Appeal's panel and "provide guidance" on the next steps that will be taken.

"(Hydro) won't have any further comment until after the meeting has taken place," Moreno said.

On June 3, the panel heard arguments from the Joint Industry Electrical Steering Committee and the Georgia Strait Crossing Concerned Citizens Coalition who were required to show the panel that the B.C. Utilities Commission committed an error in law in its February decision to allow the $250-million, 252-megawatt gas plant to move forward.

Hydro had entered into a partnership with Alberta's Pristine Power to build the plant, if given approval, to meet a perceived energy crunch on Vancouver Island by 2007.

Pristine would build and operate the plant and sell the power to Hydro in a 25-year purchase agreement that would see Hydro pick up the tab for the costs of the natural gas to feed the plant. The three-judge panel reserved its decision until Tuesday to have time to study the documents filed by all sides.

The groups had filed an appeal to the B.C. Court of Appeal on the grounds of a reasonable apprehension of bias and denial of procedural fairness on behalf of the BCUC panel that oversaw the review process, but the court ruled in April its jurisdiction covers only procedural and jurisdictional issues and denied the appeal. After a review of the court's decision, the groups decided to press their case to the court's three-judge panel.

In coming to the conclusion to allow the appeal, one judge fully granted an appeal, a second fully denied an appeal and the third granted the appeal on one issue - confidentiality - but denied an appeal on the apprehension of bias so, by majority, the appeal was granted.

TOP



Appeal could sink Duke Point plans

Les Leyne
Times Colonist (Victoria)
Page A12, 16-Jun-2005

The proposed Duke Point electrical generating plant is vanishing right before our very eyes.

It's more than 10 years old and still doesn't exist as anything other than a mountain of expensive course changes, court decisions, regulatory hearing transcripts and electrical supply projections. Now all of them could turn out to have been written in disappearing ink.

It's an over-budget, politically inspired mess of the first order. All that saves it from becoming a public scandal is the relative low visibility and the fact it's a complicated story about a commodity everyone takes for granted -- electricity. That, and the fact it's been running for so long now that people are inured to it.

The full extent of the project where everything that could go wrong did might not become apparent for another couple of years.

That's when, given the track record to date, it's quite conceivable Vancouver Island industries might start shutting down at peak demand times because there isn't enough electricity any more. Consumer curtailments and portable emergency diesel generators dotting the Island also wouldn't be out of the question.

Various opponents say it won't come to that -- they just have to renew the cables that now supply the Island. But that separate project is getting its own share of heat from Lower Mainland and Gulf Islands residents cool to the idea of more overhead wires.

The latest news on this star-crossed 10-year-old plan to get more electricity on the Island comes from the B.C. Court of Appeal. The justices this week allowed some interest groups the right to appeal a utilities commission decision earlier this year that the deal between B.C. Hydro and the private proponents behind Duke Point makes enough economic sense that the project can proceed.

Those groups include a citizens group that has fought the project for years, two environmental groups and the major electricity customers on the Island. (That group is spearheaded by NorskeCanada, whose mills could make considerable profit by curtailing production and selling the unused power to Hydro themselves.)

The prospect of yet another hearing isn't particularly exciting news. But this week's decision could be the end of the line for a multimillion-dollar B.C. Hydro production that over the years has wandered the length of the Island, gone through several private partners, morphed into assorted shapes, spent years in various approval process and still gone nowhere.

Hydro informed the B.C. Utilities Commission last March that if the leave to appeal was granted before June 30, it has the right to abandon the project and proceed with contingency plans. Alternatively, the crucial agreement between Hydro and the private partners will stay in place only until July 31, if the appeal is still alive.

That means there are two potential go or no-go decision dates looming. B.C. Hydro can now scrub the project on a few days' notice, or wait until the drop-dead date on July 31. Early reaction to the court decision indicated B.C. Hydro is going to make a quick call on the project in the near future. The board of directors is expected to meet soon to decide.

The B.C. Liberal government is staying as far away from the mess as it can, with Energy Minister Richard Neufeld saying it is entirely up to the utility company. Hydro will wait until today to see what the new cabinet looks like and who the energy minister is, then the board will huddle and decide what to do next.

Directors could decide to wait some more, while a full-scale appeal of the commission's decision is prepared, heard and decided upon. And if the opponents win, that could also involve backing up and holding more commission hearings.

There have been so many delays already that another year or more looks minor by comparison. Or they could decide to pull the plug and cut their losses, which are now in the tens of millions of dollars. That would burn their private partners (Calgary-based Pristine Power is the operating company). But two private partners in past incarnations of the project have already been burned, so it's not like that's stopped them in the past.

It became clear years ago to all the B.C. Hydro experts that the Island would be facing a shortage of capacity. The NDP cabinet directed Hydro to pursue the generating plant as the preferred option. It's remarkable since then how circumstances -- natural gas prices, determined citizens' groups, unfavourable rulings and political changes -- have conspired to the point where the utility now has to make a major decision in which either option is loaded with negative and expensive consequences.

leyne@island.net

TOP

Posted by Arthur Caldicott on June 15, 2005

June 14, 2005

Duke Point Project Goes to Appeal

14 June 2005

Media Release – for immediate release

Duke Point Project Goes to Appeal

Victoria/Vancouver – This morning the BC Court of Appeal granted leave to appeal the BC Utilities Commission’s decision approving the controversial Duke Point Power electricity purchase agreement. The GSX Concerned Citizens Coalition, the BC Sustainable Energy Association and the Society Promoting Environmental Conservation applied for leave following the Commission’s 17 February decision. The Court also allowed the Joint Industry Electricity Steering Committee (“JIESC”) to appeal the Commission’s decision.

Both groups sought to appeal on the grounds that the Commission may have been biased in favour of the application; that it unduly restricted access to evidence; and that it unfairly used the review to order BC Hydro to contract for gas supply to Island Cogeneration, an unrelated power plant that was not the subject of the review.

“Under the terms of the contract, BC Hydro or the government can now cancel the Duke Point Power agreement with no liability,” said Tom Hackney, President of GSXCCC. “They should do so now, so Hydro can get on with more cost-effective and environmentally appropriate projects.”

“British Columbia has abundant sustainable energy resources and huge potential to increase energy efficiency,” said Guy Dauncey, President of BCSEA. “There is no justification for building fossil fuel-based generation, now or in the future.”

“The Duke Point Power plant would emit 800,000 tonnes of carbon dioxide per year,” said Karen Wristen, Executive Director of SPEC. “It would go directly against Canada’s climate change commitments under Kyoto, and it would undermine our ability to maintain a healthy environment, economy and society.”

Power from the 252 megawatt Duke Point Power generation plant is planned to go on-line in time to offset the 2007 zero-rating of some of the sub-sea electrical cables that supply Vancouver Island. A successful appeal would likely delay the plant, so that it would not meet that deadline. In that case, the BC Transmission Corporation would use bridging measures to ensure the Island’s supply until new sub-cables can be put in service in 2008 or 2009.

The appellants have thirty days to file their appeals with the Appeals Court. No date has been set to hear the appeal. A successful appeal would overturn the Utilities Commission’s decision and nullify the approval of the Duke Point Power electricity purchase agreement.

Tom Hackney, GSXCCC
(250) 381-4463
Guy Dauncey, BCSEA
(250) 881-1304
Karen Wristen, SPEC
(604) 788-5634

Download the GSXCCC news release

David Suzuki Foundation news release
Groups heading back to court to fight Duke Point project

Energy Solutions for Vancouver Island news release
Duke Point power plant in trouble

Gabriola Island’s NoGasPlant Coalition news release
Gabriolans Delighted With Appeals Court Ruling Against Gas Plant

Sierra Club of BC news release
Appeal granted in Duke Point power plant fight!

BC Court of Appeal Reasons for Judgement
The Joint Industry Electricity Steering Committee and the GSX Concerned Citizens Coalition, British Columbia Sustainable Energy Association and Society Promoting Environmental Conservation brought applications under s. 9(6) of the Court of Appeal Act to review the order of a chambers judge dismissing leave to appeal from orders made by the B.C. Utilities Commission concerning the application to approve an Energy Purchasing Agreement entered into between BC Hydro and Duke Point Power Limited Partnership. The applications were allowed to the extent that the order of the chambers judge is varied by granting leave on the issue of disclosure of confidential information, for the reasons given by Rowles and Levine JJ.A.; Hall J.A. dissenting. The review application is otherwise dismissed for the reasons given by Hall J.A., Levine J.A. concurring; Rowles J.A. dissenting.

Posted by Arthur Caldicott on June 14, 2005

BC Court of Appeal Reasons for Decision

The Joint Industry Electricity Steering Committee and the GSX Concerned Citizens Coalition, British Columbia Sustainable Energy Association and Society Promoting Environmental Conservation brought applications under s. 9(6) of the Court of Appeal Act to review the order of a chambers judge dismissing leave to appeal from orders made by the B.C. Utilities Commission concerning the application to approve an Energy Purchasing Agreement entered into between BC Hydro and Duke Point Power Limited Partnership. The applications were allowed to the extent that the order of the chambers judge is varied by granting leave on the issue of disclosure of confidential information, for the reasons given by Rowles and Levine JJ.A.; Hall J.A. dissenting. The review application is otherwise dismissed for the reasons given by Hall J.A., Levine J.A. concurring; Rowles J.A. dissenting.

BC Court of Appeal Reasons for Decision

Posted by Arthur Caldicott on June 14, 2005

June 13, 2005

BCUC and BCCA proceedings

Act now! Stop Duke Point Power
The most effective thing you can do from June 13 on is write or call to key decision-makers. Encourage them to seize this window of opportunity to terminate the Duke Point agreement, without penalty ... more

 

Jun 13 Duke Point Project goes to appeal
    Reasons for Judgement

May 9 & 10 BC Hydro &
    DPPP
respond
May 2 & 3 GSXCCC & JIESC
    app-to-vary argument
Apr 29 Court of Appeal to hear
        GSXCCC & JIESC apps
        Fri Jun 3, 10 AM in Vancouver
Apr 26 GSXCCC fight continues
        at Appeals Court
Apr 12 BCCA dismisses appeal
        by GSXCCC, JIESC
Apr 4 BC Hydro & DPP
        file arguments to deny appeal
Mar 23 JIESC & GSXCCC file
        motion-to-appeal arguments
Feb 24, 28 JIESC & GSXCCC
        appeal BCUC decision

 

Apr 28 Sounder article
Apr 25 Questions & Facts
Mar 11 Backgrounder
and Contacts list

February 17, 2005
Duke Point Power EPA
APPROVED by BCUC

Mar 9: Reasons for Decision

800,000 tons of new CO2
courtesy BCUC & BC govt

Transcripts and key documents

   

December 20, 2004
GSX Pipeline
CANCELLED
BC Hydro news release
Williams news release

Lights finally go out
on GSX Pipeline

Posted by Arthur Caldicott on June 13, 2005

June 10, 2005

Kitimat LNG plant takes step forward

Scott Simpson
Vancouver Sun
10-Jun-2005

A Calgary company's plan to build a $500-million liquid natural gas plant near Kitimat took a major step forward on Thursday, with an announcement that the project is now in the hands of British Columbia's environmental assessment office.

Kitimat LNG Ltd. is proposing to construct a deepsea receiving terminal for liquid natural gas (LNG) 18 kilometres south of Kitimat in Elmsley Cove.

The plant's owners foresee bringing in liquefied gas from suppliers in a maritime region known as the Pacific Basin, and "re-gasify" it in tanks at the Elmsley Cove terminal before piping it to local industries and on into the Western North American gas pipeline network.

The site is about 12 kilometres from a Pacific Northern Gas pipeline.

"There's the local market, a regional market, and then there's the greater British Columbia market," said Kitimat LNG president Rosemary Boulton in a telephone interview from Calgary.

"Some of the gas has the opportunity to move into the Pacific Northwest of the U.S. and on down into California -- or it can flow east into Alberta."

Sending gas to energy-rich Alberta isn't as implausible as it sounds -- Boulton noted that the province's oil sands project requires vast amount of natural gas to serve as fuel during processing.

Kitimat has three major industries, Alcan, Methanex and Eurocan, each of which could emerge as major customers for gas from plant -- although Methanex recently said the future of its plant is uncertain due to rising North American gas prices.

Boulton estimates the project would employ 700 people during construction, leading to 50 permanent full time jobs when the project is operational.

The privately owned company, an offshoot of Calgary's Galveston Energy, hopes to be in business by 2008. It secured an initial $50 million in financing in January 2005.

LNG is a comparatively rare commodity in North America, but there are about 35 proposed projects on the books in Canada, Mexico, and particularly the U.S., and it's expected that the continent will derive 20 per cent of its gas from liquefied imports by 2020.

Improvements in LNG transportation and handling methods have slashed costs by half since 1989, making it an economically viable participant in the North American market.

"Ultimately we'd like to source gas from the Sakhalin Island project which is just north of Japan, in close to Russia. That's the shortest supply destination for us," Boulton said.

"The project economics are making sense."

She added that there are "lots" of LNG projects coming on in the Pacific Basin in the 2008-2010 time frame "so it would certainly fit in well with our supply portfolio."

The B.C. Environmental Assessment Office will now undertake a 180-day review of the proposal, which has support from the community of Kitimat and unanimous support of city council.

The company also began consulting the Haisla First Nation since May 2004 when it declared an interest in the project.

"I guess the only thing that may throw a wrench into the gears is if the environmental assessment process doesn't finish in a timely fashion," said Kitimat Mayor Rick Wozney.

ssimpson@png.canwest.co

Kitimat LNG Project site at the Environmental Assessment Office

Kitimat LNG website

Posted by Arthur Caldicott on June 10, 2005

Oil and gas exploration is dead

Brian Peckford, Parksville Qualicum News, 10 Jun 2005
Richard Neufeld, CKNW, 10 June 2005



Oil and gas exploration is dead

A. Brian Peckford
Parksville Qualicum News
10-Jun-2005

Now that the final counts are in for the recent provincial election, one can reach certain conclusions based on the results. One conclusion that I have reached is that the issue of offshore oil and gas is pretty well dead, at least for some considerable time.

I have come to this conclusion given that on this particular issue the lines were clearly drawn between the two major parties.

The Liberals were in favour of lifting the moratorium and moving ahead with appropriate regulations and the New Democrats were opposed to lifting the moratorium.

Evidence of the Liberals’ position is obvious, given their statements in throne speeches and by the premier and the energy minister.

Additionally, the Liberals established an offshore oil and gas team within the Department of Energy and Mines.

The New Democrats have clearly indicated their position in their party platform: “Carole James will make sure common sense prevails by continuing the moratorium on offshore oil and gas exploration.”

The three provincial constituencies to be most affected by offshore activity are the North Coast, Skeena, and North Island.

All three ridings were held by Liberals before the provincial election and all three constituencies were lost to the Liberals and are held by the New Democrats after the election.

The likelihood of a Liberal government with a much reduced majority pursuing their offshore policy in light of these results is low to nil.

Add to this the minority status of the federal Liberals and their desperate attempts to hold power at almost any cost, means that little will be done federally to keep this file active.

And the third party, the first nations, have stated, through the recent public hearing process, their opposition to lifting the moratorium.

A. Brian Peckford
Qualicum Beach

Copyright 2003 Parksville Qualicum News

TOP



Offshore drilling still a high priority

Richard Neufeld, Minister of Energy and Mines
CKNW
Jun, 10 2005


VICTORIA/CKNW(AM980) - The Campbell Government insists it will continue to push for offshore oil and gas drilling, despite electoral losses in the ridings most affected by the issue.
Liberal MLA's who backed offshore drilling went down to defeat on the north coast and north island. That's prompted former Newfoundland Premier Brian Peckford, who now lives in BC and pushes for offshore drilling, to lament that the issue is probably dead.

But Energy Minister Richard Neufeld insists that's not the case, "Well that's his opinion, he's welcome to one. Our document said we were moving ahead with offshore and to my knowledge I've not been told any different, still have an offshore branch and still moving forward with it."

But Neufeld admits it'll be hard to get anything done on this file in Ottawa right now given the Federal Government has its attention on other issues.

TOP


Posted by Arthur Caldicott on June 10, 2005

June 09, 2005

U.S. power cheap no more for Hydro

Scott Simpson
Vancouver Sun
Thursday, June 09, 2005

It's just as effective to build additional power sources in B.C., papers show

A voracious and troubled electricity market south of the border is killing BC Hydro's ability to bolster the province's energy supply with cheap U.S. power, documents suggest.

The cost to import electricity from the western United States has risen 11 per cent since 2003, and it's now just as cheap -- or even cheaper -- to develop new independent power production within the province.

That's a 180-degree turnaround from Hydro's decades-long practice of buying cheap off-hour import power and conserving B.C.'s sprawling hydroelectric resources for periods of peak demand.

Independent power producers say B.C. is now relying on so-called "brown" power from coal-fired and nuclear power plants, because Hydro has failed to develop new resources at the same pace as domestic needs have expanded.

About 12 per cent of the province's annual electricity needs are met by imports.

Hydro maintains it can still meet all demand in a pinch by firing up the old and dormant Burrard thermal generating plant -- although current market prices for natural gas make this a costly option.

Documents filed recently with the B.C. Utilities Commission show Hydro paid an average $52.50 per megawatt hour (enough power for 750 homes) in the 2004-20005 fiscal year, compared with $47.50 in 2003.

Cheap U.S. hydroelectricity has kept the overall import price down in decades past, but five consecutive years of drought along the Columbia River drainage in Washington state have taken that source out of the equation.

Meanwhile, a Calgary-based energy sector analyst is suggesting a power-hungry U.S. will be burning more natural gas for electricity this summer because the nation's coal-fired generation system is pretty much at the limits of its capacity.

Martin King sees North American gas prices rising 20 per cent -- a scenario which would push overall energy prices even higher, both for U.S. consumers and BC Hydro.

"BC Hydro through Powerex was enjoying importing low load hour power over the earlier years of this millennium but in the last three years it's gone up quite steeply," Independent Power Producers Association of British Columbia president Steve Davis said on Wednesday.

"When you look at price, security and environmental impact, the high import strategy doesn't make sense any more," Davis added.

"The $52.50 price was the average in fiscal 2005. The rather painful irony is that that is essentially equal to the price BC Hydro paid to the green B.C.-based IPPs in their most recent call for power.

"More subtly, those green IPPs pay about $20 per megawatt hour back to various governments through water rentals, through taxes and through levies to regional districts or first nations."

Hydro spokeswoman Elisha Moreno said the crown corporation is "definitely" trying to get more independent power projects operational in B.C., but must also deliver the lowest electricity price.

"In the ideal world we are looking at becoming self-sufficient within British Columbia," Moreno said. "The challenge we face in expediting projects is that we must maintain a competitive process."

ssimpson@png.canwest.com

MADE IN AMERICA:

Powerex imports about 11 per cent of the electricity we consume in B.C. each year. And while some of that comes from Alberta (about two per cent of imports in fiscal 2005), the other 98 per cent comes from the U.S. That dependency on American energy is getting more and more costly.

Average cost of U.S. power imports

Fiscal 2003:

$47.50 Cdn per mega-watt hour

Fiscal 2004:

$49.90 Cdn per mw hour

Fiscal 2005:

$52.50 Cdn per mw hour

Increase over the three-year period:

More than 11 per cent

Source: B.C. Hydro

Ran with fact box "Made in America", which has been appended to the end of the story.

© The Vancouver Sun 2005

Posted by Arthur Caldicott on June 09, 2005

June 05, 2005

The battle for power continues

CKNW
Jun, 04 2005 - 3:00 AM


NANAIMO/CKNW(AM980) - The battle over the Duke Point Power Project near Nanaimo is now on standby, as everyone awaits the outcome of the latest legal arguments.

The BC Court of Appeal has reserved judgement following a day's worth of hearings.

Tom Hackney of the Georgia Strait Crossing Concerned Citizens Coalition is pinning his hopes on what the three-judge panel will decide, "If we are granted leave to appeal, I think that radically increases our chances of actually defeating the Duke Point Power Project."

BC Hydro thinks the plant is important to meet the future electricity needs of Vancouver Island.

But, some others, including Hackney, think it's overkill.

Posted by Arthur Caldicott on June 05, 2005

Court of Appeal judges hear Duke Point appeal arguments

On Friday, June 3, lawyers representing the GSX Concerned Citizens Coalition (GSXCCC et al) and the Joint Industry Electricity Steering Committee (JIESC) argued their applications before Hall, Rowles and Lavigne of the BC Court of Appeal (deep breath) to have them vary Judge Thackray's earlier dismissal of GSXCCC, et al's and JIESC's applications for leave to appeal the BCUC Duke Point Power decision.

In attendance were four lawyers for the BC Hydro and the Duke Point Power Partnership (DPPP) and three for the appellants.

BC Hydro (Chris Sanderson) focused on rebutting the JIESC (Brian Wallace) arguments, leaving Duke Point Power (George Mackintosh and Loyola Keough) to address the GSXCCC (Bill Andrews) "bias" argument.

Perhaps a dozen observers attended the hearing.

Key issues and evidence in the GSXCCC and JIESC arguments:

- the amount of information released in the Duke Point review was unduly restricted

- BCUC panel chair Hobbs inappropriatelyt included an order for Hydro to make a long-term firm supply contract with Island Cogeneration Project as a condition of approving the Duke Point deal

- the infamous "un-redacted" (or "redacted, lite") Volume 8 transcript, wherein Hobbs chats with BC Hydro witnesses on how to engineer a different winner than that arrived at by the Call For Tenders process

- the Commission appears to have decided the outcome of the review in advance of hearing all the evidence - as evidenced in that transcript

- the substance of the same in camera session was to have a conversation with BC Hydro to engineer an outcome, rather than simply to hear commercially sensitive information

The judges seemed well versed in the case and did not interrupt to get facts of the review explained.

At the end of the afternoon, the judges reserved decision. Parties will likely be notified a day or two ahead when the judges are ready to release their decision. The decision may be released, with reasons to follow.

from notes by Tom Hackney
thackney@island.net
(250) 381-4463

Posted by Arthur Caldicott on June 05, 2005

June 03, 2005

Anti-Duke Point Groups Re-Apply to Appeal Court

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

2 June 2005

Media Advisory

Anti-Duke Point Groups Re-Apply to Appeal Court

Victoria – On Friday, 3 June, the GSX Concerned Citizens Coalition, the BC Sustainable Energy Association and the Society Promoting Environmental Conservation (“GSXCCC, et al”) will appear before the BC Court of Appeal in a bid to stop Duke Point Power’s 252 megawatt gas-fired power plant from being built.

GSXCCC, et al will ask a three-judge panel of the Court to vary the 12 April decision of Judge Thackray. Thackray dismissed GSXCCC, et al’s application for leave to appeal the BC Utilities Commission’s 17 February decision, which approved BC Hydro’s plan to purchase electricity from Duke Point Power. GSXCCC, et al claim the Commission’s decision should be set aside, on the grounds that there is a reasonable apprehension that the Commission was biased in its review of the electricity purchase agreement.

The Joint Industry Electricity Steering Committee (“JIESC”) will appear before the three-judge panel at the same time as GSXCCC, et al, also arguing for a reconsideration of Thackray’s decision. Should the three-judge panel grant the requests, the GSXCCC, et al and JIESC will formally appeal the Utilities Commission’s decision to the Court of Appeal.

BC Hydro has indicated that, if leave to appeal is granted, Hydro will have the right to terminate the electricity purchase agreement with Duke Point Power, without penalties. Also, if an appeal were launched and succeeded, that would cause the Utilities Commission’s decision to be nullified, and again, BC Hydro would be able to terminate the agreement without penalty.

Power from the Duke Point Power generation plant is intended to be on-line in time to offset the 2007 zero-rating of some of the sub-sea electrical cables that supply Vancouver Island with electricity. A successful appeal would likely delay the project sufficiently so that it could not meet that deadline, in which case, the BC Transmission Corporation would employ “bridging measures” to ensure the Island’s supply until new sub-cables can be put in place some time in 2008 or 2009.

“We have a very real chance of defeating this costly and unnecessary project,” said Tom Hackney, President of the GSX Concerned Citizens Coalition, “and that would be good for all BC Hydro ratepayers.”

The GSXCCC, et al and JIESC applications will be heard at the Vancouver Law Courts, 800 Smithe Street, beginning around 9:30 and continuing into the afternoon. GSXCCC etal representatives will be available on site to address the media and answer questions.

For more information, call Tom Hackney at 381-4463

Posted by Arthur Caldicott on June 03, 2005

June 01, 2005

Power line opposition heating up

Andrew A. Duffy
Times Colonist
Wednesday, June 01, 2005

Upgrade urged for Island's electrical grid

Residents of Saltspring Island, Tsawwassen and Delta want to zap plans to upgrade the power lines that keep lights glowing on Vancouver Island.

They cite health and environmental concerns, saying high-voltage lines have been linked to health problems and are just plain ugly.

A lobby group on Saltspring wants a re-routing that would boost costs by tens of millions of dollars. Tsawwassen and Delta residents want route changes. B.C. Transmission Corp., responsible for the power lines, is in talks with residents and assessing alternatives.

On Tuesday, the corporation unveiled plans to put lines underground at Tsawwassen. It originally wanted to run lines on new towers over homes but scrapped the plan after a public outcry. "We listened carefully to the views expressed in Tsawwassen and with community input we were able to identify a route alternative that fully meets safety and environmental protection standards," said Dennis Maniago, a B.C. Transmission vice-president.

But at a meeting Tuesday night, residents were still unhappy. "We don't feel that the community's concerns have been met. We have huge concerns about the health effects of placing these high-transmission lines underground," said resident Maureen Broadfoot.

B.C. Transmission has estimated its upgrading project will cost more than $200 million. The upgrade is needed, it says, because of growing demand for electricity on Vancouver Island; as well, some existing lines are near the point where they're no longer reliable.

In the Gulf Islands, B.C. Transmission wants to install new overhead lines on Saltspring and Galiano islands to carry power to Vancouver Island using a 60-year-old right-of-way.

"We are asking them to consider alternative options, alternative technology and alternative routes," said Daria Zobi, a member of Island Residents Against High Voltage Overhead Lines.

Zobi's group says running cables overhead on the existing right-of-way is potentially harmful considering the electromagnetic field given off by the increased capacity in the lines, and does not take into account environmental damage in the Gulf Islands.

"Their proposal is dinosaur technology," said Enid Turner, president of the residents' group, whose property backs onto the right-of-way. "We want them to look at new technology ... if this system is going to be around for 40 or 50 years, why not do it right?"

Both Turner and Zobi suggest an undersea model that would go around Saltspring before reaching the Vancouver Island entry point near Maple Bay. "BCTC is not willing to look at it seriously," said Turner.

The utility disagrees. B.C. Transmission has been crunching the numbers on three alternatives, an overhead route, underwater and underground, said Donna McGeachie, the corporation's community affairs manager. Estimates will be ready for a meeting with Saltspring residents on Saturday.

© Times Colonist (Victoria) 2005

Posted by Arthur Caldicott on June 01, 2005

May 20, 2005

Latest suit against B.C. Hydro called political

Peter Kennedy
Globe and Mail
20-May-2005


VANCOUVER

U.S. energy officials say California's latest lawsuit against British Columbia Hydro and Power Authority may be politically motivated and could hamper the state's ability to meet demand this summer.

They were referring to a $1-billion (U.S.) lawsuit filed this week in which California Attorney-General Bill Lockyer accuses B.C. Hydro's Powerex export arm of acting in concert with others to manipulate electricity prices during the state's energy crisis five years ago.

"These actions include, but are not limited to, the purchase of electricity by Powerex in California and, with the help of Public Service Co. of New Mexico and the Colorado River Commission, its withdrawal from, and subsequent reimportation into the California market," the suit alleges.

A statement of claim filed in the Superior Court of California indicates that the state is aiming to recover $1-billion in damages for injuries caused by the alleged violation of the state's antitrust law.

The latest in a string of lawsuits filed by California against B.C. Hydro, it comes nearly two years after the U.S. Federal Energy Regulatory Commission (FERC) said it could find no evidence that Powerex manipulated the California electricity market during the 2000 and 2001 energy crisis.

B.C. Hydro spokeswoman Elisha Moreno said the suit is "a bombshell" because it alludes to the same transactions that were reviewed and cleared by FERC in October, 2003. "The Attorney-General's office is dragging up the past when we thought it was behind us."

U.S. energy sector officials seemed to agree.

FERC spokesman Bryan Lee said he did not want to comment on the specific allegations in the suit, but added that Mr. Lockyer has not had a very successful track record with suits of this kind.

"Typically, they have been dismissed because under the U.S. Constitution, the Federal Power Act prevails over state law in matters of state commerce, such as electricity sales across state lines," he said.

Gary Ackerman, an executive director of the Western Power Trading Forum, which speaks for 40 wholesale electricity buyers and sellers in the United States, put it more bluntly.

"It is clear to me that this is politically motivated," he said in an interview. He said Mr. Lockyer may be trying to garner support from voters opposed to deregulation of the California's electricity industry ahead of state governor elections next year. "I challenge anyone to come up with a better explanation."

A spokesman for Mr. Lockyer, Tom Dresslar, said yesterday that California's only motive is to hold companies accountable for their misconduct. "Powerex ripped us off, pure and simple, and we are trying to get our money back."

B.C. Hydro's Ms. Moreno said the Crown utility has 10 days to respond to the allegations in the suit. "We are going to be more selective about who we do business with in California," she added.

Posted by Arthur Caldicott on May 20, 2005

May 19, 2005

Add stepped rates to Hydro

Editorial
Nanaimo News Bulletin
May 17 2005

Only a community like Gabriola could rally together for such an environmental cause.

Unhappy with the prospect of the Duke Point power plant, a high number of people in the community got together to demonstrate to B.C. Hydro that they can reduce the demand on electricity during peak power periods.

The results were encouraging. The island's overall use of electricity rose only about one-quarter of the amount it normally does during the peak afternoon/evening hours.

Peak hours were targetted as an answer to the idea that the power plant must be built to address the impending shortfall in Vancouver Island's energy supply.

It's a worthwhile demonstration in another respect. It's likely very few people think about the overall energy demands placed on B.C. Hydro when they turn on their dishwashers or dryers. But if everyone took it to heart, Gabriolans have it right - the Duke Point plant probably wouldn't be needed.

The problem is habits are quite different. Many people will continue to come home at the end of the day and fire up all their electrical appliances because it's convenient to them. Growth means more people will be doing the same, necessitating Duke Point. But a little incentive will help.

B.C. Hydro's industrial customers are already on stepped or time-of-use rates. There's no reason a similar system can't be introduced for residential customers.

Many people might grumble about the prospect of having to pay more for using electricity when they want. However, if our habits keep up, we will have to build yet another expensive power plant and increase our reliance on natural gas to support our habits. That will increase the cost of electricity with no choice for any user.

Stepped rates will reward those willing to lessen the peak demand, which helps us all in the end.

- News Bulletin editorial board

See also Power experiment proves conservation is the answer

Posted by Arthur Caldicott on May 19, 2005

May 16, 2005

BC Hydro & Duke Point Power respond to GSXCCC & JIESC

On May 3, the GSX Concerned Citizens Coalition and the Joint Industry Electricity Steering Committee filed with the BC Court of Appeal, "applications to vary" the Court's decision of April 12. (link)

The April 12 decision by Judge Thackray rejected the applications of each group for permission hear an appeal of the BC Utilities Commission decision of February 17 which approved the Electricity Purchase Agreement between BC Hydro and Duke Point Power Partnership. (link)

An oral hearing on the "applications to vary" is set for June 3, at 10:00, in Vancouver.

BC Hydro and Duke Point Power Partnership have each responded to both of the "applications to vary" by GSXCCC and JIESC.

BC Hydro response to GSXCCC

BC Hydro response to JIESC

Duke Point Power Partnership response to GSXCCC

Duke Point Power Partnership response to JIESC

Posted by Arthur Caldicott on May 16, 2005

Watchdogs over the oil and gas industry need more clout

Editorial
Vancouver Sun
Monday, May 16, 2005


A business has only one overriding purpose: to deliver a return on investment to its owners. Despite all the recent blather about corporate citizenship and good governance, everything is subservient to the pursuit of profit.

Nations that embrace the profit motive are rewarded with ample wealth to provide a high standard of living for their citizens, spend lavishly on social programs and dispense aid to less fortunate states.

However, society has priorities other than making money, such as public health and safety and environmental integrity. Business must operate in such a way that it does not compromise these goals. Legislators put rules and regulations in place to ensure that the common good is not sacrificed for the sake of the almighty dollar.

So it is disturbing to learn that the oil and gas industry in British Columbia has a sorry record of compliance with provincial rules. An audit by the Oil and Gas Commission found that of 3,305 field inspections last year nearly two-thirds were in breach of regulations -- a total of 5,734 infractions. The number of violations is up 26 per cent from the 2003 audit, which may reflect the booming oil and gas sector and a greater emphasis on field inspections rather than a surge in lawlessness.

Still, oil and gas producers should clean up their act or face consequences if they don't. And therein lies the problem.

The Oil and Gas Commission was created as a component of the Oil and Gas Development Strategy, a plan worked out by the New Democratic Party government and the Canadian Association of Petroleum Producers in 1998, designed to increase production and stimulate investment in the oil and gas industry.

From its inception, the commission was charged with regulating an industry the government was anxious to promote and nurture. It is responsible for enforcing regulations under a dozen different acts, covering drilling, waste management, spills, road construction, pipelines and workers' compensation issues.

But it has little in its enforcement tool box to effectively do the job. It can write deficiency letters asking offenders to take remedial action and, in a serious case where safety is jeopardized, can issue a stop-work order. It has no authority to levy fines and must call in another government agency if further investigation is warranted.

It is supposed to regulate the industry, its website says, "through fair, consistent, responsible, and transparent stakeholder engagement."

Like the B.C. Securities Commission, the Oil and Gas Commission is financed by the industry it regulates, charging fees for services such as issuing permits for oil and gas activities.

The difference is that the body which regulates the securities industry acts as prosecutor, judge and executioner. It can initiate investigations, conduct hearings, issue judgments, levy hefty fines, prohibit offenders from serving as an officer or director of any public company, shut down an investment dealer and even ban bad players from capital markets for life. It commands, even demands, the respect of those it regulates.

Companies will take shortcuts if they can save money. They are obliged to find the most cost-effective ways to produce the highest possible profit. That's their duty to shareholders. Given corporate zeal to keep costs to a minimum, if the penalties for non-compliance become an onerous business expense, a needless drag on earnings, the number of violations will drop.

Let the risk-takers in the oilpatch develop our resources, reap their rewards, create jobs and pay taxes within a framework of fair and reasonable regulations that will be vigorously enforced by an Oil and Gas Commission that has real clout.

© The Vancouver Sun 2005

Posted by Arthur Caldicott on May 16, 2005

May 12, 2005

Power experiment proves conservation is answer: group

Robert Barron
Nanaimo Daily News
Wednesday, May 11, 2005


After a three-week experiment, culminating in a three-hour ‘power-down’ on Gabriola Island on May 3, a group has concluded Vancouver Island’s energy needs can be met by conservation and peak load reduction.


Bob McKechnie, a member of the NoGasPlant Coalition which opposes the planned construction of a gas-fired power plant at Duke Point, said the power on Gabriola Island was monitored for three weeks before May 3 to establish a base-line of power usage.

“With the cooperation of BC Hydro, a separate meter was set up specifically to monitor the island’s energy use during this time,” McKechnie said.

“We established that during peak times, from 4:30 p.m. to 7:30 p.m., the electricity load on the island went up an average of 630 kilowatts. Then on May 3, during the peak-use time, about 350 participating households on the island cut their power use and many went for a picnic.”

McKechnie said power usage on the island only went up 140 kilowatts during the peak period on May 3, about a 77% reduction from the average baseline.

He said if this comparison is translated to power usage on Vancouver Island, then extra power usage during peak times could drop from 4.12 megawatts to 3.10 megawatts, or a 25% reduction in power usage, using conservation methods alone.

“If Vancouver Islanders could reduce their power usage by half of that, around twelve-and-a-half per cent, during peak times, about 112 megawatts of power could be saved through conservation,” he said.

“Then if we add that NorskeCanada’s offer to reduce their usage during peak times by 140 megawatts, we have a total of 252 megawatts, which is exactly the amount of power the planned Duke Point plant is supposed to produce.

“What we learned on Gabriola suggests Vancouver Island’s power needs could be met now without costly construction, simply by modifying the time of day we use power,” McKechnie said.

BC Hydro’s Ted Olynyk said the Gabriola Island experiment is forward looking and sets a “great precedent” for other islands and areas to take up similar challenges.

“PowerSmart and load management are definitely part of the solution of meeting our energy needs, but it’s not the complete solution,” he said.

“BC Hydro needs a firm supply to deal with growing power demands, and we’re looking at a mix of PowerSmart, increasing efficiencies from our own operations, alternative energy, new generation like micro-hydro and the Duke Point power plant.”

Posted by Arthur Caldicott on May 12, 2005

May 05, 2005

Evaluation of an HVDC Light alternative to VITR (230 Kv)

Evaluation of HVDC Light as an Alternative for the Vancouver Island Transmission Reinforcement Project

Prepared by:
Dr. Mohamed Rashwan
TransGrid Solutions Inc.
Winnipeg, MB

April 6, 2005

Conclusion

An HVDC LightTM option for VITR rated 600 MW has been compared to one 3 phase 230 kV ac circuit rated the same. The two systems were compared from the standpoint of:

• Technical performance
• Energy losses
• Reliability
• Costs
• Environmental impacts

For VITR, HVDC LightTM is more expensive to construct, has higher losses, and costs more to maintain than the 230 kV ac alternative. It does not offer any technical advantage in this situation simply because:

• Vancouver Island is not a weak ac system, where the HVDC is the only in feed.
• The reactive power support and its control on the island is not a problem.
• There already exists a strong ac connection between Vancouver Island and the mainland via the two 500 kV ac cables.

Dr. Rashwan's Report

Posted by Arthur Caldicott on May 05, 2005

May 03, 2005

GSXCCC & JIESC file appeal arguments

The GSX Concerned Citizens Coalition and the Joint Industry Electricity Steering Committee today filed with the BC Court of Appeal, "applications to vary" the Court's decision of April 12.

The April 12 decision by Judge Thackray rejected the applications of each group for permission have an appeal of the BC Utilities Commission decision of February 17 approving the Electricity Purchase Agreement between BC Hydro and Duke Point Power Partnership.

An oral hearing on the "applications to vary" is set for June 3, at 10:00, in Vancouver.

GSXCCC Argument for the Application to Vary

JIESC Argument for the Application to Vary

Posted by Arthur Caldicott on May 03, 2005

April 27, 2005

Carr criticizes Liberals for backing gas-fired power plant

Glenn Bohn, Vancouver Sun, 27 Apr 2005
Robert Barron, Nanaimo Daily News, 27 Apr 2005



Carr criticizes Liberals for backing gas-fired power plant

Glenn Bohn
Vancouver Sun
27-Apr-2005

NANAIMO -- Green party leader Adriane Carr said Tuesday that if the Liberal government was committed to environmental protection, it would be reducing B.C.'s use of fossil fuels, not supporting a natural-gas-fired power plant at Duke Point near Nanaimo.

Carr said BC Hydro, a provincial Crown corporation, should be getting new electricity for Vancouver Island by supporting wind, tidal and other alternative sources of energy -- not a fossil-fuel-burning project that puts more greenhouse gases and local pollutants into the atmosphere.

"You cannot be committed to clean air and be driving the fossil fuel energy path, as the Liberals are doing," Carr said, speaking near the proposed site of the 252-megawatt power plant.

"We have a global commitment, the Kyoto commitment, to reduce our use of fossil fuels."

A Green party document released last week proposes energy conservation tax credits of about $5,000 apiece for 10,000 homes, for an estimated cost of $50 million. The Greens also want to set aside $100 million for renewable energy subsidies.

"The biggest cost saving is in energy conservation," Carr said.

She said B.C. shouldn't be using a precious and increasingly expensive resource -- natural gas -- to generate electricity near Nanaimo.

"The pollution would drift over to Greater Vancouver, which already has its pollution problems," she added.

The Duke Point power project, which was initially supported by the former New Democratic Party government, was approved this February by the B.C. Utilities Commission. Hydro's top executives have said the gas-fired power plant is the best way to provide customers on the Island with the electricity needed or else face a power shortfall in 2007.

But Philip Stone, the Green's candidate for the North Island riding, noted an already-approved 450-megawatt wind farm on the northern tip of Vancouver Island is expected to generate enough power for 135,000 homes. He complained that BC Hydro hasn't committed to buying that wind-generated electricity and the power will be exported to the U.S., through a submarine cable that crosses the Strait of Juan de Fuca.

"Instead, we're selling ourselves into fossil fuel slavery," Stone said.

Carr, whose party won about 12 per cent of the popular vote in 2001, said the Green party would not allow the Duke Point power project to go ahead if it formed the next B.C. government.

When a reporter reminded Carr she has already acknowledged her party won't win the election, Carr chuckled and said "that's true."

But, she said, "Elected Greens can play an incredible role in the legislature."

She pointed to the effect of two NDP MLAs in the last legislature, Jenny Kwan and Joy MacPhail.

"We all have to acknowledge that even two feisty women in the last sea of Liberals played a big role, in terms of raising issues," she said.

gbohn@png.canwest.com

TOP



B.C. Green Party leader Carr takes shot at Duke Point plant


Robert Barron
The Daily News (Nanaimo)
27-Apr-2005

The burning of fossil fuels for energy, vote-splitting and the dangers of fish farms were just a few of the topics discussed by Adriane Carr, the Green Party's provincial leader, at Duke Point Tuesday.

Flanked by two local Green candidates in the provincial election, Nanaimo's Doug Catley and North Island's Philip Stone, Carr said if she were elected premier, she would consider cancelling the $280-million Duke Point power plant project.

"If the decision was made that building the power plant is wrong and the public indicated they were interested in moving to different ways to meet our energy needs, then a Green government would work out a deal to get out of the plant contracts," she said, standing in front of the entrance of the proposed plant.

"We need to move away from the entrenched use of fossil fuels as we're moving entirely in a different direction from our commitments under the Kyoto Accord."

Carr said the province has to move to alternative, clean and renewable energy sources that will cost less in the long run.

"The province has one of the greatest potential for wind power in the world and there's a proposal for a wind energy farm in North Island," she said.

"However, BC Hydro has never given wind companies a fair shake by offering them the same prices for their power as they've given the Duke Point operators, so the wind farm is looking to sell its power in the U.S."

VOTE-SPLITTING

Asked if she felt her party would split the votes between the NDP and Greens, ensuring a Liberal win in the election, Carr said votes for the Green Party "come from across the political spectrum."

"During the last election, people were leaving the NDP in droves so the party shouldn't be blaming us for their loss," she said,

"People are coming to us from both the Liberal and NDP camps, and about 30% who voted for us last time said they wouldn't have voted at all if we weren't in the running."

Catley said he's "insulted" by the notion the Green Party would be splitting votes with the NDP.

"This is a democratic process which allows people to stand up for what they believe in," he said.

"I find it incredible that we'd be accused of vote-splitting as it's an insult to the process to suggest that diversity of thought is not recognized. The Green Party is neither left nor right, but global."

FISH FARMS

Carr said salmon farms are not healthy for the wild salmon that swim nearby.

"I want to place a cap on current fish farms and replace the industry with a restoration of wild fisheries," she said.

"Wild fisheries provide more jobs and are more sustainable than fish farms."

TOP



Posted by Arthur Caldicott on April 27, 2005

April 26, 2005

Duke Point Power opponents continue Appeals Court fight

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

For Immediate Release: April 26, 2005

Duke Point Power opponents continue Appeals Court fight

Victoria – The GSX Concerned Citizens Coalition (GSXCCC), the BC Sustainable Energy Association (BCSEA) and the Society Promoting Environmental Conservation (SPEC) will continue their BC Court of Appeal challenge to the BC Utilities Commission decision that approved BC Hydro’s plan to buy power from the Duke Point Power’s gas-fired generation plant.

“We want our day in court,” said Tom Hackney, President of the GSXCCC. “We are convinced there is an apprehension of bias in the Utilities Commission decision; and the evidence shows the Duke Point power plant is unnecessary, costly and contrary to our Kyoto commitment to reduce greenhouse gases.”

“We carefully reviewed the reasons Judge Thackray gave for dismissing our appeal application,” said Hackney “We are not satisfied that he grasped the facts of the case or understood our strong reasons for claiming an apprehension of bias. This goes to the heart of people’s ability to trust in the fairness of the Utilities Commission’s decisions on matters affecting Hydro rates and the public interest.”

On 28 February, the GSXCCC, BCSEA and SPEC applied to the Court of Appeal for leave to appeal the Utilities Commission’s 17 February decision, which approved BC Hydro’s electricity purchase agreement with Duke Point Power LP to buy the output from a 252 MW plant that is scheduled to be built this year at Duke Point.

GSXCCC, et al claim there is a reasonable apprehension of bias that the Commission panel reviewing the purchase agreement had made up its mind in favour of the power plant before having heard all the evidence and arguments. GSXCCC, et al also claim the Commission panel conducted itself improperly during an in camera session and exceeded its jurisdiction in disregarding potential cost liability of using natural gas – a known source of greenhouse gases – in the power plant. The Joint Industry Electricity Steering Committee, representing industrial users of electricity, also filed for an appeal, on similar grounds.

On 6 April, GSXCCC, et al and JIESC argued their applications for leave to appeal before Judge Thackray of the Court of Appeal. On 12 April, Thackray dismissed both applications, issuing reasons on 20 April.

The GSXCCC, et al will shortly file documents to ask a three-judge panel to review and reconsider Judge Thackray’s dismissal.

For more information, call Tom Hackney at (250) 381-4463.

Download the GSXCCC News Release

Posted by Arthur Caldicott on April 26, 2005

April 25, 2005

BCUC awards $460,000 in participant funding

Download letter to GSX Concerned Citizens Coalition from BC Utilities Commission

Download participant funding application from GSX Concerned Citizens Coalition to BC Utilities Commission

Posted by Arthur Caldicott on April 25, 2005

April 23, 2005

Power plant foes weighing options

John Kimantas
Nanaimo News Bulletin
Apr 23 2005

Groups behind a court challenge to derail the Duke Point natural gas power plant are assessing their options in advance of the next stage of the appeal process.

Tom Hackney of the GSX Concerned Citizens Coalition said a decision is likely early next week on whether to proceed with the legal challenge in the B.C. Court of Appeal.

The stall in the plans comes courtesy of the release Wednesday of the B.C. Court of Appeal's reasons for decision.

The GSXCCC is one of the intervenors seeking for leave to appeal the B.C. Utilities Commission decision to grant B.C. Hydro a certificate of public convenience for the Duke Point plant.

The certificate is the last official hurdle before the power plant can proceed.
The reasons for judgment pose a serious blow for the Duke Point plant critics.
Justice Allan Thackray allowed few grey areas in his assessment of the appeal bid.

"In my opinion there is nothing in the submission of the applicants that would ground a successful appeal of the decision of the commission on the basis of either unduly limiting the scope of the hearing or of its use of and interpretation of the issue of public interest," Thackray wrote.

Hackney said his group will review the reasons for judgment.

"We'll be looking them over and assessing our options," he said.

Two days are already set aside May 2-3 in the B.C. Court of Appeal to hear the matter.

Jeff Myers, president of Pristine Power, the group that will build and own the power plant at Duke Point, celebrated the judge's decision.

"Justice Thackray's reasons for decision provide confirmation that the BCUC hearing process was fair and appropriate," he said in a press release.

Meanwhile, B.C. Hydro is taking a wait-and-see approach.

Hydro spokeswoman Elisha Moreno said the Crown corporation won't be proceeding with the power plant until the appeal process has run its full course.
She said the agreement with Pristine Power has already been signed.

Posted by Arthur Caldicott on April 23, 2005

The air we breathe

John Kimantas
Nanaimo News Bulletin
Apr 23 2005

It's a sunny week for a workshop at Karen Sato's home in rural Cedar, and cars of the participants line the front lawn of the Cedar Heights Crescent home.

The topic for Karen Sato's class is consegrity - wellness support - and Sato has chosen the Cedar location as her base for its quiet rural nature, one that fits in well with the workshop's theme.

On this unusually warm April afternoon, however, there's one fly in the ointment - a rotten egg-like smell of sulfur that for some reason seems to settle in pockets and valleys across the Cedar area in areas like one near Woobank Road.

For pollution, this area is likely only to see it become worse. With the construction of the Duke Point natural gas-fired electrical generation plant, this neighbourhood is essentially "ground zero" - the closest cluster of residential properties to the proposed power plant.

Cold start-ups will have the worst local effect. During these, the predicted highest concentrations of nitrous oxide and carbon dioxide emissions will be within 300 metres of the stack; the nearest residences are 700 metres away.

Experts say even the worst exposures won't be a health risk. In the closest area, once combined with emissions from Harmac, nitrous oxide levels are expected to reach 178 parts per million. That's below World Health Organization guidelines and less than half of what the Environmental Assessment Office refers to as "the federal government objective."

Sato, given her background, is particularly attuned to the energy of an area. Her initial reaction at the prospect of the plant was fear, she says.

But after a walk in the woods and seeing wildflowers blooming, however, she felt more confident that all will be well.

Her attitude in combatting the risk is philosophical.

"Adding more fear will generate more fear and then it will be that much more harmful," she says.

Most neighbours tend to share the same general lack of concern. In a conversation with three other families in the MacMillasn Road area - the closest residences to the Duke Point stack - none expressed concern. In fact, all three said they had not even followed the controversy.

One other person with no concerns about the construction of the Duke Point plant is the man with his nose closest to the city's air quality monitoring.

The monitoring equipment, a collection of unassuming electronic consoles, sits below air tubes in a climate-controlled but otherwise unremarkable office on the third floor of the Water, Land and Air Protection office on Labieux Road.

Warren McCormick, an air quality meteorologist, is charged with checking the
station several times a day.

The Nanaimo station is a minor one, checking ozone and sulphur dioxide levels.
The ozone is the feature associated with urban smog. Sulphur dioxide originates from fuels with sulphur in it, such as oil and gas.

Day after day the machines monitor the air, and day after day the readings come out the same: that Nanaimo's air quality is good.

There are exceptions. McCormick says one occurs in the spring when the ozone levels, due to global background levels or special weather events, put the ozone level slightly above the "good" and into the "fair" range.

The other time of concern is in the fall when the fine particulate matter level goes high.

McCormick notes that those readings coincide with open burning, especially when coupled with periods of clear skies and light winds.

Another air quality station monitors Harmac for particulate matter known as PM10, a harmful pollutant that can penetrate deep into the respiratory tract, affecting breathing.

Another measure taken at Harmac is for TRS, totally reduced sulphur, a sulphur compound that is reduced because it doesn't have oxygen.

TRS is the focus of emission control not because it's particularly harmful, but because all pollutants tend to be lessened when TRS levels are reduced. TRS is also responsible for the kraft mill smell associated with Harmac.

"It's the one people notice the most," McCormick said.

While the smell is an indication of pollutants, McCormick said the ability to smell TSR is no indication the level is dangerous.

"Some people can actually smell it at levels lower than our instruments can measure it," he said.

If figures show Nanaimo's air quality is good today - and enviable if you live in places like Chilliwack, where the province's air quality is at its worst - it's the future that is causing most distress.

Opposition is aimed squarely at large projects: the Duke Point power plant and the hog fuel burner at Coastland Wood Industries.

McCormick is one of the few in favour, a position earned through his inside knowledge of emissions.

He doesn't expect things to get worse.

"I think it will be barely measurable," he said.

It's a position mirrored by the Environmental Assessment Office. The office's 2002 assessment report on the Vancouver Island Generation Project - Duke Point - gives the plant a clean bill of health.

The key finding: that the proposed plant would not have a significant impact or even an incremental impact on air quality, with emissions well under established criteria.

It's a view not shared by its critics. And there are many. For the Environmental Assessment review process, the office received about 400 submissions. Only five were in favour.

Despite the outcry, the opponents have failed at every stage.

It's a split just about right down the middle: officials in agreement, and the general public opposed.

Next: How the two sides can be so far apart.

Posted by Arthur Caldicott on April 23, 2005

April 22, 2005

Environmental and financial consequences of Site C dam

Ruth-Ann Darnall
Vancouver Sun
22-Apr-2004

On April 8 in The Sun, David Black, chair of the B.C. Progress Board, presented his case for building Site C, a 900-megawatt hydro-electric dam on the Peace River in northeastern British Columbia. It sounded too good to be true. It probably is.

There is more to the Site C story, much of it found in recent BC Hydro documents and in the conclusions of the B.C. Utilities Commission when it considered the Site C project in the early 1980s.

BC Hydro estimates that the project would leave a footprint of 12,800 acres (5,125 hectares). Of this, 10,000 acres (3,940 hectares) is judged by both Hydro and the commission to be farmland of agricultural significance -- not the 500 hectares estimated by the B.C. Progress Board.

Much of this is Class 1 agricultural land, with Class 1 climate capability, an increasingly rare commodity in British Columbia. Not only would the acreage be lost, but any Class 1 land that remained would have to be downgraded to Class 2 because of climate change brought about by the impoundment. In the late 1970's, BC Hydro introduced a "passive land acquisition program," under which it acquired about 7,500 acres. The remainder of the titled land is held by private individuals.

The Progress Board dismissed the environmental consequences of Site C because "there are no salmon in the river." In fact, the unique wildlife values of the Peace Valley were recognized by the South Peace Land Resource Management Plan, which laid out the Peace Boudreau Protected Area on the south side of the Peace River. The valley provides crucial wintering and calving habitat for ungulates and is a critical nesting area for warblers and an important flyway for 70 species of birds and waterfowl.

So let us be clear: The environmental footprint of Site C is not inconsequential.

There are some things man cannot put into economic terms. The Peace Valley is one of them. Yet in these times, neither environmental consequences nor pristine beauty will be the basis upon which Site C will be judged; Site C will stand or fall on economic considerations.

British Columbians must hope that once again, the utilities commission will provide the acuity and vigilance needed to determine truly and fairly the full costs of this mega-project. Black maintains that the dam "can be 100 per-cent financed by pre-selling the power for export, resulting in little financial risk."

California is the market mentioned. Have British Columbians forgotten that California received $455 million worth of electricity from BC Hydro in 2001 that it has steadfastly refused to pay for? Having forgotten that they asked for help to keep the lights on, California accuses B.C. of somehow being at fault and overbilling them. Not only did the California companies refuse to pay, BC Hydro was forced to defend itself from attempts to sue for refunds.

Despite a ruling last year by the U.S. Federal Energy Regulatory Commission that BC Hydro had done nothing wrong, the bill remains unpaid. Is this the market into which British Columbians wish to entrust a "self-financed" $2.2-billion dollar investment? What have been the legal costs of defending BC Hydro and chasing that $455 million? The Progress Board opines that "financial returns can be guaranteed." Guaranteed by whom? In the end, any financial returns will be guaranteed by B.C. ratepayers.

Something that seems too good to be true usually is. Such is the scenario laid out by Black.

Make no mistake: Site C is not without environmental consequences, nor financial risk.

Ruth-Ann Darnall is chair of the Peace Valley Association, which was formed in 1975 to ensure the preservation of the Peace River Valley.

(No website; she lives in Fort St John)

Posted by Arthur Caldicott on April 22, 2005

April 20, 2005

BCCA reasons for decision

The reasons for judgment in the dismissal of the GSXCCC’s and JIESC’s respective applications for leave to appeal the BCUC’s approval of the Duke Point EPA are now on the BCCA website at www.courts.gov.bc.ca

Posted by Arthur Caldicott on April 20, 2005

April 19, 2005

How to Curb BC’s High Risk Hunger for Energy

Alan Durning
The Tyee
April 18, 2005



Spreading pipelines, vulnerable to sabotage, fuel our growing appetite.

Last year, one of the most surprising findings of a new regional index of progress called the Cascadia Scorecard was that -- of seven key trends -- British Columbia and the rest of the Pacific Northwest scored most poorly on energy efficiency.

Yes, despite Cascadians’ interest in renewable energy, clean energy, and hybrid cars, the average northwesterner consumes nearly as much highway fuels and nonindustrial electricity as a Texan. British Columbians are more energy efficient than folks from Washington, Oregon, or Idaho, but still consume relatively high levels of energy -- almost 50 percent more per person than Germans.

This year’s edition of the Cascadia Scorecard, released last month, confirmed the region’s poor performance on energy and added a surprise twist to the story -- as well as some good news.

Vulnerable to attack

The surprise is that not only does the region’s energy consumption remain high—despite high gas prices, British Columbians’ per-person energy use actually increased in 2004 -- but the region’s energy system is also highly insecure on an infrastructure level. Cacadia’s pipelines and powerlines are highly vulnerable to sabotage that, if realized, could seriously disrupt the regional economy.

British Columbia, for example, gets most of its oil from Alberta through the Trans-Mountain Pipeline, which crosses hundreds of miles of hinterlands before reaching the lower Fraser Valley. Like similar pipelines, the Trans-Mountain is almost impossible to secure against determined attackers. The region’s five natural gas pipelines are more explosive than oil pipelines, and—unlike oil—gas has no alternative mode of transport.

The good news is that there is a solution that pays for itself -- a clean-energy revolution that promises to make BC’s energy system secure, efficient, and more profitable. Strategies such as clean-car standards and innovative incentives for energy efficiency can bombproof the Pacific Northwest’s energy system, generate thousands of jobs, and help the region improve its “score” in energy efficiency.

Clean car ‘feebates’

In transportation, one of the most promising strategies is “clean cars,” the super-efficient, advanced-technology vehicles that British Columbia will get if Ottawa honors its Kyoto pledge and demands steep cuts in new-vehicle emissions. Clean cars are like a decentralized petroleum reserve. Their fuel tanks and those at filling stations hold several weeks’ supply -- a security buffer, should pipelines stop flowing.

The Canadian government and the big automakers recently signed an agreement to reduce emissions of greenhouse gases from new vehicles. With Canada firmly on board for clean-car standards, as well as seven states in the US, the auto industry will have a much greater incentive to design more fuel-efficient cars.

On the consumer side, the drive toward clean cars would be accelerated by a powerful efficiency incentive called feebates, which is getting traction in Canada. The basic idea is elegant in its simplicity: In the case of vehicles, cars that are more efficient than average come to the showroom carrying a rebate for their buyers. Those rebates are proportional to the efficiency of the vehicle, so superefficient vehicles come with whopping big rebates.

Conversely, cars and trucks that are less efficient than average, come with a fee -- a fee that grows with the vehicle’s inefficiency. The fees pay for the rebates each year, so it’s revenue neutral. Even better, feebates would have a “snowball” effect on efficiency because they are designed to continuously tug the entire car and truck market toward better fuel efficiency.

Correcting a market flaw

Economists like feebates because they correct a market flaw by making purchase prices a better reflection of the real costs of energy-inefficient products. Environmentalists like feebates because they put prices in line with Canada’s Kyoto commitment. Ottawa is considering implementing vehicle feebates as part of its 2005 budget, but they could be used for any energy-using product.

Similar energy savings are readily available not only in transportation, but also in buildings and industry. Energy efficiency can save energy less expensively than new sources can provide it, as BC Hydro’s ambitious PowerSmart plans make clear.

Investment in renewable energy can also add dramatically to the province’s energy security by diversifying and decentralizing energy sources. Western Canada is already benefiting economically from an emerging base of businesses that specializes in energy efficiency and renewables, green buildings, and alternative fuels. Ballard Power Systems of Burnaby leads the world in hydrogen fuel cells, which have potential for both transportation and distributed power generation.

A new ethanol

Another quick-maturing technology, which Canadian firm Iogen is pioneering, is cellulose ethanol, a fuel made from crop and forest residues and urban wastes that could be locally produced in rural British Columbia. Other areas with potential are passive-solar design, highly efficient woodstoves in nonmetro areas, and windpower.

Saving oil and natural gas through efficiency gains and investment in renewables would also generate profit by allowing BC to import less oil from Alberta and to export more of the natural gas it already extracts. All told, the province’s economy stands to gain up to a maximum of $10 million a day: up to $5 million by not importing as much oil and another $5 million by increasing exports of gas. Instead, the money will circulate locally, creating jobs and supporting BC businesses.

Such changes won’t appear magically. They will require leadership and the embrace of innovative new incentives detailed in Cascadia Scorecard 2005. But the payoff will be enormous: British Columbians keep home more of their energy money. They get an energy system that’s less vulnerable to sabotage. And future editions of the Cascadia Scorecard may start by lauding the region’s energy efficiency -- instead of lamenting its low score.

[Tomorrow: How BC sustainability stacks up against U.S. Northwest on health, economy, population, sprawl, forests, pollution and energy.]

Alan Durning is executive director of Northwest Environment Watch. The Cascadia Scorecard, launched in 2004, monitors seven key trends critical to the future of the Northwest, including health, economy, population, energy, sprawl, forests, and pollution. See sidebar, “Keeping Score,” for more information on the province performed in these trends. And for regular updates on the Scorecard, click to subscribe here.

The Tyee features online discussion on articles such as this one. Check it out. Join the discussion.

Posted by Arthur Caldicott on April 19, 2005

April 18, 2005

Dams Hit Dry Spell

Marc Lifsher
LA Times
April 17, 2005

A prolonged Northwest drought has cut water levels along the Columbia River, meaning less hydropower is available for export to the south. California's grid operators are worried.

In 1941, folk singer Woody Guthrie wrote a paean to the Columbia River's Grand Coulee Dam, enthusing that power generated by the New Deal monument "is turning our darkness to dawn." (Right click to download and save Woody Guthrie's classic Roll on Columbia)

But this summer, the Pacific Northwest's mightiest river could leave California in the dark. A stubborn drought has reduced water levels behind the Columbia's network of power-producing dams by a third, leaving less electricity available for export to the south.

And that prospect is making California's power grid operators nervous.

The Golden State historically has relied on Northwest hydropower to help keep the lights on and air conditioners humming during periods of peak summer demand, and this year will be no exception. California expects to import as much as 6,000 megawatts of Northwest power on the hottest summer days — enough to serve about 4.5 million typical homes.

For now, power officials in the Northwest, whose massive hydroelectric dams can produce more than 15,000 megawatts of electricity when running full bore, say they should be able to meet that need, even if they can spare the extra power for only a few hours at a time.

But if California is hit by a severe late-summer heat wave — statistically a 1-in-10 possibility — the state would have to seek emergency supplies of Northwest hydropower to avoid forcing utilities to cut service to some large customers, according to a forecast released last month by the California Energy Commission.

And if sweltering weather grips Southern California for an extended period, the Columbia Basin's parched watershed might not be up to the task.

"We've got a lot of turbines on the river, and we can probably run them for three hours without depleting much of the water behind the dams," said John Fazio, a systems analyst with the Northwest Power and Conservation Council, which coordinates electricity supplies in Oregon, Washington, Idaho and Montana. "But we can't keep it up for a week."

Even normal weather conditions could severely tax California's electricity grid this summer, according to a recent forecast by the California Independent System Operator, which runs a 25,000-mile transmission grid that covers most of the state — although major service areas such as the cities of Los Angeles and Sacramento are outside its jurisdiction.

Power shortfalls could occur despite large-scale imports from the Northwest, Arizona and across the West, Cal-ISO warned, pointedly noting that "in severe drought conditions, neighboring regions' water levels may be too low" to provide the spare electrons California would need at times of peak demand. That happened as recently as 2001, when drought conditions in the Northwest cut hydropower exports to California, contributing to the energy crisis.

"Things will be tight," conceded Jim Detmers, Cal-ISO's acting chief operating officer.

California and the Pacific Northwest have a long history of mutual power dependence, dating to President Franklin D. Roosevelt's creation of the Bonneville Power Administration in 1937.

Roosevelt created the BPA to operate the massive Bonneville and Grand Coulee dams, as well as other hydroelectric dams on the Columbia River and its tributaries. The president envisioned the BPA as a kind of Western version of the Tennessee Valley Authority, the government corporation that dammed rivers and delivered electricity and industry to the rural South during the Depression.

The Northwest project, called a "socialist boondoggle" by critics, struggled for years to win public support. In 1941, the BPA paid folk singer Guthrie $10 a song to write 26 anthems, ballads and blues — including "Talkin' Columbia" — that praised the mammoth dams and the men and women who built them.

During the next seven decades, the BPA, a self-financing federal government agency, has marketed power from 31 dams and other sources. The agency has been an engine of growth in what had been rural areas of Oregon and Washington, providing below-market-price power to aircraft manufacturers, aluminum smelters, computer makers and farmers.

"The Roosevelt plan was to industrialize the area," said Robert McCullough, an energy consultant in Portland, Ore. "He built the string of dams along the Columbia into the largest integrated hydropower project in the world."

Since its creation in the late 1930s, the Northwest hydro system has been a reliable energy trading partner, sending electricity south on two massive transmission lines to help meet California's summer needs and getting power back to heat homes and businesses during the winter. During recent summers, imports from the Northwest have supplied about 14% of California's electricity needs.

But this year's drought may strain that relationship. Conditions in Oregon and Washington are the driest in almost 30 years. Stream flows are at record lows, increasing the likelihood that farmers will have less water for irrigation and threatening environmental protections for fish and wildlife. Forest managers, meanwhile, are preparing for a difficult fire season.

Despite the Columbia's low levels, the Western hydroelectric power forecast is not uniformly grim.

Snow levels in all parts of California's Sierra Nevada are near records as the persistent high-pressure system that kept Oregon and Washington dry shoved the moisture-bearing jet stream southward. The state Department of Water Resources this month reported snow levels at 37% above normal, providing ample melt to power turbines in California's network of dams.

But some experts worry that even that unexpected bounty may not compensate for the sparse rainfall to the north.

Indeed, California's plan to import 6,000 megawatts from the Northwest and at least an additional 3,000 megawatts from nearby Southwestern states this summer amounts to "wishful thinking," said Gary Ackerman, executive director of the Western Power Trading Forum, a trade group that represents electricity generators and wholesalers.

"When you've got hot weather in Phoenix, Portland and California at the same time, those Northwest megawatts are not going to show up in California," Ackerman said. "They'll be taking care of the air-conditioning load up there."

In addition, Cal-ISO — which tries to ensure that electricity gets delivered where and when it is needed in California — is not allowed to sign long-term contracts with Northwest generators, leaving that job to the utility companies. In a power emergency, the agency might have to take a back seat to other big users, such as industries and cities in the Northwest, that have already lined up supplies of scarce hydropower.

And even if the power is available, it may not come cheaply. If blackouts loom and California needs to buy emergency electricity, dispatchers at Cal-ISO would have to scramble to buy whatever power is available "out of market." Unlike the spot market, where power prices are capped at $250 a megawatt hour, out-of-market power costs whatever the seller decides to charge.

No one is predicting the kind of price increases that occurred in 2000-01, when power shortages were exacerbated by outright market manipulation by energy traders. But tight market conditions that drive up the cost of Columbia River hydropower also push up the price of natural gas burned in modern turbine power plants — making even California's home-grown electrons more expensive.

Waiting until the last minute to buy Northwest power carries other risks. It means the state has little or no margin for error if transmission lines become congested or a forest fire — more likely now in the drought-stricken region — causes line outages, McCullough said.

It doesn't help that the Bonneville Power Administration is charged by federal law with trying to balance regional energy needs with the protection of dozens of species of endangered fish and wildfowl. Significantly increasing water flows through BPA dams to generate more power could kill huge numbers of salmon — and could even be forbidden by federal wildlife officials under certain circumstances.

During the energy crisis, traders for the disgraced Enron Corp., who were manipulating the market to boost profit, joked about how dams in the Northwest were killing fish to generate extra power for California.

Northwest power coordinators could say no if "California calls up in a crisis and asks to wipe out a few million salmon," McCullough said. "Should you schedule flows to maximize survival of salmon or set them aside to cover … California?"

If California suffers an energy squeeze this summer, it is more likely to strike in the southern part of the state, where electricity supplies are particularly vulnerable to shortages, energy officials said.

During the last few years, power consumption has grown faster in the south than in Northern California, and more new power plants have been built in the north.

Meanwhile, a growing economy is boosting state electricity consumption 4% a year, putting further pressure on old power plants and congested transmission networks.

Clearly concerned about the potential for trouble, the administration of Gov. Arnold Schwarzenegger has made heading off blackouts this summer and next a top priority. The 2000-01 energy crisis and then-Gov. Gray Davis' role in it contributed substantially to Schwarzenegger's victory in the October 2003 recall election.

While state officials fret, California's investor-owned utilities remain sanguine — at least publicly — about the power prospects for the coming summer.

Southern California Edison Co., the utility unit of Rosemead-based Edison International that serves much of Southern California outside the cities of Los Angeles and San Diego, told a legislative committee this month that it did not expect to import significant amounts of power from the Northwest and had already lined up a 15% power reserve for this summer.

Sempra Energy's San Diego Gas & Electric Co. testified that it was "fully prepared for summer of 2005."

But such reassurances ring hollow with some analysts, who worry about a worst-case scenario of soaring temperatures in California coupled with tight power supplies from the Northwest and elsewhere.

"There's no question this is going to be a very bleak situation," warned Robert Michaels, an energy analyst and economist at Cal State Fullerton. "If things go really wrong, it's going to have political and economic consequences."

www.latimes.com

See California Energy Crisis II for a different perspective on this looming situation.

Posted by Arthur Caldicott on April 18, 2005

April 16, 2005

Candidates react as court throws out power plant appeal

Ron Cantelon, Liberal, Nanaimo-Parksville
Doug Catley, Green, Nanaimo
Mike Hunter, Liberal, Nanaimo
Leonard Krog, NDP, Nanaimo
Carol McNamee, NDP, Nanaimo-Parksville
Casey Timmermans, letters
John Kimantas, News-Bulletin



Robert Barron
Nanaimo Daily News
April 14, 2005

Cantelon: government should stay out of it

The Liberal candidate for Nanaimo-Parksville said it would be a mistake for the Liberal government to interfere in the regulatory process that is allowing the Duke Point power plant to proceed, as some critics are calling for.

Ron Cantelon said he viewed the B.C. Utilities Commission's review process of the planned 252 mega-watt power plant "at arms length and I stand by its rulings."

"If the government were to interfere, I think it would be inviting worse trouble," he said.

"Authorities (from the Environmental Assessment Office) have studied the plant from an environmental point of view and the BCUC has assessed it from an energy point of view and I respect their findings."

Cantelon said he toured a similar plant in Campbell River and noted Duke Point's plant will be "superior" to that plant.

"We have continual growth on our Island and we have a responsibility to meet our energy needs," he said.

"Maybe down the road there will be technology to put alternate forms of energy on the grid but the plant fills the need we have now to keep the lights on."

Cantelon said even some green organizations have said burning natural gas to generate electricity is the cleanest fossil fuel that can be used.

"People say we should wait for the new undersea cables to be laid, but what should we plug them into - the sun?" he asked.

"Ultimately, they will be plugged into someone else's backyard who will be putting up with the plant to fit our energy needs."


Catley: province needs to cancel project

The refusal by the B.C. Court of Appeal to review the planned gas-fired electrical generation plant at Duke Point "amounts to one more public institution which has failed to protect the public interest," according to Doug Catley.

Catley, Nanaimo's Green Party candidate in the upcoming provincial election, said the decision "throws the whole fiasco back into the political arena where it started."

"The plant is unnecessary and will emit 20 megatonnes of greenhouse gas over its 25-year lifespan, and cost taxpayers $4.5 billion," he said.

Catley said Nanaimo MLA Mike Hunter and B.C. Premier Gordon Campbell should now intervene directly and cancel the project via order-in-council.

Catley said he's pleased the NDP issued a statement on April 2 stating its opposition to the gas plant, even though the process for the plant was started with an order-in-council by former NDP Premier Glen Clark.


Hunter: NDP started power plant process

It's not for the government to interfere with a public, independent and accountable process carried out by the B.C. Utilities Commission to stop the building of a gas-fired generation plant at Duke Point, according to Mike Hunter.

Hunter, Nanaimo's MLA said he realizes there are some in the community who aren't in favour of the process being allowed to go ahead after the B.C. Court of Appeals denied an appeal on Tuesday to stop the plant.

"There has been requests for the government to interfere but we have set up accountable frame-works to assess these complex and technical projects and then let the decisions be made through a public process that we don't get involved in," he said.

"What if the plant was something the community really wanted and the government interfered to stop it? Where do we draw the line? Just because some people don't like the outcome doesn't invalidate the process."

Hunter said it was former NDP Premier Glen Clark who insisted B.C. Hydro build gas plants "all over the Island."

"This government doesn't want to continue with that kind of a process," he said.


Krog: don't jam project down people's throats

The decision by the B.C. Court of Appeal not to allow an appeal against the Duke Point power plant to proceed is "obviously disappointing, but not a surprise," says Nanaimo NDP candidate Leonard Krog.

Krog said the "ultimate reponsibility" to cancel the controversial project now rests with Premier Gordon Campbell and his Liberal government.

"He should do the right thing and cancel the plant project given the incredible public opposition to it," he said.

"Its bad for the environment and unacceptable in the 21st century to use gas as a power source. Thjere are lots of alternatives, like conservation and wind power, and Norske Canada has even offered to shift its production to reduce electrical demand during peak times."

Krog said he thinks the plant is moving forward as it's part of the political agenda of the Liberal government. Opposing the plant is official NDP policy.

"Apart from the Greater Nanaimo Chanmber of Commerce, who support anything the Liberals propose, I don't know of any other group or organization in the city that supports the plan," he said.

"People just don't want this project jammed down their throats."


McNamee: ordinary people being ignored

Stating "it's yet another situation where ordinary people are being ignored," Carol McNamee said she's "upset" with the B.C. Court of Appeal's decision not to allow an appeal against the Duke Point gas plant to proceed.

McNamee, the NDP candidate for Nanaimo-Parksville, said she's a supporter of the environment and believes a lot of people in the region "Are on the same page."

"I'm disappointed with the court's decision as the country is moving forward to live up to its commitments of the Kyoto Accord while we're moving in the opposite direction with this gas plant," she said.

"Its an interesting situation to have the ordinary citizens opposed to a project as well as having industry say it's a bad idea, while politicians are making stands on both sides of the issue.

"In this time or eroding environmental protections, I don' think allowing the gas plant to be built is the right route to follow."


We have another fast ferries on hands


by Iain Cuthbert

Nanaimo Daily News
"Letters"
April 15, 2005

Dear Sir:

With their victory in appeal court Monday, BC Hydro can now realize its five-year goal to build a gas-fired electricity generation plant at Duke Point.

Because ratepayers will pick up the tab for all the power the gas plant produces, BC Hydro is unconcerned and undeterred by the fact that gas prices have more than doubled since the project was first conceived.

With industry predicting the gas plant will cost $4.5 billion over its lifespan, this has all the markings of an election year boondoggle. Ratepayers in this region face a double whammy, having to pay that sum while breathing in the one million tonnes of pollutants the plant that will pump into the atmosphere every year for 25 years.

Look out Gordon Campbell - even the fast ferries weren't this bad.

Iain Cuthbert
Nanaimo


Power plant project was initiated by NDP


by Casey Timmermans

Dear Sir:

Re: responses from both NDP candidates in the April 14 Daily News:

Krog: "don't jam project down people's throats."
McNamee: "ordinary people being ignored."

Who started this power generation project? Both these candidates talk like sugar couldn't melt in their mouths, but their party's previous NDP government initiated this project, and both these candidates are accepting no responsibility?

Be assured our legal process has processed it. Anyone who has used our legal system as one of our NDP candidates should know because he makes his living swimming in that system will tell you, it's like a crap shoot, because you never know what's going to come out the other end. Our courts are about process and following accepted procedures that hopefully get at the truth?

This process logically follows for us to now raise the question, what is the motivation behind Mr. Krog and Ms. McNamee's comments? Why are they in denial of the NDP's culpability for this political football?

Casey Timmermans
Nanaimo


Duke Pt. critics fired up


By John Kimantas
The News Bulletin

Thursday, April 14, 2005

The B.C. Court of Appeal has upheld the B.C. Utility Commission's ruling in favour of the Duke Point gas-fired power plant.

But that outcome has only fired up critics to plan the next round of tactics.

For the GSX Concerned Citizen's Coalition, one of the intervenors in the appeal process, it means asking for a reconsideration of the court ruling.

Coalition president Tom Hackney said the reconsideration will be held shortly in front of a three-judge panel, as court time is already booked for May 2-3 due to B.C. Hydro's stringent timelines for beginning construction on the power plant.

Meanwhile, candidates in the upcoming provincial election are pushing the issue into the political arena.

"I just don't think it makes sense from any perspective - health, environment, economy, science, whatever. It just doesn't wash," said Nanaimo NDP candidate Len Krog.

"Ultimately this is a political decision and (Premier) Gordon Campbell could cancel this plant tomorrow - and that's what he should do."

It's a view mirrored by Green candidate Doug Catley.
"This throws the whole fiasco back into the political arena where it started," he said.

But don't expect Campbell to rush in to stop the plant. Nanaimo MLA Mike Hunter said the government has put in place a system to hold groups such as B.C. Hydro and the BCUC accountable, and it would be inappropriate for the government to intervene.

"This case has had a very open and in my view thorough public process and I guess a lot of people don't like the outcome of the process. The fact they don't agree does not invalidate the process," Hunter said.The Liberals have tried to keep politics out of this process, he said. "Personally, I find it very offensive when politicians make decisions about stuff they know very little about," he said.

Another decision that could end the project still rests with the board of B.C. Hydro.

"They have an energy purchase agreement. Now they have to get down to business with Pristine (Power Corp.) and decide if this is what they are going to do," Hunter said.

© Copyright 2005 Nanaimo News Bulletin

Posted by Arthur Caldicott on April 16, 2005

April 15, 2005

Roping the Wind: 30-storey wind turbine touted for Ogden Point

Malcolm Curtis
Times Colonist
April 15, 2005


Testing for a wind turbine as tall as 30 storeys could be in the offing for Ogden Point, home to Victoria's cruise ship docks.

At the urging of Coun. Rob Fleming, city council voted Thursday to give an "indication of support" for a temporary-use permit for wind energy testing there.

"What an incredible thing it would be for Victoria," said Fleming, referring to it as a potential icon that would convey a "green city" image to the hundreds of thousands of cruise ship passengers who visit the capital each year.

Wind turbines and solar panels on the roofs of warehouses at Ogden Point could generate enough electricity to power cruise ships that dock there, he said. Fleming added that it would reduce local air pollution by eliminating the need for ships to burn bunker oil for their electrical needs while tied up.

The idea, he said, is modelled on Canada's first urban wind turbine built in 2002 at Toronto's Canadian National Exhibition site. The 94-metre
(30-storey) high structure, a joint venture between Toronto Hydro and a co-op, uses three 29-metre-long blades to harness wind power.

A similar structure would be taller than any office or condo tower in Victoria or the capital region.

Fleming said he didn't want to get hung up on the size of the turbine. Testing, which would take 12 months, may suggest a different kind of generator altogether, he said.

Other councillors sounded supportive of the proposal which is just one of several ideas being considered for redevelopment of the Ogden Point site. Council referred it to planning staff for a report.

Coun. Pamela Madoff said she thought of wind turbines as "public art," while Coun. Helen Hughes said they can be "visually pleasing."

Tim Van Alstine, chairman of the James Bay Neighbourhood Environment Association, also welcomed the idea. A wind turbine would fit into the sustainable redevelopment of Ogden Point, he said.

"Obviously there's an esthetic concern," he said, but a wind turbine could be a city symbol, "a way of saying welcome to Victoria."

TJ Schur, of Sidney-based Aeolis Wind Power, cautioned that extensive testing remains to be done.

Wind speed, wind direction and temperature -- "cooler air is denser and holds more energy" -- are the key factors in determining feasibility of the Ogden Point site, Schur said. She did not know enough about the requirements of cruise ships to say whether a wind turbine could power cruise ships.

Ogden Point is owned and managed by the Greater Victoria Harbour Authority, whose chairman Stewart Johnston is supportive of the wind testing.

"It's something that we intend to go ahead with," Johnston said. He wasn't previously aware of the potential size of the turbine but added it's "early on" in the process.

The idea initially emerged from a meeting held last November on the future of Ogden Point, transferred to the authority by Transport Canada in 2002.

"We've got 26 acres of fallow blacktop," said Johnston, referring to the mostly paved area next to the docks. "We always want to use it as a port but we also want to put it to other uses too."

The authority has hired a consultant to develop options that could be explored in a future meeting with developers from outside Victoria, including some from outside the country, Johnston said.

Ideas under consideration include a shopping complex, an attraction such as a federal marine observatory, a possible new location for the Maritime Museum of B.C., expanded marine repair facilities and some kind of presence for First Nations.

Posted by Arthur Caldicott on April 15, 2005

April 14, 2005

California "Energy Crisis" II

Kelpie Wilson and Marc Ash
t r u t h o u t | Report
Wednesday 13 April 2005

Report: California "Energy Crisis" II
Energy Giants Banking on Environmental Disaster

"It's strange that men should take up crime when there are so many legal ways to be dishonest."
-- Al Capone

California, March 2001: rolling blackouts sweep through major cities, leaving entire communities without power. The explanation offered by private energy generators was simple: "There is a crisis, and we don't have enough power to meet the demand."

Three years, hundreds of investigations, and billions of taxpayer dollars later, a web of deceit, corruption and illicit profit are well documented and part of the public record. California State officials now acknowledge that power companies withheld more than enough power to have averted the blackouts, and they did it to drive up prices and profits. In fact, CBS News reported, federal investigators have power plant control room audio tapes of traders from Williams Energy telling plant operators to "turn off the juice."

Lesson learned? Apparently not.

The California Public Utilities Commission, charged with protecting California ratepayers and implementing a sensible state energy plan, is about to deliver ratepayers into the hands of oil companies wanting to hook the state into a dependency on expensive, imported liquefied natural gas (LNG) that comes at the end of a long supply chain over which Californians have no control.


This wild and unspoiled Baja ecosystem is the proposed site for the new Sempra LNG terminal.
Energy companies have been lining up to push for LNG re-gasification terminals to supply California's huge energy market. But so far, environmental concerns have slowed the siting of these terminals in the state. And so the attention has turned to nearby Baja California, Mexico, where a free-for-all has ensued, leading to the emergence of Sempra Energy as the first to secure a site: Costa Azul, a few miles north of Ensenada.

Sempra wants to locate a sprawling industrial facility on this beautiful bit of unspoiled coastline that is one of the last remaining unbroken stretches of coastal sage scrub in the Californias. This is a marine treasure with a world-class surfing wave, a fishing community and a tourism economy.

LNG is natural gas, chilled at the wellhead to minus 260 degrees Fahrenheit, loaded into expensive tankers the size of aircraft carriers, and shipped around the world. At the destination, the liquid is re-gasified by warming it, and then it is siphoned off into pipelines. All of this consumes considerable amounts of energy, reducing the efficiency of the gas as an energy source.

At Costa Azul, Sempra will use seawater to warm the gas, which will chill the seawater by 20 degrees or so, with devastating consequences for marine life and the resident fishing community.

Reliance on LNG has global environmental and human rights impacts. Most of the natural gas supply available to the West Coast will be extracted from fragile environments inhabited by defenseless indigenous people. Gas from Peru comes from deep in the Amazon, where environmentally reckless extraction is killing off tribes who have only just been contacted by the outside world. Another major source of LNG would be Sakhalin Island, off the coast of the Russian Far East, impacting indigenous people, rare gray whales and hundreds of threatened marine species.

Sempra Energy held a groundbreaking ceremony at the Costa Azul site on March 30th, but two days later, the Baja California state legislature launched an investigation into the project.

"There hasn't been transparency from the beginning to the end," said legislator Guillermo Aldrete. "We want to know the economic and environmental impacts - both negative and positive." Aldrete was particularly concerned about Sempra's involvement in the California power crisis of 2000-2001. Sempra agreed to pay $7.2 million in 2003 to settle accusations by federal regulators that it had engaged in market manipulation, and it is a defendant in a lawsuit seeking further damages for its "gaming" of the gas supply.

"We can't trust Sempra Energy if they have these problems in California," Aldrete said.

Inexplicably, it is the California Public Utilities Commission (CPUC) that is facilitating the Costa Azul project and clearing the way for LNG as a major new energy source for the state. Last September, CPUC approved Sempra's request to terminate contracts with domestic natural gas suppliers. This opened a hole in the state's natural gas supplies that Sempra and Chevron-Texaco want to fill with more expensive, more polluting, more dangerous and less secure LNG.

In the case of Sempra Energy, the company will ship the LNG to its Costa Azul terminal and sell it to a subsidiary called Sempra Trading, which will in turn sell it to Sempra-owned San Diego Gas & Electric and Sempra-owned SoCal Gas, creating a giant vertical structure perfectly configured for price fixing.

CPUC has also approved letting Sempra offload the cost of its $800 million terminal to all California ratepayers. The only thing it has not done yet is allow Sempra to lock in long-term contracts for LNG with California utilities. Without long-term contracts, the company will find it difficult to secure financial backing to actually build on the Costa Azul site.

Activists in California and Mexico are not considering this a done deal yet and are calling on CPUC to hold evidentiary hearings on LNG. "So far the CPUC has only listened to the energy companies. They need to hold evidentiary hearings to determine, first of all, if we really need the gas and these facilities," said Aaron Quintanar of WiLDCOAST , a conservation group that is fighting the Costa Azul terminal. But so far, the CPUC has not responded to a November letter from 24 members of the US Congress asking for evidentiary hearings.


A small but dedicated band of some of the worlds best surfers have joined forces local Mexican villagers in an attempt to defend this magnificent stretch of Baja coastline.
In a letter to the commission, Sempra Energy maintained that evidentiary hearings are not required, giving the example of the CPUC's approval, without such hearings, of a $500 million dollar program to support small distributed generation units (eg: small gas turbines, wind turbines, photovoltaics, fuel cells and diesel generators). Sempra pointed out that the "relatively small cost of constructing the facilities necessary to access new supplies of natural gas is similarly expected to produce 'sizeable public benefits' in the form of enhanced reliability and lower natural gas prices for all California consumers."
According to Ratepayers for Affordable Clean Energy (RACE), the CPUC's endorsement of LNG flies in the face of the State's approved Energy Action Plan, which prioritizes energy efficiency and renewables, not natural gas. RACE says that if the State were to seriously pursue its commitments by adopting a renewables goal of 33 percent by 2020, it could "eliminate the natural gas demand equivalent of two LNG terminals over the next 10 to 15 years."

Finally, the question must be asked: why is the CPUC willing to increase California's dependence on foreign fossil fuels and at the same time subject ratepayers to another round of Enron-izing? The answer may have something to do with the Governor.

Last week, Chevron-Texaco announced its purchase of Unocal, a smaller company that controls considerable natural gas supplies in the Far East. The citizen's group Foundation for Taxpayer and Consumer Rights (FTCR) said in a press release that Chevron-Texaco treated some of Governor Schwarzenegger's top staff to a junket in Australia last July to sell them on LNG as California's new source of energy.

FTCR concluded: "Today's announced merger indicates Chevron-Texaco's desire to corner the market on LNG, of which Unocal controls significant supplies in the Far East. It's a $16 billion bet that California will open the door to coastal LNG terminals and make the long-term commitment to gas-produced electricity."

FTCR also notes that Governor Schwarzenegger's campaign committees have accepted $222,200 from Chevron-Texaco and that Schwarzenegger's chief of staff is Chevron-Texaco's former lobbyist, Patricia Clarey. The group is calling for the California legislature to launch an investigation of what they have dubbed "LNG-gate."

At a time when oil men are running the federal government and energy issues have come to dominate our foreign policy, it is distressing to see the state of California, long a leader in renewable and clean energy, going down this path.


--------------------------------------------------------------------------------

You can send comments to t r u t h o u t Executive Director Marc Ash at: director@mail.truthout.org

Kelpie Wilson is the t r u t h o u t environment editor. A veteran forest protection activist and mechanical engineer, she writes from her solar-powered cabin in the Siskiyou Mountains of southwest Oregon.

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. t r u t h o u t has no affiliation whatsoever with the originator of this article nor is t r u t h o u t endorsed or sponsored by the originator.)

www.truthout.org

Posted by Arthur Caldicott on April 14, 2005

PetroChina signs Gateway Pipeline cooperation agreement

NEWS RELEASE
Enbridge
April 14, 2005

Enbridge and PetroChina sign Gateway Pipeline cooperation agreement

CALGARY, Alberta, April 14, 2005 – Enbridge Inc. today announced that it has entered into a memorandum of understanding with PetroChina International Company Limited to cooperate on the development of the Gateway Pipeline and supply of crude oil from Canada to China. The Gateway Pipeline is a proposed project to transport 400,000 barrels per day of Alberta oil sands production from Edmonton, Alberta to a port on the west coast of British Columbia where it would be shipped by tanker to China, other Asia-Pacific markets, and California.

The agreement, signed in Beijing, China by Enbridge President & Chief Executive Officer Patrick D. Daniel, provides that Enbridge will assist PetroChina to aggregate long-term supplies of Canadian crude oil. Enbridge and PetroChina have a number of crude supply initiatives under development with a target of approximately 200,000 barrels per day. Enbridge has separate initiatives to accumulate commitments from other potential shippers on the Gateway Pipeline to fill the remaining capacity.

“This is a positive step forward on a project which will have major benefits for Enbridge, for oil sands producers and for Canada, as well as for consumers in China and other offshore markets,” said Mr. Daniel. “However, there remains a great deal to be accomplished before the Gateway Pipeline can become a reality.”

“Definitive long-term agreements for the sale of crude oil to the Chinese will need to be negotiated, as will longer term capacity commitments with other shippers. We will continue our consultation with the many aboriginal communities and other stakeholders, and we will need to complete our plans to minimize environmental impacts. Only when all of these matters are concluded in a manner which supports the commercial feasibility of the project will we be in a position to file a regulatory application.”

Mr. Daniel added, “The agreement with PetroChina builds on a favourable environment for trade between Canada and China which has been cultivated by Prime Minister Paul Martin, and the efforts of Alberta Premier Ralph Klein to stimulate Chinese interest in the oil sands.”

The Gateway Pipeline that Enbridge is proposing would be a new 30-inch diameter crude oil pipeline with design capacity of 400,000 barrels per day. It would provide a new export route to markets in the Asia-Pacific region and the United States west coast, and Enbridge continues to assess two potential ports – Kitimat and Prince Rupert – for the deep-water marine terminal that will be needed. The Company has already completed preliminary design work, engineering and environmental assessments of the pipeline, and, during the last three years, has been engaged in preliminary discussions with a number of stakeholders including shippers, governments and Aboriginal communities.

A regulatory application for the $2.5 billion, 1,160-kilometre (720-mile) crude oil pipeline would have to be made in 2006 to achieve a late 2009/2010 in-service date, which is when Enbridge’s Western Canada crude oil supply forecast indicates that oil sands production will have increased to the level that access to a major new market will be beneficial to producers.

Gateway is one of a number of Enbridge initiatives to ensure that there is sufficient pipeline capacity to transport the estimated 700,000 to 900,000 barrels per day of incremental oil sands production that is anticipated by 2010. In addition to Gateway, Enbridge is developing projects such as the Spearhead, Southern Access and Waupisoo pipelines, and additional mainline expansion, to transport additional volumes of bitumen and synthetic crude oil to current North American markets and to new markets in the United States.

Enbridge Inc. is a leader in energy transportation and distribution in North America and internationally. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world’s longest crude oil and liquids transportation system. The Company also has international operations and a growing involvement in the natural gas transmission and midstream businesses. As a distributor of energy, Enbridge owns and operates Canada’s largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State. Enbridge employs approximately 4,000 people, primarily in Canada, the U.S. and South America. Enbridge's common shares trade on the Toronto Stock Exchange in Canada and on the New York Stock Exchange in the U.S. under the symbol ENB. Information about Enbridge is available on the Company's web site at www.enbridge.com.

Certain information provided in this news release constitutes forward-looking statements. The words "anticipate", "expect", "project", “estimate”, “forecast” and similar expressions are intended to identify such forward-looking statements. Although Enbridge believes that these statements are based on information and assumptions that are current, reasonable and complete, these statements are necessarily subject to a variety of risks and uncertainties pertaining to operating performance, regulatory parameters, weather, economic conditions and commodity prices. You can find a discussion of those risks and uncertainties in our Canadian securities filings and American SEC filings. While Enbridge makes these forward-looking statements in good faith, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected.

Enbridge assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

Contacts:
Investment Community
Colin Gruending
(403) 231-5919
e-mail: colin.gruending@enbridge.com

Media
Jim Rennie
(403) 231-3931
e-mail: jim.rennie@enbridge.com

Posted by Arthur Caldicott on April 14, 2005

April 13, 2005

Duke Point power plant advances another step

Andrew A. Duffy
Times Colonist
April 13, 2005


Court says opponents can't appeal utility commission approval


The Duke Point power project is one step closer to breaking ground after the
B.C. Appeal Court ruled Tuesday there is no leave for appeal of the B.C.
Utilities Commission's approval of an electricity purchase agreement between
B.C. Hydro and proponent Pristine Power.

The ruling means Pristine can continue with its engineering work on the Duke
Point site for the $280 million, 252-megawatt plant, with plans to excavate
starting in early summer.

"Obviously we're pleased with the decision and it does confirm the BCUC
decision was fair and appropriate," said Harvie Campbell, vice-president of
Pristine. He added that Tuesday's decision reconfirmed the impartiality of the
BCUC. "It confirms this was a fair decision ... and this is a cost effective
project that is the right answer to Vancouver Island's problems."

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

To that end, Hydro entered into a 25-year agreement that will see them pay
Pristine $45 million annually to provide electricity from the plant. The BCUC
approved that agreement in February, but there were appeals filed in March.

The Joint Industry Electricity Steering Committee, representing B.C.'s largest
industrial consumers of electricity, appealed based on its belief the project
exposes Hydro customers to high costs and financial risks.

The Georgia Strait Crossing Concerned Citizens Coalition appealed on the
grounds the BCUC's decision was biased and predetermined before intervenors had
a chance to present evidence at public hearings.

With their leave for appeal dismissed, those groups have one week to decide if
they want to pursue a review of the decision.

"The plan is to reconsider our options and decide what to do next," said Dan
Potts, executive director of the JIESC. "We have the option of pursuing a
review of the decision, but whether we'll have the appetite for that I'm not
sure."

Potts said his group, which is spread around the province, will meet this week
sometime and make up its mind.

It's the same story for the GSXCCC, according to director Arthur Caldicott.

"Obviously we're disappointed, and we're not sure what we're going to do," he
said. "If there are some odds of success, then we will probably go after it."

In a statement, Hydro spokeswoman Elisha Moreno said the utility, like all
interested parties, is in wait-and-see mode.

"Hydro recognizes this is a sensitive and important issue and respects both the
opinions and convictions of all parties and understand that they may wish to
seek a reconsideration of the court's decision," she said.

It didn't take long for the Green Party to weigh in and turn the project into
an election issue. Nanaimo Green Party candidate Doug Catley said the appeal
court ruling was another example of a public body failing to protect the public
interest.

Posted by Arthur Caldicott on April 13, 2005

April 12, 2005

BC Court of Appeal dismissed the applications for leave to appeal by GSXCCC, JIESC

Judge Thackray of the BC Court of Appeal dismissed the applications for leave to appeal by GSXCCC, BCSEA and SPEC and by JIESC in court of appeal chambers on April 12, 2005. Reasons for the decision will be issued by Monday or Tuesday, April 18 or 19.

The applicants for leave to appeal have a right to request a review (appeal) of the leave decision to a three-judge panel of the court, and Judge Thackray expected that they would likely do that.

Counsel for all parties acknowledged it was necessary to get instructions from their respective clients as to the next steps.

Normally, apart from the ‘urgency’ aspect of this case, the review of the leave dismissal would be heard, and then if it were successful a date would be set for the court (three-judge panel) to hear the main appeal.

However, in urgent cases such as this one it is possible to have a three-judge panel hear both the review (appeal) of the dismissal of leave AND the appeal itself all in one go. That way, there are three potential outcomes: (a) the panel overturns the dismissal of leave and allows the main appeal, (b) the panel overturns the dismissal of leave but disallows the main appeal (preserves the possibility of an application for leave to appeal to the Supreme Court of Canada), or (c) declines to overturn the dismissal of leave and the appeal is dead with no possibility of appeal to SCC.

If the review application and the main appeal were heard together, it would almost certainly be done on May 2-3, which dates have already been reserved.

Hydro and DPP are likely anxious to have the review and the main appeal heard together on May 2-3; because if the review was done separately and was successful the date for the hearing of the main appeal would be getting closer and closer to the project drop-dead date.

Decisions remain from GSXCCC et al, and JIESC, whether either or both will apply for a review of the dismissal of leave, and, if so, whether to agree to have the review and the main appeal heard together.

News release from

Posted by Arthur Caldicott on April 12, 2005

April 09, 2005

No environmental assessment for Duke Point

On 21 February 2005, the GSXCCC wrote to the Environmental Assessment Office about the status of the Duke Point Project at the EAO, and to bring to the attention of the EAO some reasons why an EAO review of DPP should be undertaken, to determine if a fuller review is required.

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

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

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

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

Posted by Arthur Caldicott on April 09, 2005

April 08, 2005

Duke Energy CEO Proposes Carbon Tax

PAUL NOWELL
AP Business Writer
Thursday, April 7, 2005

sqwalk.com
COMMENT: A round of surprised applause for Duke Energy's Paul Anderson. It takes a lot of courage in the corporate energy club to say the right things about climate change and corporate responsibility. Is this more corporate bs and pr masquerading as sincere intent? Time will tell. In the meantime, this is from Duke's own materials on environmental responsibility and climate change:

Duke Energy ... believes that a mandatory, Federal, economy-wide policy response - for example, a carbon tax - is preferable to this patchwork, as it would be less costly to society and more effective in managing greenhouse gas emissions. A national approach would also be easier to integrate into a comprehensive global response, which the U.S. and other countries should continue to pursue. (link)

Duke Energy operates in British Columbia, having aquired Westcoast Energy a couple of years agol. Duke owns large gas gathering and processing facilities in the northeast, and BC's main natural gas transmission artery from the northeast to the lower mainland, where about 60% of the gas crosses the border, and the rest is consumed in the lower mainland and Vancouver Island.

Also mentioned in the article is Cinergy Corp, one of America's largest coal-fired generation utilities, based in Cincinatti. Talking the clean energy talk loudly, Cinergy has been presented as the technology partner to Hillsborough Resources, which hopes to build a coal-fired generation project at its Quinsam Mine in Campbell River on Vancouver Island.

The problem with this is, the Hillsborough project will be too small to cost-justify the expensive scrubbing and filtering technologies required to obtain the best emission standards possible. So what's Cinergy up to? Doing the right thing, or saying the right words?

By the way, Duke Energy and Duke Point have no common corporate, historical or nomenclative root. Is nomenclative a word? - Arthur Caldicott
sqwalk.com

Duke Energy Corp. will lobby for a tax on carbon dioxide emissions that would reduce fossil fuel consumption and begin addressing the global warming problem, the company's chairman and chief executive said Thursday.

"Personally, I feel the time has come to act — to take steps as a nation to reduce the carbon intensity of our economy," Paul Anderson told several hundred Charlotte business and civil leaders at a breakfast meeting. "And it's going to take all of us to do it."

Anderson acknowledged a national carbon tax would mean bigger utility bills and higher prices at the gas pump for consumers. But unless industry leaders take the lead, he said, the long-term outcome could be even more disastrous.

"If we (the U.S. energy industry) ignore the issue, we would be the easy target," he said. "The worst scenario would be if all 50 states took separate actions and we have to comply with 50 different laws."

Anderson's speech was a follow-up to a letter he wrote last week to shareholders that accompanied the Charlotte-based company's annual report. In the letter, Anderson vowed to be proactive in shaping national policy on global warming and climate change.

In his letter, Anderson said political leaders must break through the congressional stalemate on multi-pollutant legislation and formulate a new national energy policy.

"It is clear that the United States needs cohesive environmental and energy policies that break the continuing logjam, and we intend to take a leadership role in developing and advancing those policies," he wrote. "For example, we will be proactive on the issue of global climate change. By helping shape public policy, we can advance the interests of our investors and customers, while also addressing the issue itself."

Duke Energy, which ranked 86th in the recent Fortune 500 list, follows Cincinnati-based Cinergy Corp., which addressed global warming in an annual report issued last week. "As a major coal-burning utility, some might expect us to duck this issue," wrote James Rogers, chairman, president and chief executive. "But avoiding the debate over global climate change and failing to understand its consequences are not options for us."

In Thursday's speech, Anderson said the greatest attraction of a mandatory carbon tax is that "it allows us to share the cost of reducing greenhouse gas emissions across all sectors of the economy — minimizing the disruption in any one area."

"You can imagine the reaction I get when I say 'carbon tax' in the halls of Duke Energy," he said. "One employee wrote me that as a shareholder, he couldn't fathom why I would advocate a position that would discourage use of our product by potentially increasing its price."

Molly Diggins, director of the North Carolina chapter of the Sierra Club, said she was pleased Anderson is leading Duke to take a role in trying to solve the global warming problem.

"We applaud Duke Energy for recognizing that global warming is a serious problem that will require mandatory measures to fix," she said. "But even with Duke's support, a carbon tax is not politically realistic at this time."

Duke Power Co., Duke Energy's regulated utility, relies heavily on carbon-based coal and nuclear energy to produce nearly all its power.

After his speech, Anderson acknowledged he does not expect to see a carbon tax enacted while President Bush is in the White House. Bush withdrew the United States from participation in the Kyoto Protocol, an international global warming treaty that took effect in February.

The Kyoto Treaty requires more than 30 industrial countries to reduce their emissions of six greenhouse gases by a combined average of 5.2 percent below 1990 levels by 2012.

"I don't think this will happen during this administration," Anderson said. "This will take several years of debate."

http://sfgate.com

Posted by Arthur Caldicott on April 08, 2005

Peace River dam provides a powerhouse of opportunity

David Black
Special to the Sun
Thursday, April 08, 2004

Recently The Vancouver Sun ran a front-page story that detailed concerns about the development of a potential power source, the Peace River dam known as Site C (BC Hydro resurrects Site C dam proposal, April 2). There is, however, another side to the story.

The Site C project is a major one. It will yield 900 megawatts of power, roughly 10 per cent of B.C.'s existing generation, which can be pre-sold for export or used within the province to replace power B.C. currently imports. The dam and power line construction will provide 8,000 person-years of much needed employment. The jobs will be filled by workers from all over the Interior and the north.

Site C is our least expensive source of large-scale new power generation. The over-all cost of the project is $2.2 billion and can be 100-per-cent self-financed by pre-selling the power for export, resulting in little financial risk. There will be a positive return on the initial investment.

The reservoir will flood 5,000 hectares, 500 of which are farmland. BC Hydro already owns the land. The project will replace the need for an equivalent amount of generation that could exacerbate global warming.

The B.C. economy has underperformed for much of the last two decades and lagged behind the Canadian average for growth of real GDP per capita (the total amount of goods and services produced expressed on a per person basis) in 15 of the last 20 years.

B.C. Progress Board evaluations also show that B.C.'s export performance has trailed all other provinces on a relative basis. From 1993 to 2002, BC had the lowest average annual improvement in its exports per capita. A growing economy and strong export performance are critical to raising incomes for citizens and providing a stable funding base for health, education and other social programs.

Site C will inject $2.2 billion into the economy. Development risks are low. Financial returns can be guaranteed. Low-cost financing will be easy to obtain against the economics of the dam. This is the best sort of governmental pump priming because it's a strategic investment and requires no government funding.

The first step is to pre-sell the power. Transmission lines outside of B.C. limit opportunities, but California is one possibility. Apparently, suppliers in Alberta are offering California power from new coal-fired thermal plants.

On the environmental side of the ledger, there are no salmon in the Peace River. There are already two hydroelectric reservoirs just upstream of the Site C location, so it is no longer a natural, wild river by any stretch of the imagination. The required reservoir is not small, but neither is it large compared to many others in B.C. It is equivalent to a square area of seven kilometres by seven kilometres, or only three per cent of the reservoir area behind the upstream W.A.C. Bennett dam.

North America needs more power. Most provinces and states have no choice but to develop less environmentally friendly options. Site C hydroelectric power generation will help meet domestic and export market demand, while keeping to a minimum the province's contribution to global warming and climate change. Given the range of available options, most observers will agree that developing our hydroelectric power capability is a positive choice from an environmental perspective.

Hydro development is a financially low-risk method of creating employment and injecting much-needed liquidity into our economy. The public has little faith in public megaprojects, but BC Hydro's skill at dam building is well recognized. North America needs the power. Environmentally, hydroelectric generation is the best option.

David Black is the chair of the B.C. Progress Board. The board is an independent panel of 18 senior business and academic leaders formed in July 2001 by Premier Gordon Campbell to evaluate B.C.'s economic, innovation, education, environment, health and social progress, and to provide strategic advice on ways to improve the province's economic performance.

© The Vancouver Sun 2004

Posted by Arthur Caldicott on April 08, 2005

April 07, 2005

Court hears leave to appeal arguments

On April 5, Judge Thackray of the BC Court of Appeal heard a day of legal argument regarding applications by GSXCCC, BCSEA and SPEC and by JIESC for leave to appeal the BCUC’s approval of the Electricity Purchase Agreement between Hydro and Duke Point Power. The judge reserved his decision until Tuesday April 12 at 9:15 a.m.

If leave is granted, then the appeal will be heard by three judges of the Court of Appeal on May 2-3.

Meanwhile, BC Hydro clarified in its written argument that its current agreement with DPP is such that if leave is granted then Hydro has a right to cancel the EPA (and the Duke Point plant).

"If leave (to appeal) is granted, BCH has a unilateral right to terminate the EPA. If BCH does not exercise that right and the appeal remains unresolved on June 30, 2005, it has a right to terminate the EPA. If an appeal is successful or unresolved on July 30, 2005, the EPA comes to an end." Paragraph 31, BC Hydro argument to the BC Court of Appeal

Posted by Arthur Caldicott on April 07, 2005

April 05, 2005

Oil Spike's Tech Impact

Red Herring
March 31, 2005

Rising gas prices might convince Americans to stop buying SUVs, and give the clean energy sector a boost.

Goldman Sachs speculated Thursday that oil markets may have entered a “super spike” period with prices rising as high as $105 per barrel, a development that would not only change what we drive, but other technologies we use.

Crude oil rose $1.61 to $55.60 per barrel in recent trading on the New York Mercantile Exchange. Goldman Sachs estimates the average oil price will be $135.12 per barrel by 2008, which would put U.S. retail gasoline prices at $4.30 per gallon, about double the national average of $2.15 reported this week by the U.S. Energy Information Administration.

If at-the-pump prices top $4 per gallon, Americans might stop buying “gas guzzling sport utility vehicles (SUVs) and instead seek fuel efficient alternatives,” the Goldman Sachs report said. The example was used as an indicator of when oil prices would begin to destruct demand.

In the meantime, the market is seeing immediate effects as investors assess the impact of oil prices across all sectors, including technology. The Nasdaq slid 6.47 to 1999 on the news. “There does seem to be a fairly profound effect,” said Ehud Ronn, director for the Center of Energy Finance Education and Research at the University of Texas in Austin. “The market perceives oil prices as having a negative effect for the high-tech sector.”

If the prices go anywhere near $105, Mr. Ehud said the economy will descend into a fairly severe recession; the broad stock market, including the Nasdaq, could face declines as large as 50 percent; and the broad tech sector will decline, although the value of certain sectors, such as clean energy and alternative fuels, will improve.

The price of oil actually has limited impact on IT technology, said Martin Reynolds, a Gartner fellow specializing in emerging technologies. “Because profitability and costs are relatively high in the high-tech industry, the price of oil doesn’t make much of a difference,” he said. But oil prices could have a big impact on certain materials, such as concrete, that are produced using oil and that have low margins, he said. “People with high-quality products will pay a premium while low-value uses get cut off first,” he said.

When the low-value producers go out of business, that affects the overall economy, he said. Also, investments could drop as consumers’ disposable incomes are squeezed by high prices for gasoline and the impact of oil prices on other sectors, such as food.

Overall economic dampening is probably the biggest influence of oil prices on the high-tech industry. Neal Elliott, industrial program director at the American Council for an Energy-Efficient Economy, said core inflation could reduce demand for higher-ticket commodities, such as home computers, iPods, and high-definition televisions, as people become more reluctant to replace old products with newer versions.

Higher costs of transportation for components—as well as increased prices for shipping materials, such as plastic wrapping, that are made from oil and gas feed stocks—could also squeeze manufacturers with slim profit markets. And oil price increases are tied to higher natural gas and electricity prices, too, Mr. Elliott said.

But alternative-energy technologies—particularly wind power, which costs $0.04 per kilowatt hour—biofuels, biomass, and energy-efficient technologies from refrigerators to DVD players, are all getting a boost from the prospect of even higher energy prices. Hybrid technologies will become even more popular, at the expense of SUVs, and automakers are going to deploy both high- and –low-tech methods to increase energy efficiency, Mr. Elliott said.

“Lighter-weight materials, more advanced engine-control systems, low-resistance tires—these things are going to trickle down from premium lines to the secondary market, and are going to become standard on fleet vehicles,” Mr. Elliott said. But he noted hydrogen technology might actually be dampened by high natural gas prices, because natural gas is used to make hydrogen.

Eventually, more energy-efficient technologies could have the effect of lowering energy prices and in turn, lowering the appeal of those technologies. If natural gas consumption were reduced 1 to 2 percent per year, for instance, wholesale prices could drop as much as 20 to 30 percent, Mr. Elliott said. “The truth is, we’re in uncharted territory here with respect to energy prices,” he said. “Perhaps nobody really knows what’s going to happen.”

Posted by Arthur Caldicott on April 05, 2005

BC Hydro & DPP leave to appeal argument to BCCA

On March 25, the Joint Industry Electricity Steering Committee (JIESC) and the GSX Concerned Citizens Coalition (GSXCCC) filed their respective arguments with the BC Court of Appeal (BCCA) laying out reasons why the Court should hear the appeal to have the BC Utilities Commission's (BCUC) decision of February 17, approving the Electricity Purchase Agreement (EPA) between BC Hydro and Duke Point Power Partnership (DPP).

Don't you just hate sentences like that? Full of subordinate phrases and abbreviations and ending up being a jumble of meaningless noise.

Tough. There's no nice way to put that kind of information in writing.

You can get the JIESC and GSXCCC arguments here.

On April 4, BC Hydro submitted its arguments with respect to the leave to appeal request: 2005-04-04 BCH leave argument.pdf

Duke Point Power Partnership's arguments are here: 2005-04-04 DPP leave argument.pdf

Posted by Arthur Caldicott on April 05, 2005

NO DEAL YET: BC Hydro & Terasen ask for extension

Richard Stout
Chief Regulatory Officer
British Columbia Hydro and Power Authority
333 Dunsmuir Street
Vancouver BC V6B 5R3
www. bchydro.comBC Hydro
Phone: (604) 623-4046
Fax: (604) 623-4407

April 4, 2005

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

Dear Mr. Pellatt:

RE: British Columbia Hydro and Power Authority (“BC Hydro”)
Call for Tenders for Capacity on Vancouver Island
Review of Electricity Purchase Agreement
Proiect No. 3698354

Paragraph 2(b) of Commission Order No. E-1 -05 requires that BC Hydro notify the Commission if it has been unable to reach an agreement on the terms of a Transmission Services Agreement with Terasen Gas (Vancouver Island) (TGVI) within 45 days of February 17, 2005. This letter is intended to provide that notice.

BC Hydro and TGVI have been engaged in discussions to reach an agreement for gas transportation service to both the Duke Point Power’s proposed power plant at Duke Point near Nanaimo and to the Island cogeneration plant at Elk Falls near Campbell River. While progress towards an agreement has been made, more time is required for resolution of outstanding issues.

BC Hydro does not believe that any specific direction is required at this time pursuant to paragraph 2(c) of Order No. E-1 -05. Rather, BC Hydro requests that the parties be given until April 22, 2005 to resolve their remaining differences. Should they prove unable to make an agreement by that time, BC Hydro will provide a further report and seek further directions.

Yours sincerely,


Richard Stout
Chief Regulatory Officer
C. Project No. 3698354 Registered Intervenors

2005_04_04 BCH_BCUC_CFT.pdf


Posted by Arthur Caldicott on April 05, 2005

April 04, 2005

GSXCCC to George Abbott on Coal-fired Generation


BC Sustainable Energy Association,
395 Conway Road, Victoria V9E 2B9
250-881-1304
www.bcsea.org


GSC Concerned Citizens Association
302 – 733 Johnson St, Victoria, BC, V8W 3C7
250-381-4463
www.sqwalk.com


Hon. Richard Neufeld
Minister of Energy and Mines
Legislative Buildings
Victoria, BC, V8V 1X4
and
Hon. George Abbott
Minister of Sustainable Resource Management
Legislative Buildings
Victoria, BC, V8V 1X4

April 4, 2005

Dear Ministers Abbott and Neufeld,

Re: Compliance Energy Corporation coal-fired thermal electric proposal

The BC Sustainable Energy Association and the GSX Concerned Citizens Coalition are writing to urge you: (a) to designate as a reviewable project under the Environmental Assessment Act the Compliance Energy Corporation proposal for a coal-fired thermal electric power plant near Princeton, British Columbia; and (b) to direct the BC Utilities Commission review the project to determine whether it is in the public interest.

Coal-fired thermal generation is one of the most polluting and greenhouse-gas-intense forms of generation. Allowing a coal-fired generation plant in BC would significantly impair efforts to control air quality in BC and to reduce BC’s contribution to global climate change. It would also harm Canada’s position in the international community, where nations are making increasingly urgent efforts to control greenhouse gas emissions and minimize global climate change. It would also harm BC’s strategic position for the development of modern energy industries that can address our present needs without unduly harming our future prospects.

Allowing the Compliance proposal would set a BC precedent. It is incumbent on the BC Government not to do so without a full and thorough assessment of the positive and negative implications and of whether, on balance, the project is in the public interest.

A full and thorough environmental review is required in order to assess both the environmental effects of the plant and alternative technologies that may be available to reduce or mitigate its environmental harm. The terms set for the environmental review should clearly define the criteria by which the environmental and other attributes of the proposal will be evaluated and allow opportunities for public input and the testing of evidence.

A Utilities Commission review is required in order to determine whether the proposal is in the public interest. As you know, the Environmental Assessment Act does not provide for a balancing of the negative environmental effects of a project against its possible benefits, including economic, and therefore the environmental assessment is not able to determine whether a project is in the public interest.

The Utilities Commission assessment should include an oral public hearing, with at least one round of information requests.

Sincerely,




Thomas Hackney, President
GSX Concerned Citizens Coalition

Guy Dauncey, President
BC Sustainable Energy Association

cc:
Jim O’Rourke, President, Compliance Energy Corporation
Joan Hesketh, Executive Director Environmental Assessment Office


Download GSXCCC letter to George Abbott

Posted by Arthur Caldicott on April 04, 2005

April 01, 2005

BC SEA Signs Up its 400th Member: Richard Neufeld

Guy Dauncey
BC Sustainable Energy Association
Victoria, April 1st, 2005

BC SEA Signs Up its 400th Member.

The BC Sustainable Energy Association signed up its surprise 400th member today: BC Energy Minister Richard Neufeld.

Mr. Neufeld said he had been talking to a lot of people recently about BC’s energy future, and he thought it was time to develop a more secure energy supply for the province.

Over the Easter break, Mr. Neufeld said, he had a chance to listen to his family’s concerns about global climate change. His grand-daughter had been coming home from primary school with disturbing new information from recent global conferences on climate change, and as someone who cares about how her generation will live, he thought it important to address the matter. The BC Sustainable Energy Association seemed like a good vehicle for developing new policies and approache! s, so he had decided to become a member.

He was not aware that there was a special award for the person who became the 400th member, or that he was entitled to a free gift of any title he liked from New Society Publishers. "That’s a pleasant bonus," he said.

"The prospects for North America’s supply of natural gas are also not reassuring," he said yesterday. "It makes no sense to premise our future energy supply on natural gas, when the fuel is going to become very expensive and then start running out very soon, leaving us dependent on liquefied natural gas imported from Iran."

"In an ideal world," he went on, "we could depend on the Americans to secure the Iranian gas supply for us, and BC would be able to obtain all of its energy from coal, oil and gas."

However, he went on, "The BC Liberal government does not believe in an ideal world. It is important to be pragmatic about these things. If we have to heat our homes w! ith solar energy, and provide power to the grid from wind, so be it. There are plenty of good business opportunities to be had in these sectors, and if BC’s businesses want to be global leaders in this field, the government will back them all the way."

"This is an exciting challenge," he said. "This is what I like about British Columbia. One day you urging BC Hydro to do whatever it takes to press ahead with the new gas-fired power plant at Duke Point, Nanaimo, and the next day you are thinking "Maybe that’s a really dumb idea".

When asked if his government would pressure BC Hydro to cancel the project, he said "I’ve tried, but they won’t listen. People think that we cabinet ministers have all the power, but it’s not true. It seems that I’ll have to join the people on Gabriola and stand at the gates to protest, if I hope to make any difference."

"I may need to do the same to make sure that the moratoriumon oil and gas explor! ation of our costs stays in place," he said.

When asked if he had been to any BC SEA meetings, he said no, but he hoped to meet with the Board soon, to start crafting a new sustainable energy policy for the province.

The President of the Association, author Guy Dauncey, said "We welcome all members who support our goals and objectives. We are very pleased that Mr. Neufeld has joined us, and we look forward to working with him as we lay the plans for a total phase-out of all fossil fuels in BC over the next ten years."

-30-

Posted by Arthur Caldicott on April 01, 2005

March 30, 2005

Tracy and Kevin have a baby boy!

Posted by Arthur Caldicott on March 30, 2005

March 27, 2005

Duke of Hazards

Johnny Frem
Common Ground
March 2005


Would Duke Point's gas burning electric plant be Sumas 3?


Sometimes choices are driven by an agenda of politics or greed with ignorance to the long-term consequences to the environment. The choice by the BC Utilities Commission to allow a consortium to build a gas-fired electrical-generating station at Duke Point near Nanaimo seems like one such decision. The Commission granted permission February 17 for BC Hydro to sign the electricity purchasing agreement with Duke Point power - a project of Pristine Power. Several interveners have indicated that they will file appeals.

The Commission said virtually the same project was too expensive in September of last year, sending BC Hydro back to find a cheaper way to bring electricity to Vancouver Island. Unfortunately BC Hydro, anticipating approval, had already gone ahead and bought the turbines for the project for about $50 million. An interesting question here is who authorized this massive purchase prior to BCUC approval?

Instead of looking for a new way to supply power, BC Hydro put out the call for tenders and defined it such that the likely answer to its call would be a gas-fired plant. BC's utilities commission is supposed to prevent monopolistic practices. Allowing a corporation, any corporation, including BC Hydro, to define the parameters of the case under consideration appears to be an abdication of that responsibility.

First, BC Hydro "encouraged" the new project by offering its untouched turbines at discounted prices if the bidder agreed to take on the Duke Point gas-fired plant project. Then BC Hydro specified to the bidders that the electricity could only be generated on-island. Transmission lines coming from off-island would not be eligible for consideration - even though it defined the project as only a temporary solution and the final solution after 2008 would be new BC Hydro transmission lines from off-island. And finally, BC Hydro offered to guarantee the price of gas for 25 years to anyone agreeing to take its gas-fired project to completion, a gas guarantee that will be paid by BC electricity ratepayers.

Now the Commission is allowing the same project it had rejected the first time around as too expensive - even though BC citizens would be asked to pay extra when the price of gas to the plant increases, even though it's unneeded, unwanted and unhealthy, even though in the Liberals' throne speech they vowed to continue their opposition to a similar gas-fired plant - the Sumas 2 project under consideration south of the US border near Abbottsford, even though it violates their commitment to green energy in that same throne speech, and even though a task force of the biggest industrial users of electricity in BC are against it.

The green light to drive a climate-changing, gas-guzzling toxin-emitting electric-generating plant at Duke Point came one day after Canada ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change, likely putting Canada in breach of our international treaty obligations. One estimate states Duke Point would produce as much poisonous exhaust as 40,000 more cars each day. In the long run it seems we are being driven down the wrong road in regards to air pollution, lung damage and increased medical costs. Asthma is already one of the leading causes of emergency hospitalization among children in BC. More air pollution makes it worse. Not a clean choice.

The entire premise for this plant in the first place is that the sub-sea cables which carry high-voltage direct-current to Vancouver Island will be classified as outdated in 2007 and new lines won't exist until October 2008. First, they are not being "retired" as some media has reported. In fact BC Hydro maintenance plans show that it intends to keep them up and energized until 2014. They just lose their "reliability" rating from a system-planners point of view. Yakout Monsour, senior VP of system management for BC Transmission Corporation, testified before the Commission that he was completely comfortable handling the problem with current system assets until the implementation of the transmission solution in 2008 to 2009.

Second, several other solutions to the loss of those cables' reliability rating have also been suggested. Some at BC Hydro seem adamant that the only solution they are willing to entertain is a gas-fired plant. They discarded such submissions to the hearings as Norske Canada's "demand side management" solution, where Norske offered to reduce its use of electricity should the island ever approach crisis during the period of 2007 and 2008. As one of the largest users of electricity on-island it could resolve any shortfall in electricity very easily by shutting down some of its pulp mill process, which is what it offered to do. Norske is also concerned with uncontrolled increases in gas pricing and thus the cost of generating electricity.

BC Hydro's position is it wants "on-island generation." But in fact Duke Point is the farthest thing from "on-island" with Alberta gas piped in across the Georgia Straight. Another solution was offered by Sea Breeze Pacific Regional Transmission Company which is preparing to build a new transmission line across the Strait of Juan de Fuca. Hydro dismisses electrical cables from the bid process but it allows gas pipelines, coming from off-island. As Prince Rupert found out last year, when residents gathered in the civic centre to keep warm, pipelines can break too.

Several truly on-island solutions were offered but were bounced out of the tendering process for various reasons. Green Energy has a planned bio-mass plant, Norske Canada has a demand side management solution wherein it offered to shed its load (one quarter of Vancouver Island's total load) if there were any interruptions in service, two companies offered transmission solutions, there is a fully permitted 450 MW wind farm ready to be constructed on the north end of Vancouver Island that has already passed environmental review. Also several additional smaller runs of river hydro and waste wood plants were offered during tendering.

If this "temporary" solution is allowed then what might become of Duke Point's gas-fired generating plant? Could it be that the BC Utilities Commission or BC Hydro boards were stacked with pro-gas and pro-oil members? Would this future local market demand encourage off-shore oil drilling? It is time for all stakeholders, including ratepayers, to consider this important decision because we all would pay the environmental and increased electrical costs.

For further information and to voice your opinions contact the following:

BC Utilities Commission www.bcuc.com
BC Hydro www.bchydro.com
BC Sustainable Energy Association www.bcsea.org
BC Transmission Corporation www.bctransco.com
BC Wind Energy Association www.bcwea.org
David Suzuki Foundation www.davidsuzuki.org
Green Party of BC www.greenparty.bc.ca
Independent Power Producers of BC www.ippbc.com
Norske Canada www.norskecanada.com Tsawassen Residents Against High Voltage Overhead Lines www.Travhol.com

www.commonground.ca

Posted by Arthur Caldicott on March 27, 2005

March 25, 2005

GSXCCC and JIESC Appeal Arguments

These are the arguments given by the JIESC and by GSXCCC to the Court of Appeal, requesting that the Court hear our appeals of the BCUC decision on Duke Point.

Download JIESC Arguments
Download GSXCCC Arguments

Posted by Arthur Caldicott on March 25, 2005

Other firms outdo ICBC for bonuses

Chad Skelton
Vancouver Sun
March 25, 2005

sqwalk.com
COMMENT: Michael Costello, president of the B.C. Transmission Corp. received a bonus of $132,000, on top of his $275,000 salary.

Outrageous! Hell, BCTC wasn't even in existence until May 2003, and BCTC hasn't done a *&^$#* thing since it was spun out of BC Hydro. By what reasoning does that entitle Costello to a bonus which is worth twice the average family income in Canada?

Likewise, BC Hydro's CEO Bob Elton was awarded a bonus of $110,000. For what? For presiding over the write down of $120 million of our money spent to no avail on the failed GSX Pipeline and failed Port Alberni Generation Project and failed Vancouver Island Generation Project and rigged Vancouver Island Call for Tenders. That's what Elton got his bonus for.

This is nothing new. They've been doing this in BC Hydro for years. For example, in 2001, as head of BC Hydro, Costello took home $466,057 in salary and bonuses. The annual announcement of obscenely large bonuses to these guys usually gets a rise out of the media, and always causes me a seasonal fit. Surely it is time to rein this excess in.

The rationale? We've got to pay talent what talent is worth. Right. Think GSX, VIGP. Get real.

Okay, now that I've got most of the rant out of my system, I'll try to be more reasonable.

BC Hydro and now, BC Transmission Corp., operate in markest that exist apart from the two organization and for which neither can claim any credit (unless we're talking about manipulated energy trades in Alberta or California - for which compelling evidence exists that Powerex has engaged but for which it denies any credit.) And both BC Hydro and BCTC are charged with operating and maintaining infrastructure, all of which was inherited, all of which has been around for a long time, and none of which present management can take credit for.

If either Elton or Costello contributed anything of significance to the operation of BC Hydro or BCTC, if they brought commanding visions to the organizations, or led the companies through perilous seas to safe harbour, then a bonus might be meaningful and appropriate. But these guys are granted bonuses by their boards if everyone comes to work in the morning, and if the generators run and the wires transmit. That should be the minimum starting point to continue earning their salaries. It should not entitle them to grossly large bonuses.

Credit for the continued operation of BC Hydro and BCTC should go to the many people who come to work every morning, and who keep the generators running and the wires transmitting. Not to Elton and Costello.
sqwalk.com

The bonuses paid to top executives at the Insurance Corp. of B.C. are small compared with bonuses paid to those who run B.C.'s two electricity utilities.

It was revealed this week that top executives at ICBC will receive bonuses ranging from $50,000 to $64,000 this year as part of $18 million in incentive pay the public insurer is giving its managers and unionized employees.

By contrast, BC Hydro president Bob Elton last year received a bonus nearly twice as large-- $110,000 -- on top of his annual salary of $295,000.

And Michael Costello, president of the B.C. Transmission Corp. -- which is responsible for managing the province's transmission infrastructure -- received a bonus of $132,000, equivalent to 48 per cent of his $275,000 salary.

Other senior executives with the two companies also enjoyed big bonuses.

Yakout Mansour, the senior vice-president of operations for BCTC, received a bonus of $92,000 in addition to his salary of $225,000.

In all, BC Hydro spent $14.8 million last year on bonuses -- $4.3 million for unionized employees, $9.5 million for middle managers and $1 million for senior executives.

"This is public money and I think taxpayers would be outraged to know people are getting 40-per-cent bonuses each year," said Sara McIntyre, B.C. director of the Canadian Taxpayers Federation.

Jenny Kwan, NDP MLA for Vancouver-Mount Pleasant, said ICBC and Hydro should be using any excess profits to reduce costs to consumers instead of rewarding top executives.

"I would expect that British Columbians want to see a rate reduction as a first priority rather than bonuses," she said.

Elisha Moreno, spokeswoman for BC Hydro, said the utility's bonuses are based on a variety of factors, including improvements in customer service and a reduction in staff injuries.

"We're still behind the industry average in terms of bonuses, compared to other employees in the Canadian utility sector," she said.

BCTC spokeswoman Moira Chicilo said the utility needs to pay generous salaries and bonuses to retain talented staff.

"We absolutely view these executives as being compensated very fairly and reasonably," Chicilo said via e-mail.

She noted that Mansour was recently hired away by a California electricity company at a base salary of $400,000 US.

Bonus policies vary widely between Crown corporations.

BC Transit doesn't pay any.

The Workers' Compensation Board of B.C. pays managers an extra 10 per cent for meeting predetermined company goals and a further 10 per cent for "exceeding those goals," said spokeswoman Donna Freeman.

cskelton@png.canwest.com

BIG BONUSES:

Many top executives at B.C.'s Crown corporations received generous annual bonuses last year.

B.C. Transmission Corp.

Michael Costello, president: $132,000

Yakout Mansour, VP operations: $92,000

Jane Peverett, chief financial officer: $64,000

Scott Wornouik, VP Strategy: $59,000

BC Hydro

Bob Elton, president: $110,000

Dawn Farrell, VP generation: $79,100

Bev Van Ruyven, VP distribution: $75,000

Teresa Conway, acting CEO of Powerex: $65,000

Tourism B.C.

Rod Harris, CEO: $57,000

Source: BC Hydro, B.C. Transmission Corporation, Tourism B.C.

Posted by Arthur Caldicott on March 25, 2005

March 24, 2005

How are we going to keep the lights on?


Greater Victoria Chamber of Commerce
2005 AGM

Description:
How are we going to keep the lights on? The 2005 AGM will feature Bob Elton, President and CEO of BC Hydro, on the short and long term strategies for power on Vancouver Island.
--------------------------------------------------------------------------------

Details:
Date and Time: Apr 27, 2005
11:30 am - 01:30 pm
Location: Victoria Marriott Inner Harbour
728 Humboldt St.
Victoria, BC

Cost: Members: $30.00 + GST
Non-Members: $50.00 + GST


Posted by Arthur Caldicott on March 24, 2005

US, China battle for Canada's underground

Robert Collier
San Francisco Chronicle
March 24, 2005

sqwalk.com
COMMENT: Amazing article from San Francisco, claiming the oil from Canada's oil sands for America, acknowledging that the primary reason for the Mackenzie Gas Pipeline is to provide gas to cook the oil out of the sands, and ending up brandishing a fist at Chinese intentions to claim some of that oil for China.

First Nations rights may disappear like bugs under US jackboots if they get in the way of moving Canadian oil to US markets. - Arthur Caldicott
sqwalk.com


Some tribes oppose pipeline to tap land rich in oil reserves

While Congress debates whether to allow oil and gas drilling in Alaska's Arctic National Wildlife Refuge, a similar battle with much higher stakes is under way in northwest Canada.

The $6 billion Mackenzie Pipeline project would open the Canadian Arctic for natural gas drilling and send the gas 800 miles south down the Mackenzie River Valley to Alberta. There, much of this fuel would be used to throttle up production in a huge but hard-to-tap supply of petroleum dispersed in underground gravel formations. These so-called oil sands hold petroleum reserves that are second in size only to Saudi Arabia's, and analysts say they could supply a large portion of U.S. energy needs for decades to come.

But the project has sparked opposition from some native tribal groups, which call it a federal grab of their ancestral lands, and from environmentalists, who say it would churn out greenhouse gases linked to global warming.

It is a fight that is likely to forever set the course for Canada's vast and empty north. The project is full of continental superlatives -- North America's richest oil patch, its biggest construction project since the Alaska pipeline in the 1970s, its largest strip-mining operation.

"By far the most important thing for North America are those oil sands in Canada," said Robert Esser, director of oil and gas resources at Cambridge Energy Research Associates in New York. "It's nice we're going to have access to (the Alaska refuge), but there are a lot of unknown questions there. We have no idea whether there is oil or gas or how much. In the oil sands, we know the reserves are huge, much larger than in Alaska."

The Canadian government, which calls the project an economic necessity, is not required to seek approval from Parliament in Ottawa. Pipeline construction is expected to start in early 2007, with gas flowing two years later.

In Alaska, by contrast, congressional authorization is required to develop the wildlife refuge. Last week's Senate vote to allow drilling will be followed by several more months of legislative maneuvering and, if the plan is approved, about eight years of preparation before oil begins to be pumped.

Despite its bright prospects, Canada's pipeline could still be stopped in its tracks by opposition from one of the region's native tribes, which are known in Canada as First Nations.

The Deh Cho First Nation, a tribe of about 4,200 people who occupy the southern third of the pipeline route, has filed suit in federal court in Vancouver, British Columbia, to block the project. Unlike tribes of the northern Mackenzie Valley that have settled their land disputes with the government and support the pipeline, the Deh Cho are holding out for autonomous powers in their area. Until a deal is reached on the land dispute, the government lacks legal authority for a pipeline right of way, the tribe insists.

"What we see today is Canada not living up to its obligations," said Noeline Villebrun, national chief of the Dene, the parent federation of Mackenzie Valley tribes. "If Canada hopes to settle the claims, then the Deh Cho have to see their rights being accommodated."

The Deh Cho won a round last week, when a federal judge ordered the government to release briefing notes, minutes, draft plans, correspondence and other documents related to planning for the pipeline project.

Contained in the oil sands are vast quantities of so-called bitumen, or super-heavy oil, underneath an area of northern Alberta as big as Florida. One extraction process is similar to strip mining, in which sand is scooped out and cooked at high heat to extract the sludge. Another process pumps steam into the underground deposits, dissolving the bitumen and allowing it to be piped to the surface. Under both methods, the resulting goo is refined into commercial grades of crude oil and piped to customers, mostly in the western United States. About 2 tons of sand have to be dug up, heated and processed to make a single 42-gallon barrel of oil.

The crucial ingredient in this process is natural gas. Although other fuels have been used to cook the oil sands, such as coal and the bitumen itself, none works as well as gas. Production of gas from long-established fields in Alberta is expected to decline in coming years, and because demand for gas is rising fast, expansion of the oil sands will require new supplies.

The nearest major source is in three well-explored yet untapped gas fields in the delta of the Mackenzie River on the shore of the Arctic Ocean. If the pipeline is built, gas from the delta can be funneled down to Alberta, where it will connect with the province's pipeline system to reach the oil sands.

With international oil prices soaring over $50 per barrel and likely to remain high for years to come, the oil sands are a bonanza in the making. The oil sands are estimated to contain 174 billion barrels of oil, second only to Saudi Arabia's 260 billion barrels.

In contrast, the Arctic National Wildlife Refuge contains only about 10 billion barrels. The Energy Department predicts output there will reach a peak of about 1 million barrels per day within a few years after the estimated 2015 start, and will decline gradually thereafter.

Companies such as ChevronTexaco, Shell, Exxon Mobil, Petro-Canada and Suncor Energy have made multibillion-dollar investments in the oil sands in recent years, raising total production to about 1 million barrels per day. If sufficient natural gas is available to cook the sludge, output from the oil sands is expected to reach 2 million barrels per day by 2010, rising to 3 million by 2020 and as much as 5 million for many decades to come.

"Imagine Saudi-type production levels just north of the U.S. border in a friendly country," said Roland George, an Alberta analyst with Purvin & Gertz, an oil industry consulting firm in Houston.

But environmentalists say the process of burning large amounts of energy just to get more energy is reckless. "The oil sands are the world's dirtiest source of oil," said Stephen Hazell, director of the Sierra Club of Canada's campaign against the Mackenzie pipeline.

The oil sands expansion is expected to increase Canada's emissions of greenhouse gases by as much as 12 percent of the country's total allotment under the Kyoto Protocol, making it almost impossible for the government to meet its commitments for reducing emissions, Hazell said.

The economic potential of the pipeline project has been a powerful lure for many of the region's Natives. Poverty is rampant in the ramshackle Native villages that dot the boreal forest. Unemployment can be as high as 50 percent.

"People need jobs, and although we're not sure the pipeline won't just hire outsiders from down south, there are a lot of people here who are really hopeful," Villebrun said.

Three tribes in the Mackenzie Valley have allied themselves with the oil and gas companies behind the pipeline project. The Sahtu Dene, Gwichin and Inuvialuit, which settled their federal land claims in the 1990s, hold a one- third stake in the pipeline project along with its corporate parents: Exxon Mobil, Shell and ConocoPhillips.

Although it supports the Mackenzie pipeline, the Gwichin tribe, whose 7, 000 members live on both sides of the Alaska-Canada border, oppose oil development in Alaska. Its leaders have long been active participants in U.S. environmentalists' lobbying campaigns in Washington against drilling in the wildlife refuge because the area is the main summer calving ground of migrating caribou herds that are a major source of the tribe's food supply.

"By destroying that one area in (the refuge), they will ultimately destroy the caribou," said Joe Linklater, chief of the Gwichin First Nation in Yukon Territory, who traveled to Washington earlier this month to lobby against the Alaska refuge proposal.

Linklater said he and his family, who live in the village of Old Crow, north of the Arctic Circle, hunt and kill several caribou each April and October during the animals' migration through the area. "That's what is in our freezer all year long -- the caribou -- and that's what we eat," he said. But he noted that the Canadian pipeline lies outside caribou migration areas.

Many other twists and turns lie ahead amid the complicated energy politics of the Far North.

The Mackenzie project has caused consternation in Alaska because it could delay construction of the planned $20 billion, 3,500-mile natural-gas pipeline from Alaska's North Slope down into Canada. The existing trans-Alaska pipeline carries oil only, and natural gas extracted in the North Slope as part of the oil drilling process must be re-injected into the ground. Experts say income from a natural-gas pipeline is needed to allow full expansion of oil drilling in the Alaska refuge.

The proposed Alaska pipeline route, which would parallel the Alaska- Canada Highway into the Yukon and British Columbia, is further behind in the Canadian regulatory process than its Mackenzie rival. Canadian officials are believed to be deliberately taking a go-slow stance to ensure that their pipeline gets built first.

Although U.S. officials hope the output from Alberta's oil sands will be exported mainly south of the border, Chinese officials are trying to lock up long-term contracts for oil that would be sent through a proposed pipeline to the coast at British Columbia and then exported via tanker to China.

"There have been Chinese delegations in every skyscraper in Calgary," said George, the analyst.

"The Chinese are doing what the United States is doing, scouring the planet for every molecule of oil production they can get their hands on."

Many Washington conservatives are seeing red. "It's definitely a big worry for the Chinese to be trying to monopolize the oil sands," said Frank Gaffney, president of the Center for Security Policy in Washington.

"We're in a race for energy supplies, and we can't allow China to win this one."

Posted by Arthur Caldicott on March 24, 2005

March 23, 2005

GSXCCC files appeal motion

Appeal schedule

March 23: Intervenor motion books due

April 4: BC Hydro and DPP response books due

April 6: Leave to appeal argument in BCCA chambers, Vancouver, Smythe
Street, 9:30 a.m., courtroom number will be posted on the day

April 20: (if leave to appeal is granted) appellants' factums due

April 27: respondents' factums due

May 2-3: BCCA appeal oral argument.


GSX Concerned Citizens motion

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

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

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

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

4. The Commission erred in law and was patently unreasonable in
interpreting "the public interest" in s.71 of the Act as being determined
exclusively by the outcome of BC Hydro's CFT competitive bidding process and
without reference to the precautionary principle as a norm of customary
international law.

5. The Commission exceeded its jurisdiction when it held that BC Hydro's
risk of carbon tax liability associated with the EPA should be allocated to
BC Hydro's shareholder rather than the ratepayer.

6. The Commission had before it no evidence to support its conclusion that
the EPA is warranted because Vancouver Island has a long term electricity
supply problem requiring both new generation and renewed transmission.

7. The Commission had before it no evidence to support its conclusion that
the Norske Canada Demand Management Project is not a viable option for
addressing the Vancouver Island electricity capacity gap for planning
purposes between the F2008 zero-rating of the HVDC lines and the deemed
F2010 in-service date of the Vancouver Island Transmission Reinforcement
Project (230 kV lines).

8. The Commission erred in law and was patently unreasonable in holding
that in a hearing under s.71 of the Act the utility does not bear the onus
of establishing that the electricity supply contract in question is in the
public interest.

9. Such other grounds as counsel may advise.

Posted by Arthur Caldicott on March 23, 2005

March 21, 2005

Natural Gas Losing Power Market

Mike Byfield
Nickle's Daily Oil Bulletin
21 March 2005

sqwalk.com
COMMENT:Volatile, high prices for natural gas are driving electricity generators away from gas. The foolish and costly economics of BC Hydro's natural gas strategy for Vancouver Island was apparent to many back in 2000 when the company went public with its plans for a natural gas pipeline to Vancouver Island (the GSX) and up to three gas-fired plants on the island. This article merely confirms what we have been saying all along.

But it hasn't deterred BC Hydro, which still hopes to have the Duke Point Power Partnership start construction on a gas-fired plant in Nanaimo, as soon as possible.

The GSX Concerned Citizens Coalition is appealing the BCUC approval of the deal for the plant with Hydro. It's very clear that there are excellent bridging solutions for the short term period in 2007-2008 when certain cables from the mainland are "derated" and new cables are not yet in service. A 25 year deal for expensive gas-fired power is completely the wrong solution to the bridging problem. And BC does not need to move to fossil fuels for electricity generation.

The Joint Industry Electricity Steering Committee (JIESC) is appealing the decision too, for pretty much the same reasons. The JIESC members are focussed on the cheapest power, however, and don't particularly care how it is generated. For the moment, though, the two groups seek the same remedy with respect to Duke Point Power - that the BCUC decision be "vacated".

For more information about coal-fired electricity generation in BC, please refer to the material at Dogwood Initiative (http://tinyurl.com/626zt)

Read the letter from Dogwood Initiative and Sierra Club of BC to George Abbott, the Minister of Sustainable Resource Management asking that BC's first coal-fired generation plant be required to undergo a full environmental assessment.

Please sign and send your own letter to the Minister asking that BC's first coal-fired generation plant be required to undergo a full environmental assessment. A template letter is available for your use, here.
sqwalk.com

North American natural gas is no longer the favored fuel for new power generation, major utility customers report - and its fall from grace has triggered a competitive race with coal, nuclear, imported LNGs and other energy sources vying for incremental market share in the crucial electricity sector.

"For decades, natural gas was considered too expensive to burn for power and those conditions are already reoccurring," says Jim Oosterbaan, senior vice president of merchant operations for Edmonton-based Epcor Utilities Inc. He made that comment on March 7 to a North American natural gas conference sponsored by the Canadian Energy Research Institute in Calgary.

Energy-intensive heavy industries have already switched away from natural gas or abandoned North America in favor of other locations, Oosterbaan says, and the power sector is poised to make a similar shift to other fuels.

Stephen Reynolds, president and CEO of Seattle-based Puget Sound Energy, agrees: "Frankly, if I were looking at building a new generating unit, I'd be concerned that gas supply looks real tight even without incremental power demand. I think coal, which is reliable in terms of supply and pricing, would have the edge, above all in the Midwest."

Puget Energy, located in Seattle, services 1.6 million electricity and gas customers. Reynolds' assessment of coal's growing appeal is shared by his wife Paula Rosput Reynolds, president and CEO of AGL Resources. This Atlanta-based company distributes gas to 2.2 million customers through six subsidiary utilities.

"Even pristine states like Florida and the Pacific Northwest are determined to keep the coal option alive," says Rosput Reynolds, who is also a director of Coca-Cola Enterprises and Delta Air Lines.

Reynolds and Rosput Reynolds, who both hold degrees in economics, were president and vice-president respectively of Pacific Gas Transmission during the 1990s when that company was embroiled in a lengthy regulatory battle to expand its pipeline system capacity from Alberta to northern California.

The couple warns producers and pipeliners that similar delays in bringing Arctic gas from Alaska and the Mackenzie Delta to southern markets would give a potentially decisive boost to competing forms of energy.

"The gas industry's reputation is at stake here," suggests Steve Reynolds. "Its future depends on the sensible resolution of regulatory disputes and prompt development of Arctic supplies."

A supply shortage, if severe, could even draw the attention of government. In 1978, alarmed by a severe natural gas crunch, the U.S. Congress outlawed the burning of gas in new generating plants, in effect dictating the use of coal and nuclear fuel for new baseload and residual crude for peaking power.

After the act was repealed in 1987 by U.S. President Ronald Reagan, American gas consumption for electricity generation rose from 2.6 tcf in 1988 to 5.7 tcf in 2002.

The reputation of gas has again suffered a severe blow, Rosput Reynolds says: "A decade ago, INGAA (Interstate Natural Gas Association of America) and plenty of other upstream people were predicting that annual consumption would rise to 30 tcf. In fact, demand has remained relatively flat yet gas prices have still risen dramatically because supply has failed to keep pace with demand."

The contenders to build new Arctic gas transportation include:

Sempra Energy - whose subsidiaries Southern California Gas Co. and San Diego Gas & Electric Co. make it the largest distribution utility in the U.S. - wants to construct a 1,297-kilometre north-south pipeline through from Alaska's North Slope to the port of Valdez, where gas would be liquefied and shipped by tanker to the West Coast. Its partner in the project is the Alaska Gasline Port Authority. Pipeline capacity could range from 2.6 bcf per day as high as 6.0 bcf.

TransCanada PipeLines Limited, through its subsidiary Foothills Pipe Lines Ltd., plans to build a 4.5 bcf per day line which would follow the Alaska Highway to TCPL's pipeline grid in Alberta, then move the fuel to the (U.S.) Midwest. The $20 billion US project would be built under legislation passed by the federal government 27 years ago after a review.

Enbridge Inc. has proposed an alternative similar to TransCanada's, threatening to take legal action if Canada's federal government does not open the Alaska opportunity to another round of competition.

BP, ConocoPhillips and ExxonMobil, the major gas producers on the North Slope, have also filed an application with the U.S. Federal Energy Regulatory Commission to construct a similar U.S.-Canada pipeline. A Canadian pipeline company could become a partner with the producer group.

A consortium headed by Imperial Oil Ventures Ltd. is planning a pipeline from the Mackenzie Delta to Alberta, scheduled to move one bcf per day by 2009-2010.

Industry officials hope that the Mackenzie pipeline, based on present tentative construction schedules, would act as a warmup for the mammoth Alaska Highway project.

The Sempra and Alaska-Midwest proposals appear to have more potential for overlap in terms of timing and volumes.

Sempra's LNG facilities could be in service for 2011-2012 if government permitting is completed by 2007, says company spokesman Art Larson.

The tankers might discharge their cargoes at an LNG facility, named Energia Costa Azul, which Sempra has received government approval to construct south of San Diego in Baja California, Mexico.

Although the Coasta Azul facility's capacity of 800 mmcf per day is already committed, Larson says its expansion is possible, or another LNG facility might be built elsewhere on the West Coast.

"Alaska has enough gas potential to support to pipelines to market. We do not oppose a second pipeline but only on condition that our project moves ahead first," Larson comments.

Sempra stresses that, without its Alaska project, the West Coast will become entirely dependent on LNG from foreign sources, which it considers a potential concern for security of supply. Above all, Californians are anxious not to replay the enormously expensive energy supply crunch which they suffered at the turn of century.

Serious gas supply and pipeline construction conflicts between Sempra and other Alaska project do not appear likely at this stage, says George Eynon, CERI's senior director of natural gas research. "The actual construction component of Sempra's gas line (planned to parallel to the present trans-Alaska oil line) should occupy a relatively modest time window," he says, noting that TransCanada's 2012 in-service target is widely seen as overly optimistic.

But an orderly sequential deployment of the Mackenzie, Sempra and Alaska-Canada-Midwest projects could easily be disrupted by regulatory snafus.

The Mackenzie line, for example, has yet to win approval from some aboriginal groups. Brendan Bell, minister of non-renewable resources for the Northwest Territories, says Canada's prospects for developing its own Arctic gas could be set back by decades if delays put Mackenzie development into direct conflict with an Alaska-Midwest pipeline or large-scale LNG projects which bring foreign gas into North America.

Also on the regulatory front, Sempra must win an exemption from the Jones Act, a federal law which dictates that ships cargo moving between U.S. ports must be American-built, American-owned and American-crewed. Darcel Hulse, president of Sempra LNG, says this requirement is not feasible for his project because building an LNG carrier today in the U.S. would cost at least three times as much as it would on the open market.

Eynon points out that other constraints besides regulatory issues could emerge. "The sheer physical scale of a $20-billion (U.S.) Alaska pipeline project will impact virtually every major steel plant in the world directly or indirectly," he says.

Fuels acting as competitors to Arctic gas also face formidable regulatory and development challenges.

For example, Puget's Reynolds does not believe that LNG importers will be able to relieve the tight continental gas supply. "The siting of new LNG plants will continue to be slow and thoughtful," he forecasts. "Additional LNG imports will occur but in my opinion not quickly enough to do much more than offset production declines from the lower 48 states and Western Canada - and possibly not even that."

Nuclear power plants have been all but impossible to site since the early 1990s but Oosterbaan advises that the sector is reviving. Three nuclear plants backed by powerful sponsors are now braving the permitting process in the U.S. Policy-makers are drawn to nuclear by new technology which has dramatically increased output from existing plants and enables the construction of smaller nuclear plants.

Oosterbaan says design improvements have enabled the construction of several innovative coal-fired generating plants whose emissions are competitive with natural gas. At current electricity prices, he predicts, older coal plants will be retrofitted with the same clean-burning technology.

But Martin Edwards, INGAA's vice president for legislative affairs, says gas may yet win more market share in power. "Gas-fired plants have a very low utilization rate. Increasing that rate in many cases will be cheaper than constructing new coal-fired or nuclear plants," he comments (see following story).

But without timely access to Arctic reserves, Reynolds says, gas producers cannot assure their power customers of the 30-year supply needed to finance new generation plants, and by default new-generation capacity at least will be forfeited to other fuels.

http://www.nickles.com/brn.html

Posted by Arthur Caldicott on March 21, 2005

March 20, 2005

Full steam ahead for BC offshore oil drilling

Kevin Potvin
The Republic
Vancouver's Opinionated Newspaper
March 3 to 16, 2005 • No 108

No voices of caution or reason were invited to a $500-a-head meeting of government and energy industry leaders licking their chops and gripping their forks as they gaze out over the beautiful British Columbia coastline.

The most startling comment heard at a two-day powwow of local oil and gas industry men in Victoria this week was offered by Guy Jarvis, a vice president at Enbridge Energy Management, a pipeline company in Calgary. In describing his company's plans in the next few years, he said Enbridge will be reversing the direction of flow in a pipeline that once delivered oil from Cushing, Oklahoma to Chicago. The pipeline system will now take oil delivered from the tar sands of Alberta through Chicago to Cushing. The news was greeted by nary a gasp, as though it meant nothing.

Not long ago, the Cushing oil field produced 17% of oil sold in the United States and accounted for a whopping 3% of total world oil production. Cushing was the site of the famous Wild Mary Sudik well blowout in 1930, a wildcatter's hole that blew into a huge uncontrollable gusher for 11 days spraying 3,000 barrels of oil an hour high into the sky and drenching city hall and most of downtown in the sticky black gold.

The pipeline from Cushing to Chicago made Oklahoma the top oil producing state in the top oil producing country in the world. The first commercial oil well on the planet may have been sunk at Oil City, Pennsylvania, but the age of oil started at Cushing, Oklahoma. And now, 85 years later, we learn that Cushing will now be importing oil. For oil company men with eyes to see, there could be no more ominous a sign. But this room on this day was blindfolded to it.

One can argue about how much longer industrial nations around the world will find oil and gas to burn to keep their factories and transportation systems running, but it's all a question of when, not if. Credible scientists range in their opinions from 10 years to 75 years. Some of the wide disparity is accounted for by how the question is posed.

The world currently burns about 80 million barrels of oil a day. At that rate, there is probably hundreds if not thousands of years worth of oil in reserves underground around the planet. But the vast majority of that oil is unreachable with current drilling and pumping technology, or is too expensive to pump because of where it is. As the price that oil fetches on the market goes up, some of those places where it is currently uneconomical to explore and pump become profitable. Thus, if scientists are asked to estimate how much oil is left for us to use, their answer is that it depends on the price. At $100 per barrel, there is far more oil that can profitably be pumped to market than there is when oil is at $40 per barrel. This is the basis for the higher estimates.

But there is a limit: it takes a great deal of oil-burning energy to pump oil up from underground wells, to transport oil to refineries, to crack the heavy crude into usable smaller molecules, and to bring it to places where the resulting oil products are used, like at gas stations in cities. The energy required to bring oil to market increases as we search deeper and in more remote places for new reserves of lower, heavier quality crude.

Once we get to the point where it takes one unit of oil energy to bring the next unit of oil energy to market, the oil industry is effectively dead, no matter how high the price goes or how much oil there remains underground. Even if customers are willing to pay $1,000 per barrel, if a barrel is required to bring the next barrel of oil to market, the cost of producing that next barrel is also inflated to $1,000, which means no one can long remain in that business.

The situation with natural gas is similar, if not worse due to chronic over-estimating of the size of reserves.

What this ultimately means is that the price of fossil fuels will continually go up making marginal, unsafe, or barely economic reserves more tempting. But no new production will offset the rising trend as old oil fields run dry (like in Oklahoma) faster than new fields can be found and exploited. Prices must always rise rapidly, making the industry and those who depend on it, like governments, more desperate and reckless to exploit more unsafe and marginal reserves.

Every new dollar of investment in fossil fuel exploitation only hastens us faster toward the day when it takes a complete unit of energy to market the next unit of energy. The day before that happens will be the day of highest investment in the oil and gas industry as the whole machinery gushes to the last drop of now hugely expensive oil—and then the next day, there will be sudden silence, when the drop after the last one takes a whole drop to produce, which no one will do.

Thus it is that three of the major pipeline companies operating in BC and Alberta can in one day together announce over $5.5 billion worth of new pipelines to market the notoriously difficult-to-work-with sticky tar of north Alberta. It is also why a room full of men who should know better can applaud British Columbia minister of energy Richard Neufeld when he complains to them that the federal government is merely playing politics by maintaining the moratorium on oil and gas exploration in the famously unstable, highly ecologically fragile Queen Charlotte basin. When oil hits $100 per barrel, they'll be ready to burn down the Parliament in Ottawa.

The posh room full of energy company executives and mayors and provincial politicians gathered to hear about opportunities in the oil and gas industry in British Columbia against this backdrop of looming catastrophe, did not once all day hear the following terms: “Kyoto Accord,” “Peak oil,” “global warming,” “environmental stress,” “alternative energy,” “resource wars,” “Iraq,” “Afghanistan,” or even the words “future” or “reality.” What they did hear all day were words like “opportunity,” “billions” and “market.”

Eventually the price of oil will rise to the point where it will be profitable to rip out Stanley Park and drill for it there. Those who meekly protest will be accused of blocking business from providing government with the revenue to treat the sick in hospitals, as John Hunter, president and CEO of Hunter and Associates in Vancouver did, regarding five Western Canada Wilderness Committee protesters who campaigned against drilling in the Queen Charlotte basin outside the meeting at Victoria's Delta Point hotel.

Or, as Neufeld, apparently the representative of the people of British Columbia, said to this gathering of capitalists, “When we see 10 billion barrels of oil offshore, why shouldn't we go get it?” It may not be the sentiment of the people, but it was certainly the sentiment in that room. Market economics can be very charming in its blindness and enthusiasm, but aren't some of these people ever tempted to cautiously peek out from under their blindfolds at the road directly ahead?

Kevin Potvin kpotvin@republic-news.org


Posted by Arthur Caldicott on March 20, 2005

March 18, 2005

BCTC backs down on Tsawwassen power lines

Chad Skelton and Richard Chu
Vancouver Sun
March 18, 2005

Company will find new route for proposed high-voltage transmission lines

"Costs are an important consideration, and so are other factors such as aesthetics, socio-economic and environmental impacts. We will now turn our attention to developing an alternative option; this work will take several months." BCTC CEO Michael Costello (link)
 
DELTA - Tsawwassen residents won a major victory Thursday when B.C. Transmission Corp. backed down from a plan to build high-voltage power lines through their neighbourhoods.

In a letter to Delta South Liberal MLA Val Roddick and Delta Mayor Lois Jackson, the utility vowed not to replace the wooden power poles that currently exist along the company's right-of-way with 30-metre high steel towers.

Residents in the area have been lobbying against the proposal for months, concerned that the towers would be unsightly and that the increased voltage (from 138 kilovolts to 230) could pose health risks to residents.

When the existing power lines were built in Tsawwassen in the 1950s, most of the area was farmland.

But suburban homes now back onto the lines in many locations.

Maureen Broadfoot, spokeswoman for the Tsawwassen Residents Against High Voltage Overhead Lines, was ecstatic when she heard the news Thursday morning.

"We're pleased right now that at least this upgrade won't be going through our residential areas," she said.

The new lines were part of a $200-million project to upgrade transmission services to Vancouver Island.

Donna McGeachie, community affairs manager for BCTC, said the company will begin exploring alternative routes for the lines.

"We've got a number of alternatives that we've identified and some that the residents have identified," she said. "Those alternatives include going along Highway 17 or tunnelling underneath Tsawwassen.

McGeachie said all the alternatives are more costly and will likely increase the cost of the project by anywhere from $18 million to $35 million.

"Any other route we go through is bound to be longer, so that adds to the cost," she said.

McGeachie said the increased cost will be passed on to the energy companies that use the transmission lines, including BC Hydro, which will likely pass the cost on to customers.

The project to build new transmission lines to Vancouver Island is complex, requiring environmental approvals from the provincial and federal governments as well as U.S. authorities because 12 kilometres of the undersea cables will run through the U.S.

McGeachie said Thursday's decision will only affect four kilometres of the 69-kilometre route and is not expected to delay the project. BCTC still expects to make its application to the B.C. Utilities Commission in June.

BCTC hopes to have a new system of power lines to the Island operational by the fall of 2008, McGeachie said.

cskelton@png.canwest.com

© The Vancouver Sun 2005

Posted by Arthur Caldicott on March 18, 2005

March 15, 2005

Duke Point power plant firm holds off due to legal appeal

Andrew A. Duffy
Times Colonist (Victoria)
15-Mar-2005

With the release of the B.C. Utilities Commission's reasons for approving the electricity purchase agreement between B.C. Hydro and Duke Point Power Corp. come questions of why opponents are intent on taking the decision to the B.C. Court of Appeal.

On March 9, the utilities commission released its reasons for the decision it rendered Feb. 17, approving a 25-year agreement that will see Hydro pay Pristine $45 million annually to provide electricity from a $280 million, 252-megawatt plant to be built at Duke Point in Nanaimo.

"In light of a very strong decision in our favour we are wondering why these groups are trying to delay things," said Jeff Myers, president of Pristine Power which will build and operate the plant.

B.C. Hydro has argued that demand for electricity is increasing on the Island and around the province, and the new plant is needed to meet that demand.

The Joint Industry Electricity Steering Committee, representing B.C.'s largest industrial consumers of electricity, has filed an appeal based on its belief the project exposes Hydro customers to high costs and financial risks.

The Georgia Strait Crossing Concerned Citizens Coalition has appealed on the grounds the commission's decision was biased and predetermined before intervenors had a chance to present evidence at public hearings.

Pristine officials have wondered aloud how the appeal process, which could delay the start of the project until early summer, benefits anyone.

"That the project is a win for Vancouver Island and a win for ratepayers has been confirmed through a rigorous, competitive bidding process, a separate cost effectiveness evaluation, an environmental assessment and an extensive public hearing before the BCUC, an independent regulator," noted Harvie Campbell, vice-president of Pristine Power.

"After the extraordinary amount of checks and balances that this project has gone through, we hope common sense prevails and JIESC and GSXCCC re-examine their approach and stand down from their applications."

That's not going to happen.

Tom Hackney, president of the concerned citizens coalition said the group still believes the utilities commission was biased in favour of the project before the hearing was complete.

"We're not surprised, but disappointed," he said of the decision to approve the deal.

"The last time around when BCUC reviewed the (Vancouver Island Generation Project -- Hydro's own 250-megawatt plant which the BCUC dismissed as too large and too costly) they seemed to be a lot more open to hearing the broader arguments about different approaches to making up the energy shortfall on Vancouver Island.

"This time they really seem to have taken a narrower view."

In its reasons the commission outlined the entire process noting it was open and flexible enough to consider a number of options and was adequate for determining the most cost-effective on-Island generation option.

The commission also backed Hydro's load forecasts which necessitated additional capacity in the range of 150 to 300 megawatts by 2008.

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

"We're very pleased with the reasons for the decision," said Bev van Ruyven, Hydro's vice-president of distribution. "We thought the commission took a very balanced approach."

Myers said at this point the company is holding off breaking ground in Nanaimo for the plant, but they are doing work behind the scenes qualifying contractors and getting permits to be ready for the Appeal Court decision.

The Appeal Court will hold a one-day hearing into the matter April 8 and is expected to decide if there are grounds for an appeal within a week.

Posted by Arthur Caldicott on March 15, 2005

March 14, 2005

2 energy visions: BC looks back, other places look ahead

800,000 tonnes of greenhouse gases
BC Hydro signs a deal for a new gas-fired generation plant to start operation in 2007 that will spew 800,000 tonnes of carbon dioxide into the atmosphere, doubling the province's annual greenhouse gas emissions from energy generation. Ontario adopts a renewable fuel standard to take effect in 2007 that requires vehicle fuels to contain at least 5% ethanol, and will reduce provincial greenhouse gas emissions by 800,000 tonnes annually.
0 MW of wind by 2005
BC Hydro has exactly 0 megawatts of wind generated electricity on the grid, and plans are to add exactly 0 MW in 2005. BC's neighbour Alberta has 275 MW of installed wind capacity, Washington has 243 MW and plans to add 645 MW in 2005; Idaho plans 381 MW in 2005; even Yukon has 1 MW.
BC waits on wind, while other places retrofit.
Announced in September 2003, the 58.5 MW Holberg Wind Farm, BC's first wind project, may actually come onstream in late 2006 or early 2007. 20 year old wind turbines in Palm Springs, Tehachapi and Altamont Pass in California are to be repowered in early 2005.
All this by way of suggesting that BC has a long way to go to embrace renewables and a sustainable energy vision. Yet the road has been obvious and the GSX Concerned Citizens Coalition and many, many others have been telling government and BC Hydro for years, where that road is. But even with today's announcement, the government clearly doesn't get it. Heavy on high-tech, nowhere on local jobs, local impacts.

Posted by Arthur Caldicott on March 14, 2005

Growing a world-class power technology cluster in BC

A vision for growing a
world-class technology cluster
in smart, sustainable British Columbia

Report to the Premier's Technology Council
Prepared by Mossadiq Umedaly

Building the Future

British Columbia can be a world leader in Power Technology. Government and Industry can create high-value jobs in profitable businesses by supplying smart, sustainable power solutions to British Columbia, to Canada and to the world.

The full 127 page report is available here


NEWS RELEASE

For Immediate Release

March 14, 2005
Office of the Premier
Ministry of Energy and Mines

REPORT HIGHLIGHTS B.C. ALT ENERGY & POWER OPPORTUNITIES

VANCOUVER – A new report by industry to the Premier’s Technology Council identifies opportunities for the government and private sector to work together in establishing B.C. as a global leader in innovative power technologies, Premier Gordon Campbell said today.

“B.C. has the people and the resources to help drive the global shift toward smart power technology and alternative energy as part of our goal of leading the world in sustainable environmental management,” Campbell said. “Innovative power technology developed here in B.C. is improving the quality of life for thousands of people around the world, by improving how power is generated, transported and used. Demand for that expertise will only continue to grow.”

The report, entitled A Vision for Growing a World-Class Power Technology Cluster in a Sustainable British Columbia, identifies five international market opportunities in which B.C. has the potential to take a leadership role that will result in significant economic opportunities and job creation:

1. Remote power solutions for rural communities, including off-grid distributed generation from a variety of established and emerging alternative sources.

2. Sustainable urban practices, including building designs and urban planning to reduce energy consumption and grid-tied sustainable distributed power to help offset peak power needs.

3. Smart urban transport, including application of natural gas and electric hybrid engine, fuel cells and hydrogen – areas in which B.C. is already recognized as the global leader.

4. Smart grid solutions, including the use of software, hardware and electronics to increase the efficiency of power grids.

5. Large-scale clean, green power production to generate and deliver electricity to the western power market.

The report leverages input from leading experts to create a strategy and a framework for collaboration to address the opportunities and challenges for smart, sustainable power technologies in B.C.

“In 2002 we brought in the B.C. Energy Plan – a plan that looks forward on how to build on B.C.’s great energy resources,” said Richard Neufeld, Minister of Energy and Mines. “This report contains some exciting ideas about how to unleash our province’s full potential as an energy innovator, and advance the goals of the Energy Plan.”

“As more markets around the world look for smart power choices, they will be looking to buy those products, services and expertise from somewhere,” said the report author Mossadiq Umedaly, chairman of Xantrex Technology and a member of the Premier’s Technology Council. “B.C. is poised at the edge of a tremendous opportunity, but we also have challenges and competition. If we work together and apply ourselves thoughtfully and consistently with a clear strategy and focus we can be the providers of leading-edge power technology solutions to markets around the world.”

According to the report, power technology is already one of the biggest technology industries in B.C. with dozens of sub-sectors with the potential to add hundreds of millions to the economy over the next decade. B.C.’s power technology sector already includes more than 60 companies providing 3,000 jobs and generating $700 million in annual revenues. B.C. has market leaders and emerging companies in a number of smart, sustainable power technology areas, including power electronics, fuel cells, natural gas and electric hybrid engines, smart grid and power measurement, micro-hydro, ocean, solar, and wind energy, sustainable urban building and design practices and more.

A copy of the report is available at http://www.gov.bc.ca/

-30-

Media contact:

Mike Morton
Press Secretary
Office of the Premier
250 213-8218

Tamara Little
Communications Director
Ministry of Energy and Mines
250 889-1825

Visit the Province's website at www.gov.bc.ca for online information and services.

This news release from the Premier's Office is here

Posted by Arthur Caldicott on March 14, 2005

March 11, 2005

No Gas Plant Coalition says No! to gas-fired power plants

News Release
No Gas Plant Coalition
Gabriola Island, BC
March 9, 2005


For Immediate Release


Coalition says No!
to gas-fired power plants



eRagingGrannies.jpg
A citizens' group from the Gulf Islands has called on BC Premier Gordon Campbell to halt construction of the controversial Duke Point Power project and place a moratorium on the burning of fossil fuels to generate electricity. (Click here for letter to Premier Campbell).

"The Duke Point plant, if built, will produce more than 800,000 tonnes of carbon dioxide every year it operates," says Bob McKechnie, spokesman for the Gabriola Island based No Gas Plant Coalition. "This flies in the face of Canada's recently-signed Kyoto commitment as well as the BC government's own Climate Change Plan. Recent studies have shown that although natural gas is a relatively clean fuel, it results in noxious emissions when burned. Our health will be affected by this plant."

In February, the BC Utilities Commission approved an Energy Purchase Agreement between BC Hydro and Pristine Power, a consortium of investors headquartered in Alberta. Under the agreement, Pristine Power will build and operate the plant, selling electricity to BC Hydro according to a complicated formula that BC Hydro has refused to fully reveal to the public. Construction was to begin in early March, but is on hold pending appeals filed by Vancouver Island industry and concerned citizens. BC Hydro is now trying to hurry the matter through the BC Court of Appeal.

eMeeting1.jpg
BC Hydro has consistently maintained that Vancouver Island will begin experiencing power shortages in the next two to three years if the Duke Point plant is not built. It began planning for the plant in 2001, after similar proposals were blocked by public protest in other communities, but its plan was rejected by the BCUC last year on the grounds that it was not proven to be the least costly option for ratepayers. Pristine Power's nearly identical proposal will use the same site and the same equipment - including assets worth $120 million, which it will purchase from BC Hydro for $50 million.

McKechnie, a retired professional engineer, was among the fifty intervenors and hundreds of citizens who told the BCUC hearing in January that the Duke Point plant would create an expensive, unnecessary, and unwanted environmental hazard. His view is supported by industry engineers. "With proper management on BC Hydro's part, Vancouver Island won't experience peak capacity shortfalls if the plant isn't built," he says. "There are other simpler and less costly alternatives."

McKechnie says a combination of proper load management on BC Hydro's part and the adoption of two or three ready-to-go non-fossil generation proposals will provide all the peak-capacity protection that's needed on Vancouver Island until a new undersea cable from the mainland comes on stream in 2008. "With the new cable coming, there's time to further conservation efforts and start developing the island's abundant green/sustainable electricity resources," he says, "Building a $370-million gas-fired generation plant to deal with a simple short-term peak capacity problem is like going out and buying a chainsaw to cut butter."

The No Gas Plant Coalition has sent a letter to Premier Gordon Campbell, asking him to halt construction of the Duke Point plant and forbid further generation projects that would rely on fossil fuels. It hopes other groups and individuals will sign and support the letter, and back its protest to the premier. It is calling on all citizens to demand that their government representatives honour commitments to green energy and clean environments.

In its letter, the No Gas Plant Coalition says BC Hydro has exaggerated the population growth and energy needs of Vancouver Island to justify building the Duke Point plant. It accuses Hydro of ignoring other strategies that promote green energy and conservation. “It is a matter of record that the largest industrial user of electricity on Vancouver Island has submitted a clear plan that would cause the reduction of the offending demand peak by up to 140MW,” says the letter. “This is not some meddlesome on-the-margin proposal, but a large and truly beneficial economic option. An option dismissed by the BCUC and BC Hydro in favour of spending many hundreds of millions of dollars on a new and senseless natural gas-burning facility."

The letter also says that Hydro is promoting a fiction with its estimates of gas costs for the plant. “Too bad we, as captive customers, aren’t able to pay in fictitious dollars,” says the letter.

It asks Premier Campbell to stand by the promise that he made in his recent budget: “To lead the world in sustainable environmental management, with the best air and water quality, and the best fisheries management, bar none.”

“We intend to have every candidate in this May election state for the record just how committed he or she is to the commendable goals your government has set down,” says the letter. “We are characterizing this occasion as a test of your Government’s commitment to its word.”

For more information, go to www.sqwalk.com and/or contact Bob McKechnie at 250 247-8197 (bobmck@shaw.ca) or Erik Andersen at moonbayhouse@shaw.ca

Download this news release

Download letter to Premier Campbell

Download Backgrounder and suggestions for What You Can Do

Download media and political contacts list

Posted by Arthur Caldicott on March 11, 2005

March 10, 2005

Thursday, March 10, Duke Point meeting on Gabriola


800,000 Tonnes of CO2 per year

A Power Plant at Duke Point will be in Gabriola’s Front yard!
What can we do to stop it?
Strategy and Action Meeting
Thursday, March 10, 7pm
at the Agi Hall, opposite Gabriola P.O.

Get latest information on the Duke Point power plant,
and on the Court of Appeals process

Plan political strategies

Discuss Direct Action

Read letter for Order in Council to stop plant
and email Erik Anderson to add your name as a signatory

Donate to Fund to support Appeal

Or deposit to GSXCCC Appeal Fund at Coastal Community Credit Union

Volunteer to help!

Gabriola No-Gas-Plant Group

Contact Phil Marchant for more information
marchant@islandnet.com 247-0021

(logo taken from Siki's Quilt Square)

Positive Energy Quilt Project

Posted by Arthur Caldicott on March 10, 2005

Powerex's right to import U.S. electricity questioned

Scott Simpson
Vancouver Sun
March 10, 2005

sqwalk.com
COMMENT: "Producers in the United States supply about 12 per cent of British Columbia's electricity requirements," Scott Simpson claims in this article. Powerex does buy a lot of electricity from Alberta, Washington and to a lesser extent from other US states. But it is in the interests of trading power for revenue that this is done, not to meet domestic needs, not to satisfy "British Columbia's electricity requirements".

We buy cheap, and sell dear. We conserve water in our reservoirs at night and during low demand periods - when power is available for purchase at rock-bottom prices. And we open the floodgates when prices on US markets are high. It's brilliant business, good for the provincial treasury, and there's nothing wrong with it.

But that's not how the story is told. Instead, we're led to believe that BC needs the power. We're told repeatedly that BC is a "net importer", that we're buying power to meet BC's "electricity requirements".

In telling the story this way, Simpson echoes BC Hydro and the provincial government, both of whom apparently want to plunge BC into an orgy of capital-intensive capacity building - gas-fired plants on Vancouver Island and elsewhere, coal-fired plants, perhaps Site C - all under the pretext that BC is running short of power. It's not true. It's manipulative and deceptive and a breach of trust with British Columbians to present the facts this way. - Arthur Caldicott
sqwalk.com

California's $1-billion electricity war with Powerex is entering a new phase with two aggrieved utilities in the state launching an attack on the BC Hydro-owned company's licence to import power from the United States.

If the utilities are successful in their attack, which came in the form of a petition to the U.S. Department of Energy, it could lead to higher electricity prices for consumers in British Columbia who are already dependent on producers in the United States.

Alternatively, the petition could be used as leverage to force Hydro to refund hundreds of millions of dollars in profits earned by Powerex during the California energy crisis of 2000-2001.

Producers in the United States supply about 12 per cent of British Columbia's electricity requirements -- an estimated $375 million worth of power in 2005 -- with Powerex responsible for bringing it in at the lowest possible cost to Hydro's customers.

Since 1998, Powerex has used an authorization from the U.S. Department of Energy (DOE) to buy electricity in the U.S. and route it to Canada when market prices are at their lowest.

The DOE export licence expired last month and Powerex is seeking what it presumed to be a routine five-year extension.

However, the California utilities, Southern California Edison and Pacific Gas and Electric, are asking the DOE for permission to oppose a routine renewal.

They want the licence modified with tough new conditions to bar Powerex from making extraordinary profits as it did during the 2000-2001 crisis.

They allege that Powerex used market power to manipulate the California electricity market during the state's 2000-2001 electricity crisis and "was buying power in the California markets where it was desperately needed and exporting it to Canada."

"Powerex has demonstrated a pattern of abuse of its export privileges in connection with the energy crisis that existed in the Western United States in 2000 and 2001 ["Energy Crisis"]," says the petition filed this week.

It says evidence that surfaced during an investigation of Enron's role in precipitating the California crisis shows that "Powerex continued to export power to Canada during system emergencies and blackouts" in violation of the conditions of its DOE export license.

The petition says that without tough new conditions on Powerex's export licence, Powerex could "impair the sufficiency of electricity supply within the United States."

The petitioners recommend a licence renewal be contingent on conditions including hour-by-hour paperwork for all import and export trades -- and a commitment by Powerex to refund profits from power sales if U.S. electricity market regulators determine it broke rules against market manipulation.

Hydro media relations manager Elisha Moreno said Powerex continues to operate in the U.S. while its application is being heard.

She said Powerex expects the DOE will renew the licence and notes that U.S. authorities have already absolved Powerex of any misconduct in its dealings with California during the crisis.

But even in the unlikely event that the licence is not renewed, it would not stop Powerex from selling B.C.-made electricity into the U.S. -- such as the marketing of the downstream benefits of the Columbia River Treaty.

As well, Hydro could continue to meet British Columbia's electricity demand with U.S. power, by purchasing it from another trading company.

© The Vancouver Sun 2005

Posted by Arthur Caldicott on March 10, 2005

VICFT Reasons for Decision

sqwalk.com
COMMENT: Skimming through the CUC "reasons" for approving the EPA (released today), it strikes me that almost none of the many arguments advanced by the many intervenors apparently was correct. What is the chance that so many trained and intelligent people could be so wrong (according to BCUC) so consistently? Whatever that chance, I'd say there is a stronger explanation - in the bias of the Panel.

By the way, (and here may be something for the appeal), as far as I see, the Townhall Meeting never occurred, and the hundreds of letters of comment were never received, much less summarized, much less taken seriously. Further, except for going through and accepting all Hydro's arguments topic by topic, the BCUC never takes the trouble to assert that actually the EPA is in the public interest. Is that a significant omission and/or have I just not read the thing completely? - Shadybrook Farm

By and large, the BCUC pretty much accepted BC Hydro's arguments on the need for on-Island generation; the usefulness of DPP as a long-term capacity addition on the Island; and the cost-effectiveness of DPP versus the other CFT bidders.

While the BCUC did accept that there was some chance that greenhouse gas liability costs might come to be attached to the fuel ('upstream' costs), they pretty much discounted that as a factor, saying that they (the Commission) might simply pass that cost on to the shareholder, rather than the ratepayer. If BC Hydro were a private corporation, that would be a meaningful distincion, but since the ratepayers are, roughly speaking (with exceptions), the people of BC, charging the ratepayers for GHG liability would amount to about the same thing as charging the shareholder.

In any case, BC Hydro gets away with handing off the legal liability for GHG emissions to DPP (which is simply gambling that there will be no liability -- probably has taken no steps to offset anything), and because the BCUC is only charged with looking at financial costs that might hit the ratepayers, they don't look beyond that to assess the fact that GHG emissions will hurt us all, i.e. a matter of public interest.

The Commission also saw fit to say BC Hydro was right to assume that the 230 kV sub-sea cables might only be in service by 2009. - Tom Hackney

The only reason that they would have a second hearing was so that they could reverse the decision of the first one. - Gabriola resident
sqwalk.com

March 9, 2005


Re: British Columbia Hydro and Power Authority
Project No. 3698354 - Order No. G-99-04
Call for Tenders for Capacity on Vancouver Island
Review of Electricity Purchase Agreement

Further to our letter of February 17, 2004 regarding the above noted Application, attached please find the Reasons for Decision for Order No. E-1-05. Hard copies of the Decision will be distributed by the Commission no later than Friday, March 11, 2005.

Reasons Cover Letter
Reasons for Decision

Posted by Arthur Caldicott on March 10, 2005

March 09, 2005

Booming economy forces Hydro to hike capital spending

Scott Simpson
Vancouver Sun
March 09, 2005


British Columbia's rapid economic growth is forcing BC Hydro to boost capital spending to keep pace with soaring demand for electricity.

Hydro plans to issue an open call to the private sector for 1,000 megawatts of new power in the upcoming fiscal year -- but also plans to spend $686 million on incremental improvements to its existing heritage electricity system.

That's $86 million more than Hydro expected last year when it did its 2005 outlook, Hydro power planning manager Mary Hemmingsen said on Tuesday. Since then, she said, B.C. has taken off and now leads Canada in economic growth.

"We're responding to the province's strong economic conditions which result in more load we have to serve," Hemmingsen said.

Details of Hydro's spending plans are contained in a 'resource expenditure and acquisition plan' submitted Tuesday to the B.C. Utilities Commission.

The plan pegs 2004 economic growth at 2.8 per cent -- and expects it to average 3.0 per cent over the next five years. It was 2.2 per cent from 1999 to 2003.

The Canadian average in 2004 was 2.6 per cent, while the United States grew at 3.0.

"Quite frankly, B.C. is leading the pack. It's at the top relative to the rest of the provinces in Canada," Hemmingsen said.

Growth in B.C.'s gross domestic product is also expected to strengthen -- 2.8 per cent over the next 10 years compared to 2.6 per cent in 2004.

"Although this is a small annual difference, the cumulative effects are significant over the forecast period," says the plan. "The markets for B.C.'s main commodity exports including pulp and paper, wood and wood products, copper and coal all continue to be strong.

"This improved outlook for the external and domestic economic environments has positive implications for electricity demand and sales in British Columbia."

Hemmingsen said the "lion's share" of the additional capital sought by Hydro is "driven by growth due to economic conditions."

For example, the Lower Mainland's thriving condo market has pushed Hydro to spend more on distribution -- poles and wires -- to deliver electricity to new customers.

Hydro and other agencies last year forecast modest growth for B.C. "Then we experienced a really significant uplift last year, about 1,000 gigawatt hours more than we had anticipated," Hemmingsen said. "That uplift has continued this year.

"Factors like the Canadian exchange rate typically put a damper on the forest industry or the mining industry but we're not seeing that happen because the commodity market is so strong because of China."

Hemmingsen said the additional spending won't lead to a rate increase of any consequence because the cost of additional capital improvements will be amortized over decades.

POWER HUNGRY:

B.C.'s mining sector is forecast to account for the largest growth rates in electricity sales among BC Hydro industrial customers over five years.

BC Hydro industrial sales, growth rates 2003-04 to 2008-09
Metal mines: +6.6%
Coal mines: +5.4%
Wood: -0.2%
Paper: +0.2%
Chemical: +0.1%
Other: -0.1%
Source: B.C. Hydro

© The Vancouver Sun 2005

Posted by Arthur Caldicott on March 09, 2005

Hydro rate-rise bid brings concerns

Scott Simpson
Vancouver Sun
March 9, 2005


Proposed increases would apply to industrial users

In a move that's raising "clear concerns" among the province's top industries, BC Hydro is preparing to charge prime-time rates 50 per cent higher than the standard electricity rates it charges its biggest customers.

The rates will apply against "the last 10 per cent of energy" consumed by mines, pulp mills and chemical producers, based on their historical patterns of consumption, and will have an uncertain impact upon about $500 million of Hydro's annual business, Joint Industry Electricity Steering Committee executive director Dan Potts said.

Hydro will propose the new rate schedule, unprecedented after 40 years of fixed rates, in an application it expects to file today to the B.C. Utilities Commission.

It's making the application in response to the B.C. government's 2002 energy plan, which called on Hydro to provide "market signals" to industry as a means of ensuring efficient use of the province's exceptional and low-cost hydroelectric resource.

Large industries account for only 0.1 per cent of Hydro's customer base, but consume 38 per cent of British Columbia's total electricity demand.

At this time, those industries pay about $36 per megawatt hour for electricity -- one of the cheapest rates in North America.

But under a new "stepped rate" scheme proposed by Hydro, the industrial rate will climb to $54 per megawatt hour for the final 10 per cent of historical use -- and stay there for any additional hours consumed.

The scheme also provides a small discount of about six per cent on the first 90 per cent historical use, with the hope that companies will consider it an incentive to implement energy savings projects and stay under the 90-per-cent level.

Hydro calls the standard rate Tier One and the stepped rate Tier Two.

Companies will also have the option of accepting a "time of use" rate whereby they can cut their electricity costs by shifting operations to non-peak times, such as nights and weekends, or shutting operations down during peak residential demand times -- such as December-January.

The province's energy plan called on Hydro to implement the changes on the premise that it would promote electricity conservation, send better price signals to industry, and support an enhanced role for private-sector power generators.

The $54 megawatt hour rate is comparable to the rate on the open market in western North America that Hydro relies on to meet about 12 per cent of B.C.'s annual electricity needs.

Hydro has been discussing the new regime with the Joint Industry Electricity Steering Committee (JIESC) for about 20 months.

If approved by the BCUC, the new rate structure would be in place by April of 2006.

JIESC executive director Dan Potts described the $54 Tier Two rate as a "major economic item" for industry.

He said members have expressed "various views" on the new system.

"My personal view is that it is going to be one heck of an administrative problem to put in place," Potts said. "I think there's 60 different companies that would fall under this rate. It's not a small issue. I think something in the range of $500 million in annual sales would fall under this."

Some companies are worried that the rates could serve as a disincentive to growth because of the risk that expanded activity will be penalized by higher energy costs.

The system is supposed to provide opportunities for individual companies to consult with Hydro so that they are not penalized when they increase production.

But Potts said his members are worried about the amount of paperwork and bureaucracy that may confront them in order to have their average consumption recalculated.

© The Vancouver Sun 2005

Posted by Arthur Caldicott on March 09, 2005

March 08, 2005

Electricity in Canada: Who needs it? Who's got it?

Eric Beauchesne, CanWest News Service, 08 Mar 2005
TD Bank news release, 07 Mar 2005
Electricity in Canada: Who needs it? Who's got it?




Power 'too cheap': Encourage conservation with higher prices

Eric Beauchesne
CanWest News Service
March 8, 2005

OTTAWA -- Provincial and territorial governments should charge domestic businesses and consumers more for their electricity to encourage energy conservation and investment in new energy sources to ensure an adequate supply of power in the future, the TD Bank warned Monday.

All provinces still have an adequate supply of electricity but most are already encountering problems keeping up with demand, or soon will, it says in the report -- "Electricity in Canada: Who Needs it? Who's got it."

"The challenges don't stop at merely scouting out new sources of supply, but investing heavily in transmission and distribution infrastructure," it says.

Above all, provincial and territorial governments need to encourage conservation by raising prices to eliminate the current gaps that persist between what it costs to produce electricity and what Canadians are charged for it, it said.

"Addressing these hefty challenges on the supply and electricity infrastructure fronts will be necessary to ensure that Canadians continue to enjoy a reliable electricity system down the road," said TD economist Derek Burleton.

But that won't be cheap, it warns, citing one estimate of $150 billion in needed investment over the next two decades, or $7.5 billion per year.

To help cover those costs, it suggests governments open the door more to private sector involvement in the generation and transmission of power.

"And, here, we're not just talking about private ownership of assets, but in areas where it makes sense, governments partnering with the private sector to design, build, operate, and/or finance projects," Burleton said.

Most governments have been moving in the right direction towards achieving the goal of ensuring adequate power supplies, such as developing strategies to tap into new supplies of so-called clean energy, it said.

However, it argued governments haven't gone nearly far enough to address the key issue which is their practice of pricing electricity below cost.

Historically, governments have opted to heavily subsidize electricity prices, in part as a strategy to help their industries compete, it noted. Although the gaps between price and cost have narrowed, they remain significant in many parts of Canada.

It has been estimated if Quebec consumers had paid what the province charged foreigners for electricity in 2003, their hydro bills would have been $8 billion higher.

But it's not just Quebec subsidizing domestic consumers, said Burleton, who added price subsidization remains the rule rather than the exception in Canada.

Raising electricity prices to market levels would initially reduce the competitiveness of domestic industries but that would ultimately force them to become more efficient, would attract investment in new generation capacity, and ultimately help avert a full-blown power crisis in the future, it said.

Jay Myers, economist with Manufacturers and Exporters Canada, agreed that over time prices should better reflect the costs of providing electricity but warned increases must be implemented cautiously and with a clear plan of how energy demands will be met.

"Sure in the long-term everything might be OK, but it's the short-term damage to the economy that we have to look at as well," Myers said.

However, the TD report argued some short-term pain may be necessary, noting that in Alberta, energy deregulation in the late 1990s led to a painful 60 per cent increase in prices.

However, since then there has been a wave of new private-sector investment and a sharp pull-back in prices, it said.

Even if prices rise over the next few years, Canada will continue to enjoy a competitive advantage on energy pricing internationally, it added.

© The Vancouver Sun 2005

TOP



MEASURES NEEDED TO ARREST DETERIORATING SUPPLY-DEMAND POSITIONS IN PROVINCIAL ELECTRICITY SECTORS, SAY TD ECONOMISTS

News release
TD Bank
07 Mar 2005

• All provinces in this country currently enjoy an adequate supply of electricity – even Ontario, where challenges have captured considerable attention over the past few years.
• At the same time, however, most regions are already confronting, or are likely to encounter, deteriorating supply-demand positions.
• The challenges don’t stop at merely scouting out new sources of supply, but investing heavily in transmission and distribution infrastructure.
• Above all, provincial and territorial governments need to encourage conservation by eliminating current gaps that persist between the cost of producing electricity and the price levied. Further moves toward market-based pricing would help to achieve this end.

TORONTO – Although electricity supplies across the country are currently sufficient to meet demand, most provinces are facing a growing electricity squeeze, say TD economists in a special report entitled Electricity in Canada: Who Needs It? Who’s Got It? The report is available at www.td.com/economics. “To alter the status-quo, governments will need to ramp up efforts to encourage conservation, in part through smarter pricing policies, and achieving new supplies of power, led by ‘green sources’,” remarked Derek Burleton, a senior economist with TD Bank Financial Group.

Ontario has captured the most attention

Among the regions, Ontario’s challenges on the power front have been the most well-documented in view of the power blackout with eight U.S. states in 2003 and a recent election promise by the provincial government to shut down its coal-fired generation units by 2007, which together account for about one-quarter of the province’s supply.

Yet, the TD study shows that Ontario is far from alone in facing electricity supply
constraints over the next several years. Most regions – even hydro-rich Quebec andBritish Columbia – have experienced weakening supply-demand positions in recent years, as evidenced by a combination of declining exports, rising imports and dropping reserve margins of electricity.

$150 billion in investment required

Addressing these hefty challenges on the supply and electricity infrastructure fronts will be necessary to ensure that Canadians continue to enjoy a reliable electricity system down the road. And, assurance of reliability will come with a price tag. The Canadian Electricity Association has estimated the combined cost across Canada’s regions at $150 billion over the next two decades, or $7.5 billion per year. “With governments already facing rising health-care costs and high debt burdens, moves by governments to throw the door open more widely to private-sector involvement could assist greatly in covering these huge investment requirements,” said Burleton. And, here, we’re not just talking about private ownership of assets, but in areas where it makes sense, governments partnering with the private sector to design, build, operate, and/or finance projects.

Prices may need to rise before they fall

The report acknowledges that many governments have been moving in the right direction in many respects. Most have developed long-term strategies that aim to achieve, among other goals, new supplies of “clean” power. Ontario, for example, has been looking at requests for proposals (RFPs) for renewable and gas-fired projects, and exploring the possibility of working with other provinces, such as Manitoba and Newfoundland & Labrador, to develop hydroelectric projects in their regions. Above all, there is an acknowledgement that some of the solution rests in demand-side management, which entails shifting power use from peak to off-peak periods.

Still, despite the moves, there have been only limited efforts made at dressing one of the key barriers – namely, the practice of pricing electricity below its marginal cost.

Historically, many governments across the land have opted to heavily subsidize
electricity prices, in part as an implicit industrial strategy. Although gaps between price and cost have narrowed in recent years, as many provinces have worked to address theprice side of the equation, they remain significant in many parts. “Case in point is Quebec, where it has been estimated that if domestic consumers had paid the export rate in 2003, their bills would have been $8 billion higher,” said Burleton. Applying a similar methodology to other provinces would almost certainly show that price subsidization remains the rule rather than the exception in Canada.

Further progress in realigning prices with cost, and in moving to a more market-based pricing system in general, would appear to be a competitive strike against business.

However, to the extent that prices increase in the short run, they would ultimately help to raise efficiency, attract investment in new generation capacity, and hence assist in averting a full-blown power crisis in the future. “In Alberta, the move to deregulation in the late 1990s created some short-term pain, as prices rose by about 60 per cent. Since then, there has been a wave of new private-sector investment and a sharp pull-back in prices,” added Burleton. In any event, even if prices rise over the next few years, Canada will continue to enjoy a competitive advantage in this area on an international scale.

-30-

For more information, please contact:
Derek Burleton Don Drummond
Senior Economist Chief Economist and Senior Vice President
416-982-2514 416-982-2556

This news release is at www.td.com

Electricity in Canada: Who Needs It? Who’s Got It? (including charts and detailed
tables), is available in PDF format on TD Economics’ Home Page at:
www.td.com/economics.

TOP


Posted by Arthur Caldicott on March 08, 2005

March 06, 2005

3,742 earthquakes detected off Vancouver Island last week

The Province
06-Mar-2005


Western Canada, last 5 years

BC, last 12 months
Maps and lists of recent earthquakes
sqwalk.com

VICTORIA -- Thousands of earthquakes have rattled the ocean floor off southern Vancouver Island last week, and a team of U.S. scientists is racing to the area to see if an underwater volcano is spewing fresh lava.

U.S. hydrophones detected 3,742 earthquakes over five days in an area about 270 kilometres west of Vancouver Island, but on Thursday, the intense activity calmed to just a few earthquakes an hour.

Scientists from all over the U.S. have scrambled to join the University of Washington research vessel Thompson, which is scheduled to arrive in the Endeavour Hot Vents area this morning.

The shaking is also being monitored by the Geological Survey of Canada through seismographs at the Institute of Ocean Sciences in North Saanich.

About three km below the ocean surface -- in the Juan de Fuca Ridge undersea mountain chain -- two tectonic plates, the Juan de Fuca Plate and the Pacific Plate, are pulling apart, said Geological Survey of Canada seismologist Garry Rogers.

"Most of the time, absolutely nothing happens out there, but every few years you get a burst of earthquakes," he said.

"It may signal the faults are moving or lava [is] being ejected on to the sea floor."

The U.S. scientific team will be investigating whether there has been an undersea volcanic eruption -- something that has never been witnessed, Rogers said.

If eruptions have finished, the scientists, armed with underwater cameras, will be looking for fresh lava filling up the kilometres-wide rift valley between the two plates.

"The new lava forms lumps right away. It's like putting hot fudge into cold water. It's known as pillow lava because it looks like little pillows," Rogers said. "They might see a big new area or nothing."

Scientists are trying to understand the plate-spreading process, which happens in oceans all around the world but has never been caught in action, Rogers said.

Scientists do not believe the intense activity poses any tsunami danger, Rogers said. "There's never been any tsunami generated by spreading, but we don't really understand the process."

The Endeavour Hot Vents is a federal marine protected area because of the unique biological community that lives around hot water geysers that result from the seismic activity.

About a dozen species of microbes are able to survive in boiling water and feed on hydrogen sulfide generated by the geysers.

The University of Victoria and University of Washington are collaborating on Project Neptune, an ambitious plan to have underwater observatories linked by thousands of kilometres of fibre optic cable feeding images to shore.

Posted by Arthur Caldicott on March 06, 2005

March 05, 2005

Hydro's Duke Point power deal on hold

Scott Simpson
Vancouver Sun
March 05, 2005


B.C. Hydro is delaying work on its controversial $285-million Duke Point power deal, with the public utility saying court injunctions from industry and environmentalists could even kill the project.

Hydro has secured an agreement with its private sector partner to delay work on the project while opponents go before the B.C. Court of Appeal in a bid to stop the Vancouver Island project.

Hydro announced the delay on Friday after filing a letter to the British Columbia Utilities Commission.

Hydro was supposed to collect $45 million from Duke Point Power on Friday as the first payment on a contract to operate a gas-fired generating plant near Nanaimo.

Hydro vice-president Bev Van Ruyven said that payment has been suspended, and would be forfeit if the deal is overturned in court.

Van Ruyven said that Hydro and Duke Point will also have to make penalty payments to contractors in the event that court proceedings delay the project past June 30, but said those costs would be relatively minor.

"We don't have any control over it, other than going and arguing at the appeal courts so, yes, we're very concerned," Van Ruyven said.

"Our concern is all about getting a project there that meets reliability standards, and getting it on time."

The BCUC approved the deal between Hydro and Duke Point Power in mid-February.

Hydro wants the gas-fired plant in operation by 2007 in order to head off an anticipated risk of rolling blackouts on the Island during periods of peak winter electricity demand. But industry and a coalition of citizen and environmental groups contend that the commission had predetermined the outcome of a hearing into the project's merits.

The Joint Industry Electricity Steering Committee, representing the province's largest industrial consumers of electricity, believes the project exposes all Hydro customers to what it describes as "unacceptable high levels of cost and financial risk."

The JIESC calculates that electricity rates will rise by more than two per cent and wants Hydro to find a less expensive solution.

The GSX Concerned Citizens Coalition and its affiliates are also seeking to overturn the BCUC's order on the grounds that the commission's decision was biased and should be overturned.

In a letter this week, the coalition said that BCUC panelists Robert Hobbs and Lori Boychuk acted "in a matter to create a reasonable apprehension of bias."

"Specifically, the commission panel held discussions with Hydro witnesses
that gave rise to the impression that the Panel had made up its mind about
the outcome of the review before all the parties had brought their evidence
and argued their cases."

© The Vancouver Sun 2005

Posted by Arthur Caldicott on March 05, 2005

March 04, 2005

BC Hydro writes to BCUC about appeals

BC Hydro

Richard Stout
Chief Regulatory Officer
Phone: (604) 623-4046
Fax: (604) 623-4407

March 3, 2005

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

Dear Mr. Pellatt:

RE: British Columbia Hydro and Power Authority (“BC Hydro”)
Cali for Tenders for Capacity on Vancouver Island
Review of Electricity Purchase Agreement
Project No. 3698354

Further to our notice of February 28, 2005, this letter will provide a report with respect to the status of matters outstanding in light of the Applications for Leave to Appeal (the “Leave Applications”) Order E-1-05 filed by the JIESC on February 24, 2005 and GSXCCC et al on February 28,2005.

BC Hydro continues to believe that the DPP EPA represents the best solution for
meeting the capacity needs of Vancouver Island, while satisfying BC Hydro’s long-term planning criteria, provided that construction commences in time that it is on stream for the winter of 2007/2008.

The appeal filed by the JIESC renders closing of the VTA and commencement of
construction on March 4, 2005 as contemplated in the EPA imprudent. The financial underpinning of the DPP project is the EPA and a successful challenge to its enforceability would render the project commercially unviable.

BC Hydro has reached an agreement to adjust the terms of the VTA and keep the obligations of both parties to the EPA alive, at least until the Leave Applications are determined. If the Leave Applications have been granted or have not been dismissed or abandoned by June 30,2005, BC Hydro has a right to terminate the EPA and proceed with the contingency options then available to it. Alternatively, the EPA will continue in force after leave has been granted and after June 30, 2005 and construction of the project will be required if the appeal is abandoned or dismissed prior to July 31, 2005. If BC Hydro requires construction to commence after June 30, 2005, the VTA price will be adjusted for 50% of DPP’s unavoidable and fully documented contractor costs and gains/losses for interest rate changes for the period after May 18, 2005 and until the appeal is withdrawn, abandoned or dismissed and the transaction closes. All guaranteed milestone dates and the guaranteed commercial operations date provided in the EPA will effectively be delayed by the number of days between February 17, 2005 and the actual date on which the Leave Applications or appeal are resolved.

BC Hydro has advised counsel that it waives any requirement there may be for
reconsideration by the Commission and the Court of Appeal has provided directions to permit an expedited schedule for both Leave Applications as follows:

March 24,2005 Appellants’ Submissions
April 5, 2005 Respondents’ Submissions
April 8, 2005 One-day Hearing of both Applications

The Court’s Order is dependent upon the Commission’s Reasons being issued on or before March 11, 2005, failing which, the Order will be vacated and a new schedule and Order will have to be obtained.

Should leave be granted, BC Hydro, subject to its right to terminate, will seek an
expedited schedule for the appeal so that it will be concluded in advance of
May 18,2005. The Court of Appeal Registry has indicated that time in the week of May 9, 2005 is available for this purpose, if required, and all counsel have indicated their willingness to try to accommodate an early hearing for the appeal.

Yours Sincerely,


Richard Stout
Chief Regulatory Officer

C. Registered Intervenors

Download the letter

Posted by Arthur Caldicott on March 04, 2005

Review requested for Enron, Powerex

Scott Simpson, with files from Grant Robertson
Vancouver Sun
04-Mar-2005

sqwalk.com
COMMENT:See as well these two other recent articles, especially the notes by us in the "Hydro tied" piece.

California demands $1 billion from BC Hydro

Hydro tied to power scheme
sqwalk.com


Alberta's energy market regulator is asking the federal Competition Bureau to reopen its file on allegations of market manipulation and collusion by Powerex and Enron, the agency announced Thursday.

The Market Surveillance Administrator (MSA) said it will ask for the review after examining documents obtained from U.S. investigators who are looking at the role of Enron and other energy companies in connection with the California energy crisis of 2000-2001.

New evidence, including recorded phone conversations where Enron traders can be heard negotiating with B.C.'s Powerex, requires closer inspection, said Martin Merritt, head of the MSA.

The MSA says the new material includes "transcripts and summaries of communications alleged to have occurred between Enron and Powerex in 1999."

"The nature of the communications shown in the new information is of concern to the MSA. Those communications appear to reflect arrangements which might be challenged under federal competition law," the MSA says in a news release.

Potential new evidence of collusion in Alberta first came to light in January after a Washington state utility came across references to a "Project Stanley" -- as in Stanley Cup -- in Enron documents they were examining in a lawsuit against the disgraced Houston-based energy trading company.

California Attorney General Bill Lockyer has filed a $1 billion lawsuit against BC Hydro in connection with the crisis.

The Enron documents talk about successful bidding strategies in the newly deregulated Alberta power market, and make reference as well to Powerex, the power trading arm of BC Hydro.

The Bureau originally examined allegations of market gaming by Powerex, in combination with Enron, in 1999 but came away satisfied no illegal action had occurred.

The Bureau will look at the evidence to determine if it alters the watchdog's 2000 decision, said Denyse MacKenzie, senior commissioner in the office's criminal matters branch.

"At that time [2000] this new evidence wasn't available," MacKenzie said. "We will look at that very closely and see whether or not there is any evidence of a violation of the act and ... then proceed with the appropriate action."

BC Hydro stated in an e-mail that it has not been contacted by MSA "regarding any reopening of its investigation of Powerex transactions."

"Powerex was investigated and cleared by the Canadian Competition Bureau in December 2000, of an allegation of collusion between itself and Enron Canada Corp. related to trade transactions with Alberta," said the e-mail from Hydro media relations manager Elisha Moreno.

"The Competition Bureau found that Powerex and Enron acted independently. Powerex does not have knowledge as to what Enron was doing in the Alberta market at the time in question, but has reviewed all its own transactions and found nothing improper. Powerex is confident that its transactions were within the rules."

Posted by Arthur Caldicott on March 04, 2005

March 03, 2005

Senate defeats rate hike for BPA

Lukas Velush
The Herald - Everett, Wash
March 3, 2005

"Common sense is prevailing," an Idaho senator says, but a proposal is still alive in the House.


A plan by President Bush that could raise Snohomish County PUD rates by as much as 30 percent died in the U.S. Senate on Wednesday, officials said.

Bush proposed collecting billions of dollars to help pay down the national debt by requiring the Bonneville Power Administration to charge market rates for the electricity it sells to the PUD and other Northwest utilities.

Sen. Judd Gregg, R-N.H., chairman of the Senate Budget Committee, told his colleagues Wednesday that the market-rate plan would not be included in a budget resolution to be approved this year, Sens. Larry Craig and Mike Crapo, both R-Idaho, said in a statement late Wednesday.

Craig said that with Gregg's decision, "common sense is prevailing," while Crapo called the administration proposal "an ill-advised, unworkable concept based on misinformation about BPA."

"We're obviously very appreciative of the support from the senators, including our delegation from the Northwest," said Neil Neroutsos, a PUD spokesman. "They know how severe of an impact it would have on rate payers here in the Northwest."

BPA currently charges only what it costs to generate electricity at a series of dams on the Columbia River and at a nuclear power plant. Estimates are that forcing it to sell electricity at market rates would force the energy wholesaler to raise its rates by 66 percent.

That would be particularly tough on Snohomish County PUD, which buys 80 percent of its electricity from BPA and is its largest customer. Using a formula developed by the Northwest Power and Conservation Council, a 66 percent BPA rate hike would translate into a 30 percent PUD rate hike.

The PUD has had some of the state's highest power rates since 2001, when it raised rates more than 50 percent because of the 2000-01 West Coast energy crisis. The PUD has had record numbers of disconnections since the rates went up, and companies that use large amounts of electricity have struggled to keep their doors open.

Sen. Maria Cantwell, D-Wash., a member of the Senate Energy Committee, hailed Gregg's announcement, which followed weeks of intense lobbying by Western lawmakers from both parties.

"The Bush rate hike would have a devastating impact on our economy and jobs," Cantwell said. "I will not rest until the administration's plan is dead and gone."

Rep. Rick Larsen, D-Wash., said that he'd now like to kill the BPA measure in the House of Representatives.

"This fight is not over," Larsen said. "On the House side, I will join with my colleagues to fight this destructive proposal. We won't rest until this proposal is resting squarely in the graveyard of bad ideas."

A Portland-based economist estimates that bringing BPA power to market rates would cost Washington and Oregon up to 60,000 jobs.

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

McCullough estimates that Washington state would lose 21,000 to 32,000 jobs. It's unknown how many jobs would be lost in Snohomish County, he said. He used federal data on electricity rates, economic activity and jobs to estimate the region' s potential job losses.

The PUD and other utilities would like to keep future administrations from making runs at BPA by locking in 20- or 30-year contracts with the energy wholesaler.

"By securing long-term contracts, we have some assurances that we can do better planning in terms of our overall power supply," Neroutsos said. "Our main interest is stabilizing Bonneville and, potentially over time, lowering its rates. If that were to happen, we would hope that, over time, we would be able to find some rate relief for our customers."

In its Feb. 7 budget proposal, the Bush administration called for a major change in the way the BPA and other federal power suppliers charge their customers, to rates based on market prices at the time rather than the cost of producing the electricity.

The Bush proposal estimates that the government could collect $12 billion by forcing BPA to raise its rates. Based on today's market rates, the $2.4 billion that BPA now takes in each year could increase to nearly $5 billion in five years.

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

But Northwest lawmakers said the plan could cripple a region still recovering from the West Coast energy crisis and a sluggish economy.

www.heraldnet.com

See also BPA plan called a job-killer

Posted by Arthur Caldicott on March 03, 2005

Vancouver Island secures LNG storage plant in $100 million deal

Paul Harris
Business in Vancouver
March 1-7, 2005; issue 801

Island's first liquefied natural gas facility to be built near Ladysmith to service area demand and fuel new Duke Point power plant

Vancouver Island is set to enter a new era in energy supply following the approval of its first liquefied natural gas plant in a deal worth close to $100 million.

The need for the LNG storage plant is driven by future demand forecasts and a natural gas-fired power plant being built near Nanaimo as part of a 25-year electricity supply contract between BC Hydro and Duke Point Power Ltd. Partnership. Under the newly approved Hydro contract, Terasen Gas (Vancouver Island) Inc. is expected to deliver natural gas to the plant.

To meet increasing energy demand and avoid a supply shortfall by the winter of 2007, TGVI applied to the province's utilities commission to build the LNG plant at Mount Hayes, near Ladysmith.

The plant will be able to provide 100 million cubic feet of natural gas per day. The corporation will have the option of selling any excess capacity to other parties - principally Terasen Gas Inc. - with revenue from the anticipated surplus estimated at $27.6 million per year.

Construction on the plant is slated to begin this spring. Gas will be supplied to the plant via Terasen's pipelines before being liquefied and saved for periods of peak demand.

The Lower Mainland has very little gas storage compared with the U.S. Pacific Northwest.

A National Energy Board study quoted by TGVI in its main argument to the commission stated that "the main physical tool for dealing with gas price volatility, which reflects short-term changes in gas demand, is storage."

TGVI's biggest island customers are currently Hydro and seven large pulp and paper mills, including four owned by NorskeCanada.

The entire LNG project hinged on Hydro's plans for Duke Point. Had its natural gas-fired power plant fallen at the final hurdle, TGVI had pledged to scrap its LNG project.

"There is nothing really exotic about LNG. It's part of our evolution," said Mike Davies, manager of business development at Terasen Gas Inc. "It is really about capacity on the island and gas supply costs."

He said the real revolution in LNG will come if, or when, plants importing tanker-loads of LNG are built in the province's northwestern corner. B.C. has already been identified as a key potential entrance point for LNG imports from Russia, the Far East and the Middle East.

As reported in BIV in December, two companies - Galveston LNG and WestPac Terminals Ltd. - are going head to head in a race to create B.C.'s first import and distribution plant for LNG. They want to build facilities at Kitimat and Prince Rupert, respectively.

TGVI currently provides natural gas services to around 80,000 residential, commercial and industrial customers on Vancouver Island and the Sunshine Coast via around 640 km of high pressure transmission pipeline. It reckons customer numbers will swell by an average of 2,400 per year between now and 2026.

Mount Hayes was chosen for the $94.4 million project because it was away from population centres, had no environmental or archaeological complications and had existing road access, TGVI told the utilities commission.

Choosing Mount Hayes, however, rules out supplying the plant with LNG via tanker or barge because capital costs needed for the project to accommodate the vessels would be too great.

TGVI, a subsidiary of Terasen Inc., predicts it will cost $1.78 million a year to operate and maintain the plant.

The site is owned by Weyerhaeuser Co. Ltd. and TGVI has an option to buy it for $614,000. The property includes a 12-hectare plant site and a 20-hectare buffer zone.

It's also part of the land slated for purchase last month from Weyerhaeuser by Brascan Corp. (See story page 5.)

Among the conditions set by the commission in approving the TGVI plan is that construction of the LMG plant must begin by December 31, 2005.

pharris@biv.com

www.biv.com

Posted by Arthur Caldicott on March 03, 2005

BC Hydro to relieve Duke Point Power of financial obligations?

News Release
Village of Gold River
02 Mar 2005

FOR IMMEDIATE RELEASE

BC Hydro seeking to relieve Duke Point Power of financial obligations in Electricity Purchase Agreement

In a phone conversation today with a Senior Executive of BC Hydro, Gold River Mayor David Lewis was informed that BC Hydro was actively engaged in discussions that would seek to relieve Duke Point Power Limited Partnership of some of its financial obligations contained in the EPA recently approved by the BC Utilities Commission.

Under the terms of the agreement and the direction of the BCUC, Duke Point Power is required to complete the financial transaction for the transfer of VIGP assets by March 3, 2005. During the recent BCUC hearings, it was stated that there was no mechanism for Duke Point Power to recover its financial commitment for the VIGP assets in the event of a successful appeal of the decision. As an appeal has already been filed by The Joint Industrial Electricity Steering Committee, it puts the Duke Point Power shareholders in a precarious position.

“For BC Hydro to attempt to relieve the Duke Point Power proponents of this obligation is yet one more example of the prejudicial manner in which BC Hydro has handled this entire Vancouver Island Call For Tender process.” stated Gold River Mayor David Lewis

Mayor Lewis was in Victoria this past week meeting with government officials regarding this issue.

“I made it very clear that if this path was taken by BC Hydro, it would send a very disturbing message to all of those who have been involved in this process. We need to see leadership from those who have the power to prevent such abuses from occurring. This has gone on long enough.” concluded Mayor Lewis


For more information contact:
David Lewis
Mayor, Village of Gold River
250-283-2202

Download the Gold River news release

Posted by Arthur Caldicott on March 03, 2005

February 28, 2005

GSXCCC files EPA appeal with Court of Appeal

Court of Appeal File No. __to be assigned__


COURT OF APPEAL

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

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

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

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


NOTICE OF APPLICATION FOR LEAVE TO APPEAL

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

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

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

3. The Appeal involves Constitutional/Administrative law.

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

The grounds of appeal are:

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

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

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

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

4. Such other grounds as counsel may advise.

The hearing of this proceeding occupied 11 days.

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


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


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

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

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

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

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

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

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

To the respondents:

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

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

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

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

Other Registries:

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

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

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



Court of Appeal File No. __to be assigned__

COURT OF APPEAL

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

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

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

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

NOTICE OF APPLICATION FOR LEAVE TO APPEAL

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

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

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

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

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

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

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

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

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

Download the complete Notice of Application for Leave to Appeal

Download the GSXCCC news release

Posted by Arthur Caldicott on February 28, 2005

February 26, 2005

Tide turns for power, and for young minds

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

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

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

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

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

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

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

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

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

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

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

vironment and will recover quickly," he said.

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

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

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

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

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

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

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

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

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

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

Posted by Arthur Caldicott on February 26, 2005

February 25, 2005

JIESC files EPA appeal with Court of Appeal

Feb 24, 2005

NO CA032700
Vancouver Registry

COURT OF APPEAL

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

Between: Joint Industry Electricity Steering Committee, Appellant

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

Notice of Application for Leave to Appeal

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

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

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

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

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

The grounds of appeal are:

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

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

a. unduly restricting the scope of the hearing;

b. proceeding with undue haste;

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

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

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

4. Such other grounds as counsel may advise.

The hearing of this proceeding occupied X days.

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

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

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

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

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

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

To the respondent(s):

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

IF YOU FAIL TO FILE A NOTICE OF APPEARANCE:

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

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


Download the complete Notice of Application for Leave to Appeal

Posted by Arthur Caldicott on February 25, 2005

February 24, 2005

Hydroelectric power's dirty secret revealed

Duncan Graham-Rowe
New Scientist
24 February 2005




Enlarge image


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

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

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

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

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

"Drawdown" regions

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

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

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

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

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

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

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


Dam shame

Fred Pearce
New Scientist
16 Nov 2000

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


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

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

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

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

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

Studies carried out by the commission found that:

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

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

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

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

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

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

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

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

More at: www.dams.org


Posted by Arthur Caldicott on February 24, 2005

BPA plan called a job-killer

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

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


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

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

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

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

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

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

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

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

Revenue could double

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

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

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

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

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

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

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

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

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

Effect on industry

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

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

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

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

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

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

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

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

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

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

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

Posted by Arthur Caldicott on February 24, 2005

Duke Point power plant appeal expected to be filed this week

Robert Barron
Nanaimo Daily News
24 Feb 2005

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

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

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

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

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

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

Posted by Arthur Caldicott on February 24, 2005

Duke Point Power – still the wrong solution for Vancouver Island

Thomas Hackney
Times-Colonist
24 Feb 2005

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

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

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

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

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

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

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

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

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

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

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

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

Posted by Arthur Caldicott on February 24, 2005

February 22, 2005

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

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




The lights aren't really going out

AD Fisher
Times Colonist
22 Feb 2005

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

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

That's just nonsense.

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

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

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

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

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

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

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

TOP


Energy potential arrives with the tides

Ian Gartshore
Times Colonist
22 Feb 2005

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

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

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

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

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

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

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

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

TOP


We'll pay and pay for Duke Point deal

John Volkovskis
Times Colonist letters
23 Feb, 2005

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

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

This deal stinks.

John Volkovskis,
Gabriola Island.

TOP


Posted by Arthur Caldicott on February 22, 2005

February 21, 2005

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

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

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

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

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

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

21 February 2005

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

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

Dear Ms. Hesketh,

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

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

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

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

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

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

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

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

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

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

Sincerely,


Thomas Hackney, President

cc. George Abbott, Minister, Sustainable Resource Management

Download this letter

Posted by Arthur Caldicott on February 21, 2005

Scrutiny attests to power project's value

Jeff Myers
Pristine Power
Special to Times Colonist
21 Feb 2005

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

- Jeff Myers is president of Pristine Power Ltd.

Posted by Arthur Caldicott on February 21, 2005

Cables still needed for Island power

Yakout Mansour
BC Transmission Corp.
Times Colonist
21 Feb 2005

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

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

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

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

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

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

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

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

Posted by Arthur Caldicott on February 21, 2005

February 18, 2005

News coverage of Duke Point EPA approval

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


Gas-fired electrical plant gets go-ahead

Scott Simpson
Vancouver Sun
18 Feb 2005

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DUKE POINT POWER PLANT:

Electricity capacity: 262 megawatts

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

Cost of Duke Point plant: $285m

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

Length of deal: 25 years

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

Construction jobs: 200

Permanent jobs: 16

Source of natural gas for Duke Point: Terasen Gas

© The Vancouver Sun 2005

TOP


Power project clears hurdle

Andrew A. Duffy
Times Colonist
18 Feb 2005

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

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

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

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

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

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

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

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

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

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

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

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

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

The motion was dismissed at the time.

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

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

"We are very disappointed by

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

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

proceeding lacked the required fair-

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

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

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

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

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

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

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

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

TOP


Duke Point power project gets green light

CBC News
Feb 17 2005 07:01 PM PST

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

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

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

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

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

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

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

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

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

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

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


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

The Province
February 17, 2005

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

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

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

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

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

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

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

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

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

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

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

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

© Canadian Press 2005

TOP


Island needs more power

Editorial
Times Colonist (Victoria)
19 Feb 2005

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

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

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

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

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

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

TOP


Posted by Arthur Caldicott on February 18, 2005

February 17, 2005

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

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

For Immediate Release: February 17, 2005

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

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

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

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

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

- 30 -

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

BCUC Order

BCUC News Release

Download this news release

Posted by Arthur Caldicott on February 17, 2005

BCUC review of VICFT-EPA: Transcripts & key docs

BCUC review of the
Duke Point Power EPA
SCHEDULE

17 - 28 Jan - Public hearing completed
Tue, 01 Feb - Written argument from BC Hydro
and Duke Point Power Partnership

Fri, 04 Feb - Written argument from intervenors

GSXCCC, BCSEA, SPEC
BCOAPO
BCTC
CECBC
Green Island Energy
JIESC
NorskeCanada
Sea Breeze
TGVI
Vanport Sterilizers
Village of Gold River
Eric Anderson
AD Fisher
John Hague
John Hill
Sheila Malcolmson
Bob McKechnie
McLennan
Shadybrook Farm
Keith Steeves
Randy Young

 

Mon, 07 Feb - Letter and reply argument from
Duke Point Power Partnership
and BC Hydro

Thu, 10 Feb - Oral argument
Thu, 17 Feb - BCUC decision
Link to BCUC document registry

Hearing Transcripts

Jan 15, Saturday

Jan 17, Monday

Jan 18, Tuesday

Jan 19, Wednesday

Jan 19, Hearing in Camera (redacted)

Jan 20, Thursday

Jan 21, Friday

Jan 22, Saturday

Jan 24, Monday

Jan 19, Hearing in Camera (unredacted)

Jan 26, Wednesday

Jan 27, Thursday

Jan 28, Friday

Posted by Arthur Caldicott on February 17, 2005

Island power project is coming together just in time

Editorial
Vancouver Sun
February 17, 2005


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

© The Vancouver Sun 2005

Posted by Arthur Caldicott on February 17, 2005

February 16, 2005

BCUC approves Terasen's resource plan and LNG storage facility

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


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

NOW THEREFORE the Commission orders as follows:

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

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

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

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

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

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

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

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

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

BY ORDER

Lori Ann Boychuk
Chair

Decision

Posted by Arthur Caldicott on February 16, 2005

Multi-year B.C. drought inevitable

Jonathan Fowlie
Vancouver Sun
February 16, 2005


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

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

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

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

Think coal.

Action items:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DRY TIMES:

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

- A 12-year drought starting in the 1840s

- Severe drought in the 1930s

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

© The Vancouver Sun 2005

Posted by Arthur Caldicott on February 16, 2005

February 13, 2005

Feb 17: BCs first day in a Kyoto world

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


Setting the stage

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

5. BC to “reduce provincial greenhouse gas emissions

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

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

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

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

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

Or not.

What does Duke Point have to do with it?

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

Posted by Arthur Caldicott on February 13, 2005

Island power play on the line

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted by Arthur Caldicott on February 13, 2005

Power and passion

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

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

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

They handed him B.C. Hydro.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted by Arthur Caldicott on February 13, 2005

Cable connections make for strange bedfellows

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted by Arthur Caldicott on February 13, 2005

February 11, 2005

California demands $1 billion from BC Hydro

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

Scott Simpson
Vancouver Sun
11 Feb 2005

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

© The Vancouver Sun 2005

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


Posted by Arthur Caldicott on February 11, 2005

February 07, 2005

Residents riled over planned power line upgrades

Rob Wiltzen
Gulf Islands Driftwood
Wednesday, February 02, 2005

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

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

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

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

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

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

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

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

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

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

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

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

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

E-mail the writer: Rob Wiltzen

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

Posted by Arthur Caldicott on February 07, 2005

February 05, 2005

Hydro tied to power scheme

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

Scott Simpson
Vancouver Sun
05 Feb 2005

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

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

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

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

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

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



Click here for full document

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

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

06 Oct 2004 Hydro back on California hook

04 Mar 2003 Powerex accused of price rigging

03 Mar 2003 Proof of energy scam

19 Dec 2002 Canadian Regulator Says Duke Overcharged for Power

22 May 2002 Affidavit of Powerex in FERC inquiry

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

09 May 2002 Canadian companies ensnared in Enron debacle

02 Feb 2002 The Company Hydro Keeps

03 May 2001 The Company You Keep

20 Dec 2000 Competition Bureau Closes Bid Rigging Investigation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

© The Vancouver Sun 2005

Posted by Arthur Caldicott on February 05, 2005

February 02, 2005

Mythoilogy

Andrew Nikiforuk
Canadian Business
17 Jan 2005

Eight wrong ways to think about the future of energy.

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

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

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

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

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

The world has lots of oil

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

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

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

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

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

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

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

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

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

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

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

The world has lots of natural gas

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

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

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

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

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

Coal-bed methane will avert a natural gas crisis

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

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

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

Liquefied natural gas is a knight in shining armour

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

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

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

Coal can't help us

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

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

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

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

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

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

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

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

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

---

Posted by Arthur Caldicott on February 02, 2005

February 01, 2005

Government Spending on Canada’s Oil and Gas Industry

News Release
Pembina Institute
31 Jan 2005

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

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


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


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


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


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


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


-30-


The full report is available here.


For more information contact:

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

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

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

Posted by Arthur Caldicott on February 01, 2005

January 30, 2005

Arctic ice cap 1979 vs 2003

RECENT WARMING OF ARCTIC MAY AFFECT WORLDWIDE CLIMATE

   
Side by side comparisons of Arctic sea ice from 1979 and 2003.
Click on image for larger version

Click here to go directly to images, animations and additional information


Recently observed change in Arctic temperatures and sea ice cover may be a harbinger of global climate changes to come, according to a recent NASA study. Satellite data -- the unique view from space -- are allowing researchers to more clearly see Arctic changes and develop an improved understanding of the possible effect on climate worldwide.

The Arctic warming study, appearing in the November 1 issue of the American Meteorological Society's Journal of Climate, shows that compared to the 1980s, most of the Arctic warmed significantly over the last decade, with the biggest temperature increases occurring over North America.

article continues NASA website

Thanks to Dr. Steven Searle of Malaspina University College who included these images in his presentation to Nanaimo City Council on January 24, in which he was raising the issue of Duke Point Power, greenhouse gases and global warming.

Posted by Arthur Caldicott on January 30, 2005

January 28, 2005

Hackney's Hearing Notes (Days 1-9)

Day 1, Jan 17, Monday
Day 2, Jan 18, Tuesday
Day 3, Jan 19, Wednesday
Day 3, Jan 19, Wednesday, in camera
Day 4, Jan 20, Thursday
Day 5, Jan 21, Friday
Day 6, Jan 22, Saturday
Day 9, Jan 27, Thursday




Duke Point Power VICFT-EPA Hearing Day 9 Jan 27, Thursday

Hi all,

It seems I forgot to issue reports on the progress of the hearing for a couple of days.

Monday, GSXCCC filed its motion that the BCUC review Panel, Robert Hobbs and Lori Boychuk, disqualify itself on the grounds of apprehension of bias, i.e. that a reasonable person, apprised of the panel's words and actions around the in camera session on Wednesday, would conclude that the panel had made up and closed its mind about the outcome of the review.

The JIESC witness panel was also heard. Sheldon Fulton, energy expert, analyzed BC Hydro's data and concluded that the Duke Point Power plant would be dispatched much less than BC Hydro claims, due to its being relatively expensive and uncompetitive to run, and thus it would be more costly to ratepayers. Fulton also has an interesting idea that BC Hydro (and others) ought not to rely on gas price forecasts; rather they should rely on forward prices generated by the futures market (because the market "never lies").

Monday was the deadline for intervenors to file motions on the bias topic, and GSXCCC's motion was the only one filed.

Tuesday, there was no hearing, as parties consulted with their clients and prepared their responses to the GSXCCC disqualification motion.

Also, Tuesday evening, people unable to attend the hearing had the chance to respond to the motion. Half a dozen or so wrote in support.

Wednesday was entirely taken up with GSXCCC making its motion orally, intervenors speaking in support (8 or so, including Joint Industry Electr9city Steering Committee and others); and those against, (BC Hydro, Duke Point Power, Terasen Gas, VI); followed finally by GSXCCC's rebuttal.

Thursday, proceedings reconvened at 1:30. At that time, the Panel dismissed the GSXCCC motion for disqualification, with reasons to follow. Mr. Andrews made a motion asking that Mary Hemingsen of BCH be recalled to testify regarding the in camera meeting, including to confirm if indeed BC Hydro thinks that the DPP project before the commission is really not the most cost effective project, as seems to be the case.

Commission Panel dismissed this motion, too.

Next, GSXCCC brought up its witness panel: Steve Miller and Dr. Mark Jaccard.

Both, IMHO, were brilliant. Steve demonstrated several shortcomings and inconsistencies in BC Hydro's forecasting methodology, leading to and over-stated forecast. Cross-examination by Sanderson of BC Hydro failed to move him. In fact, at one point, Sanderson had to take a break to consult with his supporters because he didn't have the statistical depth to understand what Steve said.

Dr. Jaccard testified that BC Hydro's and DPP's ploy to put greenhoue gas liability off the table by having DPP take it all on might not work because GHG liability might attach to the fuel source itself, which is BC Hydro's responsiblity. Keogh of DPP cross-examined Jaccard for quite a long time, apparently trying to find weaknesses in Jaccard's experience or methods. He made no progress, as Jaccard is impressively experienced in all aspects of this, and hightly qualified and expresses himself very cogently. Keogh tried to offhandedly say that Jaccard's opinion of China's GHG plans was just an opinion, and Jaccard responded in detail with he extensive interactions with the Chinese, who are apparently making significant efforts to curb GHG and develop policies, even though they are not yet signatories to the Kyoto Protocol.

BC Hydro's rebuttal panel was sworn. It includes Dr. Pickel -- a rematch of Pickel vs. Fulton is thus in the offing, as they both appeared that the VIGP review. BC Hydro also called the head of the company that has the Henwood model for modelling fuel and electricity prices. This seems to indicate that BC Hydro is calling out the very big guns to try to counter the claim that DPP would not be dispatched much and would thus be a white elephant.

This panel will continue tomorrow.

It is expected that the hearing portion will be over on Friday, maybe in the morning.

After that, BC Hydro will presumably be called on to file its written argument. Then the written argument of intervenors. Dates not yet set. Then BC Hydro's rebuttal argument. The panel's committed decision date of 17 February still stands.


Summary of the current situation re the case against DPP, as seen by GSXCCC, et
al:


Cost:

$35 m per year for 25 years, just to have DPP ready to dispatch. On top of that, BC Hydro would have to pay for gas and operating costs to run the plant.

BC Hydro's cost modelling has been shown to be not reliable, since they are now second-guessing their own cost model that showed DPP without duct firing to be the "lowest cost" winner of the Call For Tenders.

North American gas supplies are in crisis now as conventional supplies dry up. The proposals to build LNG facilities all over the NA coast is a measure of the desperation of the situation. Not a good time to be committing to more reliance on gas.

Urgency:

Yakout Mansour, head of BCTC has confirmed that the October in-service date for the new cables is confidently expected to be October 2008. He has a fair amount of comfort that the old cables will be able to deliver 200 MW after the zero-rating date of 2007.

Steve Miller has exposed and continues to expose BC Hydro's pattern of padding the load forecast. His more conservative approach has knocked 90 MW off the forecast. While we don't minimize the risk of under-supply, there is also a real risk and cost with over-supply.

GHG emissions:

The public has spoken loud and clear: they are concerned about greenhouse gas emissions and want BC Hydro to work to reduce them.

BC Hydro claims it has passed off all liability to Duke Point Power; however, this does not address the public concerns, as there is no reason to believe DPP will offset the emissions. At the same time, the legal evasion may not even work, according to Dr. Jaccard's testimony. Carbon liability may attach to the gas supply itself, which is BC Hydro's responsibility.

Bias:

GSXCCC believes that a reasonable person, apprised of the facts would conclude that the Panel Chair has made up his mind on the outcome of the project in advance of having heard all the evidence. In addition, by not immediately informing all parties of significant new information about BC Hydro's second-guessing of its own cost analysis, the Panel Chair deprived the intervenors of the chance to cross-examing BC Hydro witnesses on this information.


CFT fairness:

Information, partly still held confidential, reveals that BC Hydro no longer believes that the DPP winner of the Call For Tenders is the most cost-effective solution to the energy problem, even though its cost assessment model picked DPP without duct firing. Now, for reasons not revealed, Hydro thinks a non-winning variant of DPP is more cost effective than the winner, and they have had discussions with the BCUC about how to overturn the CFT results and have the with-duct-firing alternative win. This calls into question the integrity of the whole CFT process.

I'm not sure what to do with the last point, as we aren't bidders ...

Tom Hackney,
Vancouver

Transcript: Jan 27, Thursday

TOP



Duke Point Power VICFT-EPA Hearing Day 6 Jan 22, Saturday

The day started quietly enough with the witness panel for Green Island Energy taking its seat in the witness stand. There were few questions and I expected it to be quickly over; however, intervenor Keith Steves came forward and instead of beginning a cross examination, expressed his outrage to the panel over the in camera meeting transcript. He brought a motion for reconsideration regarding the matters discussed in camera (I would have to review the transcript to determine the exact nature of the motion =-- it may not have accorded with normal legal procedure).

There was a considerable amount of discussion following. Bill Andrews for GSXCCC, BC SEA and SPEC, stood and gave notice that he would file a motion regarding the in camera proceedings. Several intervenors said they needed to consult their clients. Several said they were not sure what motion was going to be considered. Panel called a brief break, during which time the intervenors adversed in interest to BC Hydro and Duke Point came together and worked out an orderly approach. Which was:

Steves withdrew his motion to reconsider. Bill Andrews made a formal motion for the panel to be dismissed due to a reasonable apprehension of bias, with written reasons to follow. He also made a subsidiary motion for the hearing of evidence to be suspended on the grounds that it would be inherently wasteful of time (i.e. if the panel gets disqualified, there will need to be a new panel to rehear the whole case). Also that the witnesses would feel uncomfortable giving evidence under the circumstances in which there is a motion suggesting that the panel is biased.

Result:

Bill will file the motion in writing with reasons, deadline 4:30 Monday. Others who want to file similar or related motions around the same material should do so at the same time.

Intervenors who can't come Wednesday to argue regarding the motion(s) can do so electronically by Tuesday 8 p.m.

Intervenors who can come will orally address the motion(s) on Wednesday morning.

The GSXCCC witness panel will not be called before Thursday a.m. However, the JIESC panel will go, as scheduled, on Monday, as will the Commercial Energy Consumer panel.

We live in exciting times.

Tom Hackney
Vancouver

Transcript: Jan 22, Saturday
TOP



Duke Point Power VICFT-EPA Hearing Day 5, Jan 21, Friday

Duke Point Power Project EPA review, Day 5, Friday, 21 January 2005

(some hot news!: see below)

Having disposed of the last of BC Hydro's four witness panels on Thursday, the BCUC Panel moved on to the evidence of the Duke Point Power witness panel. We finished the day with the BC Transmission Corporation witness panel and are now 1/2 day ahead of schedule. Because the intervenor witness panels were given over-generous time allotments, this means that we can expect the hearing to move substantially ahead of schedule. GSXCCC, et al's panel is quite likely to go on Monday, instead of starting Tuesday night. Witnesses, be ready.

Duke Point Power's witness panel consisted of Jeffry Myers of Calgary, former president of Westcoast Power, Inc.; Harvie Campell, of Calgary, former VP of Westcoast Power, also formerly VP of the ICP project in Campbell River; and Kenneth Spinner, former VP of New Ventures, Fletcher Challent Energy.

Some interesting points of testimony, larded with free enterprise comments designed to tell the BCUC panel that they were doing the right thing in supporting a CFT.

(a) Duke point power is not designed to take dual fuel (distillate), and it would be problematic for them to do so, technically and from the point of view of permits.

(b) Duke Point Power will have duct firing
capability, notwithstanding that the EPA has no contractual call for duct firing. Duct firing adds some 28 MW of capability to the plant, bringing it up to virtually the capacity of VIGP. In fact, from DPP's perspective, it is virtually the same project -- has to be because, as said yesterday, they anticipate using the same Environmental Certificate as the one granted for VIGP, and they anticipate only the formality of informing the government of a change of ownership, not a substantial change.

(c) BC Hydro scenarios for
supplying gas to DPP via barge, etc. were more or less confirmed to be theoretical, not plausible.

(d) DPP has consulted "extensively" with government
on the question of Greenhouse gas liability. We already knew DPP has assumed all the potential liability for this. This information on their research suggests that they were somewhat more prepared to face public discussion than was BC HYdro ; however the conclusion is problematic. GSXCCC cannot find any cost factor in the limited information available to us to indicate that any cost was assigned to potential GHG liability, and we think probably no cost was assigned. There is lots of political resistance to GHG liability at the federal level, with the government being extremely compliant to industry demands. Unfortunately, that means that industry can with some assurance ignore this issue. In the VIGP review, the BCUC commission had approved the notional amount of $3.60/MWh for GHG liabilty from gas fired generation, corresponding to $10/tonne CO2 offset cost. However, DPP was not even aware of this and did not consider it relevant to its cost calculations. Not only did DPP decline to say how much $ they had allowed for this, but they declined to indicate if they had allowed more or less than the BCUC had. And the COmmission chair backed up this confidentiality, refusing for the information even to be given to the BCUC in confidence. The policy implication is that the independent power producer's economic confidentiaily arguments will now become a screen to allow companies to completely ignore GHG issues, and the public will have no ability to discuss that potential downside to fossil fuel energy projects because BC Hydro will argue that they (and therefore the ratepayers) are off the hook for any liability.

In the break after DPP's panel, Chair Hobbs asked for some updates to BC Hydro's evidence that GSXCCC surmises indicates that he is working toward justifying a decision to approve the EPA. Specifically, he asked BC Hydro to update its various IR responses to take into account BC Hydro's version of the new Vancouver Island load balance, i.e. 284 MW in 2007/08. This is in advance of the GSXCCC expert testimony by Steve Miller on the appropriate load balance. In addition, as noted, Hobbs had declined to receive information about GHG potential cost, again in advance of GSXCCC's testimony by Dr. Jaccard on the subject. Not a good sign.

In the afternoon, BC Transmission Corporation brought its witness panel, consisting of Yakout Mansour, formerly of BC Hydro, now head of BCTC and another BCTC expert. The testimony was generally that the OCtober 2008 in-service date for the 230 kV cable system is confidently expected, and it could be earlier. This is considerably more optimistic than was testified to in the 2003 VIGP review. Similarly, Mansour is much more confident sounding about the longevity of the old HVDC system, coming much closer than before to saying that they could be relied on after 2007 (but he didn't go that far).

Duke Point Power spent a lot of time working to undermine the sense of certainty of the 230 kV cables. In my opinion they made little progress in this, and it became farily apparent that the 230 kV cables are progressing well. A possible exception is the development of opposition in Tsawassen, where people do not seem to be interested in an increased presence of high voltage lines crossing their community.

The most astonishing thing about the day was the circulation of the transcript of the "in camera" session of 19 January, i.e. Wednesday. This took place after the public testimony of BC Hydro panel 2.

The purpose of in camera proceedings, as I understand it, is to keep confidential certain commercially sensitive information of the EPA. The rationale (with which GSXCCC does not agree) is that the private interests must keep their critical pricing information secret in order to protect their competitiveness; however, the BCUC needs to review this in order to determine whether the public interest is served in approving the relevant contracts. That being the case, there is a need to receive some documents and information in confidence and, in some casese, there is a need to meet in camera to discuss that information.

But, there is still a commitment to let the public in on as much information as possible, so the approach taken in this case was for the meeting to happen in secret, but for a transcript to be published with the portions deleted that make reference to the commercially sensitive information.

What happened next was a comedy of errors. First, prior to going into to the "in camera" meeting, Chair Hobbs began discussing an issue with BC Hydro panel 2 in terms that did not allow other people in the room to know what they were talking about. However, Mary Hemingsen of BC Hydro dropped the phrase "you get 28 MW of capacity for a low price."

Then came the "in camera" session. Not really in camera, because the proceedings were published two days later; but a reading of that transcript quickly reveals two things: (a) at least some of the participants in the meeting are committing the theatrical error of forgetting that their remarks are on the record, and they speak as if the meeting is generally secret; (b) the purpose of the meeting is not at all to convey commercially sensitive information; rather it was used by Chair Hobbs as an opportunity to enter into a discussion -- almost a negotiation -- with BC Hydro counsel and BC Hydro panel 2 on how to arranged that a different project than the actual winner of the Call For Tenders should end up being approved.

To back up for a second, the terms of the Call For Tenders require that the portfolio that was assessed by the Quantitiaive Evaluaton Methodology to be the least cost must be called the winner, and must get the Electricity Purchase Agreement. The term "project" in this context means one of five "portfolios":
(i) Duke Point Power without duct firing; (ii) Duke point power with duct firing; (iii) some VIGP-like competitor without duct firing; (iv) same VIGP-like competitor with duct firing; (v) Duke point power assessed along with a small peaker project (if I recall correctly). The winner of the CFT is #(i), Duke point power without duct firing.

Now do some mental arithmetic. Duke Point Power Project without duct firing has won the CFT; however Duke Pont Power will build with duct firing capability. Mary Hemmingsen mentioed "you get 28 MW of capacity for a low price". The MW difference between Duke point with and without is 28 MW. There is no other capacity addition under discussion in this proceeding of 28 MW.

Now let's return to the subject matter under discussion in the "in camera" session, and recall that this was Wedneday, before all the BC Hydro evidence had been heard and before any intervenor panel had been heard. Recall also that JIESC planned to bring in an expert on gas and electricity prices, GSXCCC plans to bring evidence on the VI load gap and the liability of GHG emissions; etc.

Throw in a quote from Chair Hobbs at the beginninig of the "in camera" session: "So you know now what I want to try to do. I need your help in telling me how I can get there." (transcript 1742)


Tr. 1751 Hemingsen: "I agree that we all have a concern that it didn't produce the cost effective -- the most cost effective outcome in terms of what was bid in. That was a bit of a trade-off in the simplification of the mode."

Tr. 1753: The Chairman: "What occurs to me, Mr. Sanderson, that -- it may not be breaching confidence for the disclosure of the fact that there is a bid that is optimal for customers than [sic] the winning bid ..."

The "FACT" that there is a bid that is optimal -- i.e. the decision has been made in advance of all the relevant evidence.

At the least, this calls for some explanation.

It is not clear at the moment what GSXCCC or other intervenors will do in response. Expect more news later.

Tom Hackney
Vancouver

Transcript: Jan 21, Friday

TOP



Duke Point Power VICFT-EPA Hearing Day 4, Jan 20, Thursday

Panel 4 addressed the BC Hydro load forecast and the cost effectiveness modelling.

Ken Tiedemann is BC Hydro's load forecaster. Mary Hemingsen led the panel, having had over-all responsiblity for the CFT and related matters.

JIESC cross examination started off trying to address why the relative cost of a power plant like Duke Point Power, whose cost has embedded in it a fixed cost of $35 million per year just to be available to provide capacity (before it even starts to run -- this comes to a net present value of $300 million or so for 25 years of this cost) should be so similar in BC Hydro's calculations to purchasing energy on the BC mainland for the same period with no capacity cost or using a combination of Green Island, a small 47 MW peaker and some Norske load shedding. There is a lot of mystery in BC Hydro's numbers, and, we suspect, a big fudge factor in the BC Hydro assumptions of what the price would be to buy energy from other sources instead of from DPP. Intuitively, it's very hard to see how a power plant whose rate structure is oriented toward addressing a capacity problem that only lasts a year or two (i.e. the sub-sea cable supply problem) could be cost competitive when 23 of its 25 year contract term requires energy rather than capacity. I do not believe the JIESC cross examination got to the bottom of this, as the BC Hydro witnesses had a great deal of complicated material to explain, thus allowing them wiggle room to not reveal the point. However, we can expect some smart, well-financed intervenors to come forward with some alternative cost calculations in the argument phase.

Green Island attempted to continue pursuing the question of the disqualification of the Elk Falls peaker bid, but with limited success because that issue was not seen by the Panel to be relevant to Panel 4.

All things considered, I did not think a lot was accomplished in terms of eliciting information useful to the intervenors -- but I may need to qualify this later, depending what use people make of the highly technical nature of some of the information. At the core is a highly complex issue of how and why BC Hydro did the cost analysis and what significance it will have in the review. BC Hydro started off saying that satisfying the terms of the CFT should be the only thing at issue. The Commission disagreed, saying that the BC Hydro cost analysis and the most cost effective alternative thereof was key. However, BC Hydro's cost effectiveness analysis was not designed or intended to be a real portfolio comparison and the alternatives to "Tier 1" (i.e. Duke Point Power) are relatively arbitrary selections from the bidders (Tier 2 has Green Island and a peaker plant, but not the disqualified peaker plant -- why?). The No Award alternative makes some sense: i.e. what happens if there is no award, but Tier 2 is very arbitrary. And there is some analysis of the use of portable peaker generators that are mounted on trucks -- not bid into the process or analyzed at all. Meanwhile, the methodology BC Hydro has used is, in Hydro's terms, intended to make a rough check in case there is some big, overarching issue to be addressed that was not captured in the CFT -- i.e. not meant to be a fine analysis of relative merits of different portfolios.

So part of the discussion is around picking holes in the BC Hydro methods and analysis, but part of it is going to be in asking the Commission to give more weight to this analysis than to the CFT result (which, after all, has produced a clearcut answer: Duke Point Power)

All the signs point to the hearing going more swiftly than expected. Panel 4 is set to be finished early, and people generally do not expect the intervenor panels to take nearly as long as they have been scheduled for, especially as we do not expect to be allowed "sweetheart" cross-examination, so there will only be BC Hydro and Duke Point and the Commission itself to cross a lot of the panels, and they may well, for strategic reasons, not want to ask much. GSXCCC was given an entire day for its two witnesses. (We see this as a strategem by Panel Chair Hobbs to crowd us in our cross-examination of the BC Hydro panels).

Tom Hackney
Vancouver

Transcript: Jan 20, Thursday
TOP



Duke Point Power VICFT-EPA Hearing Day 3 Jan 19, Wednesday, Redacted In Camera

Transcript: Jan 19, Wednesday - In Camera

TOP



Duke Point Power VICFT-EPA Hearing Day 3, Jan 19, Wednesday

Conclusion of the cross examination of panel 2. Cross examination of Panel 3 regarding mostly the integrity of the CFT process, as seen by the Price Waterhouse Cooper perspective.

From panel 2 was elicited the facts that: (a) to be dual fuel, the gas turbine has to be the right type -- not practical to modify the wrong type after the fact. It does not look as if DPP is for dual fuel or can easily be made so. It looks is if BC Hydro people made some ill considered IR responses suggesting that this might be employed in the event of trouble getting enough gas from Terasen. Similarly (b), it was testified that LNG could be supplied to DPP via a pipeline from a ship, not requiring a terminal. Not sure how often deliveries would have to happen or how much gas would end up in storage; nevertheless, BC Hydro claims it is a practical alternative to getting a deal with Terasen. More realistically, BC Hydro can go to the BCUC and virtually force a gas supply deal of some kind with Terasen.

Panel Member Boychuk asked about GHG liability and BC Hydro's pathetic ($0 Net Present Value) undertaking to offset half the GHG emissions to 2010.

Panel Chair Hobbs indulged in a freewheeling discusson with the panel about DPP's contribution to system-wide energy and capacity needs, which some took as an indication that he is thinking ahead to approval.

Gold River and Green Island and the Commercial Energy consumers spent a lot of time trying to show that the process was unfair. Evidence has shown that BC Hydro has indeed taken the fuel price risk on for gas projects, and that this is a benefit making it easier for gas projects to bid; however they staunchly maintain that this is not unfair. It's an okay "bias". Price Waterhouse Coopers agrees -- the point of the bidding process is not to level the playing field for all, but rather for the rules to be clear to all and followed through consistently.

Contrary to the direct testimony of Mary Hemingsen and Bev Van Ruyven, some evidence was brought out by counsel for GSXCCC et al, Bill Andrews, to the effect that BC Hydro had discretion to allow or reject the non-complying bid of the Calpine peaker plant at Elk Falls. This will doubless be confirmed or refuted or qualified in the next couple of days, with the arrival of further information as to how much BC Hydro really had in rejecting the Calpine bid. For now, it makes some of the BC Hydro testimony look bad. The significant implication is that BC Hydro may not have been compelled to reject the Calpine bid. If that bid had been accepted, the Ladysmith peaker and the Green Island project could have been aggregated with Calpine to form an acceptable portfolio, which might have competed with DPP. As it turned out, BC Hydro "was forced" to reject the Calpine bid for havng submitted a "conditional bid"; thus Green Island and Ladysmith peaker didn't get into a competing portfolio and were effectively eliminated from the race.

There was a credible buzz in the halls during one of the breaks today that there is recent political interest in being flexible on DPP, more than there was a month ago. Does this mean cabinet might step in and order BC Hydro to stop DPP, or for some subtle behind-the-scenes pressure on either BC Hydro or the BCUC? I don't really know how the policial sector would intervene, given the Liberal's frequent promise to put BC Hydro under the oversight of the BC Utilities Commission, but government is the boss, and it would find a way if it really wanted to. SO, keep up the letters to politicians.

Tom Hackney
Vancouver

Transcript: Jan 19, Wednesday

TOP



Duke Point Power VICFT-EPA Hearing Day 2, Jan 18, Tuesday

This day was reserved for Panel 2, led by Mary Hemmingsen, with Rohan Soulsby, Steve Eckert, Graeme Simpson, Chris O'Riley.

The panel seemed very defensive, especially on a couple of issues: once again the question of whether DPPP is justifiable as a long-term contracted facility; and whether the VIGP bidders got a sweet deal with the $50m VIGP assets; also on whether the gas-fuelled bidders got a sweet deal with BC Hydro agreeing to allow the option to the bidder of whether or not to take the gas supply risk. It seems very obvious that BCH offering to do this constitutes a benefit to gas bidders, biases the process in their favour; however, Panel 2 was very unwilling to acknowledge it, even though they said the small peaker plants would not have been able to bid in without that clause.

Green Island and Gold River went after this point hard, and, I thought, really established how heavily this favoured gas-fired power, with the attendant risk going to BCH ratepayers (risk of long-term gas price increase, that is, shorter term price risk is, in principle, mitigated by the size of the BCH portfolio). They also spent a lot of time establishing that the Calpine peaker at Elk Falls was unfairly and inappropriately (in their view) eliminated from the process, and that their elimination caused the Green Island project not to be considered in a portfolio to meet the supply gap, thus effectively eliminating Green Island's bid.

Bill Andrews scored solidly on whether the $50 m VIGP assets deal was mischaracterized as market rate, when it should have been called sunk cost.

GSXCCC, et al. emphasized the $88m Net Present Value of GHG gas liability that is built into the VIGP benchmark -- but BC Hydro doesn't want to admit that lack of this factor in the DPP price might explain its relatively cheap stated cost.

GSXCCC also uncovered a significant fact on the Environmental Certificate:

DPP has no plans to transfer the Certificate from VIGP to DPPP because Duke Point Power expects, through the EPA terms, to purchase Vancouver Island Energy Corporation from BC Hydro. Thus, as I understand it, "Duke Point Power Project" is "Vancouver Island Generation Project" already, though not known by that name.

What this means is that there will be no transfer of the Certificate. However, we should be writing to the Minister and the EAO to inform them that we expect there to be significant change to the Certificate, and that we want input into it.

DPPP is not designed to be dual fuel, and some changes would be required to make it so. However, it looks as if it is to be dispatched differently, which should affect the air emissions. More starts and stops, which could lead to more bursts of start-up pollution. I don't know how significant this is. Overall, it looks as if our position on the Environmental Certificate is weaker.

Tom Hackney
rainy Vancouver

Transcript: Jan 18, Tuesday

TOP



Duke Point Power VICFT-EPA Hearing Day 1, Jan 17, Monday

Report from the BCUC hearing room.

Today was the first day of the BCUC hearing into BC Hydro's electricity purchase agreement with Duke Point Power.

BC Hydro started off saying that they only expected the review to address the CFT terms, and that the BCUC has expanded that to consider comparative costs of DPP with "Tier 2" and No Award.

BC Hydro witnesses emphasized over and over again that there is a threat of a shortfall on the Island. Cross-examined on the long-term economics, they showed some slippage between the necessary capacity argument for DPP and the proposition that DPP is supposedly going to be a useful and economic addition.

Under cross by Green Island, they admitted that they might go before the Commission in the future to ask for a rate increase to cover GHG offsets (in line with CEO Bob Elton's remarks). However contradictorily they also say that DPP is responsible for GHG liability.

Hearings going each day this week and Saturday. Resuming for five days next week.

Hobbs still says he will issue a decision on the 17th.

Next ... Panel 2 continued.

Tom Hackney

Transcript: Jan 17, Monday

TOP


Posted by Arthur Caldicott on January 28, 2005

January 27, 2005

BCUC commision denies motion to disqualify

It's 3:00 pm, Thursday.

Chairman Hobbs of the BC Utilities Commission has denied the GSX Concerned Citizens Coalition application for an order that the Commission disqualify itself on the grounds of a reasonable apprehension of bias and denial of procedural fairness and natural justice during the hearing.

The transcript isn't online yet, and no-one from within the hearing room has posted more information yet.

Does this decision cast doubts on the value of the rest of the hearing? You bet it does. When it is clear from the transcript of January 19 that the Chairman has already decided what outcome he wants, and it is evident from the fact that he met privately with BC Hydro to get their assistance in helping arrive at that outcome, one must question what value there is in continuing with the rest of the hearing, or charade.

No reasons have been issued.

More to come.

Arthur

Posted by Arthur Caldicott on January 27, 2005

January 26, 2005

City yanks support for Duke Point plant


Nanaimo Daily News
Wed. Jan. 26, 2005 (page 1)

In a close vote Monday, city council decided to pull its support from the controversial plan by Alberta-based Pristine Power to build a 252-megawatt power plant at Duke Point.

After a 5-4 vote in favour of a Norice of Motion brought forth by Coun. Diane Brennan Jan. 10 for council to withdraw its support of the $280 million proposal, council now has no position, for or against, the proposed plant that is currently before review by the B.C. Utilities Commission.

Council's support for the project was given when B.C. Hydro first proposed building a power plant at Duke Point three years ago, but Brennan successfully argued there are new issues, specifically around the growing cost of natural gas, if the plant proceeds, that weren't part of council's original deliberations on the subject.

(see EDITORIAL on page A6)

********************


EDITORIAL
Nanaimo Daily News
Wed. January 26, 2005

Duke Point support eroding

It is interesting to observe how support for the 252-megawatt power plant at Duke Point has eroded away in recent months.

It seems like only yesterday that support for the project far outweighed opposition, but slowly but surely that has turned.

Even our own City Council has pulled its backing for the plant, to be built by Alberta-based Pristine Power. While the Council vote was close, it nonetheless shut down Nanaimo's elected official stand, council now having no position, for or against.

A year or two back, industry too appeared to be in favour, but lately strong opposition has been heard from the major users of the prosed power. Earlier this month, and late last year, a committee representing the major industrial users of electricity on Vancouver Island stood firmly against the facility, saying costs would be too high, especially including the costs of the natural gas to feed to plant. Spokesperson for that group, Don [sic] Potts, said in a Daily News story recently, that nobody knows, with complete certainty, what the overall costs of the plant, over 25 years, would be. Naturally, Pristine and BC Hydro disagree.

Potts also took issue with claims by BC Hydro that the plant is necessary even though new cables to carry electricity to the Island, which will replace cables that will be decommissioned in 2007, are scheduled to be put in place in 2008.

Certainly, public opinion has carried some weight on this matter, too. Intelligent and straightforward letters to the editor have been in abundance calling for the BC Utilities Commission to nix the deal.

The entire matter has become a puzzler. BC Hydro says we have to gear up for power shortfalls and fears brownouts. Yet, the cables now carrying power will be fully replaced in 2008. This confuses people.

We find ourselves with doubts in recent months. While we initially supported the plant, and fully support the premise that Vancouver Island's power supply must be fully protected if the Island is to grow economically, we like so many others wonder if all the real facts are on the table.

BC Hydro has to accept a good deal of the responsibility for shattered faith. While the corporation had their information act together on this important topic at one point, they have been short in selling their message and more importantly, the right message, of late to help guide the public through this controversial process.

While some remain as strong backers of the plant, we see those numbers tumbling in rapid fashion. And, so they should. As Councillor Diane Brennan pointed out at council Monday evening, there are now new issues if the plant proceeds. Until those new issues are more clearly debated, it's understandable that support will continue to fall.

- Viewpoint by Managing Editor Peter Godfrey

Posted by Arthur Caldicott on January 26, 2005

Suggestion of bias puts power plant in jeopardy

Patrick Hrushowy
View from the right
Cowichan News-Leader
26 Jan 2005

sqwalk.com
COMMENT: Another unexpected column from the Cowichan Valley's resident right-winger (and proponent of one of the projects that did NOT make the cut in the call for tenders) Patrick Hrushowy. As we blushingly acknowledged the first time he did it, this recognition from Hrushowy feels pretty good.
sqwalk.com


The Pristine Power generating project proposed for Duke Point near Nanaimo may be on the verge of cratering thanks to a tenacious protest group that got its start in the Cowichan Valley - the GSX Concerned Citizens Coalition.

The group's lawyer, Bill Andrews, has filed a motion at the BC Utilities Commission (BCUC) alleging an "apprehended bias" and asks teh BCUC panel considering BC Hydro's preferred Duke Point project to disqualify themselves from the hearings.

In simple terms Andrews is alleging he has evidence that shows BCUC Chairman Robert Hobbs and Commissioner Lori Ann Boychuk - both sitting as a hearing panel considering the BC Hydro energy purchase agreement associated with the project - have their minds made up are are disregarding evidence.

Andrew's motion came Friday after the commission released an astonishing edited transcript of an in-camera private meeting last Wednesday between Hobbs, Boychuk and BC Hydro's Mary Hemmingsen, the senior executive responsible for Hydro's Vancouver Island call for tenders. The transcript calls Hobbs and Hemmingsen as agreeing Hydro's elaborate tender process did not produce the most cost-effective proposal, meaning they both believe there is a project that would be better for Hydro's customers than the one Hydro has submitted.

This is something that should have been dealt with publicly as soon as Hobbs and BCUC staff became aware of it. It will be argued Hobbs was derelict in his duty by his failure to disclose it in a timely manner.

The transcript also indicates Hobbs told Hemmingsen what he wants to approve.

"So you know now what I want to try to do. I need your help in telling me how I can get there," the transcript has Hobbs saying.

This means, it will be argued, that his mind was made up less than half way through the hearings and before evidence from project opponents had been presented to the hearings.

It will also be argued that since Hobbs and Hemmingsen agree that Hydro's process did not generate the most cost-effective project, and since Hobbs is prepared to approve something other than what came out of the process, other proponents should have an oportunity to have another go at it.

Whatever the outcome today when the BCUC is scheduled to consider the disqualification motion, the Duke Point project is likely to be tied up for weeks or even months in the courts by appeals on several grounds.

There are huge political implications. The BC Liberals have argued they have put BC Hydro back under the independent regulation of the BCUC. But opposition politicians will now charge Hobbs, who was appointed by the Campbell government, is simply doing Campbell's bidding and that the whole BCUC process is a sham.

Firm action by the government may be required to maintain public confidence in the BCUC.

Got a tip or comment? E-mail me at phrushowy@shaw.ca.

Posted by Arthur Caldicott on January 26, 2005

January 25, 2005

Utilities panel accused of bias

Andrew A. Duffy
Times Colonist
January 25, 2005


sqwalk.com
COMMENT: Andrew Duffy's article reprinted here contains two factual errors, I believe, that I think it important to correct.

He is correct that cable systems deliver most of the power used on Vancouver Island, although it is always variable, the mix between on-island power from hydroelectric generating facilities on the island and Island Cogeneration, the existing gas-fired plant at Elk Falls.

Duffy says that all of that cable capacity will be gone in 2007, when BC Hydro "decommissions" the cable systems.

This statement is completely incorrect.

First, we have two sets of cable systems coming to Vancouver Island:

- the 500 kV, or Cheekye-Dunsmuir system, comes from Squamish, across the Sunshine Coast, over Texada Island, to Qualicum. This is the reliable backbone of mainland power that serves the island. It is not under discussion, not being taken out of service, certainly not for many years after 2007. Capacity on this system is rated at 1300 megawatts (MW)

- the HVDC systems, which are in question, leave the mainland south of Vancouver, and cross Galiano and Salt Spring Islands, coming ashore just north of Duncan. Originally, these were rated at a capacity above 600 MW. Today, because they are aging, they have been "de-rated" to 240 MW. By 2007, BC Hydro will de-rate them to zero.

An important point is that although the HVDC systems have been "de-rated" they are still capable of great capacity. On not infrequent occasions, the HVDC have been utilized at over 500 MW, especially on one prolonged instance in December 2003 when the 500 kV system was out of service.

Likewise, in 2007, the HVDC will be de-rated to zero, but will still be serviceable, and will still be able to deliver energy to the island. This is quite different than a hard decommissioning, in which the system is bang, gone.

By 2008, BC Transmission Corp plans to replace the HVDC with a new cable system with greatly increased capacity.

Our consistent argument has been that the Duke Point Power project, with a 25 year service agreement with BC Hydro, is a profoundly inappropriate "solution" to this very short term bridging requirement, when the HVDC is de-rated (once again, NOT of no further use), and before the new cable system is in place. - Arthur Caldicott

sqwalk.com

Power project opponents claim outcome of B.C. Hydro contract hearing has already been decided

A B.C. Utilities Commission panel was under fire Monday on charges of bias and the appearance it has already made up its mind on a contract B.C. Hydro has signed with Pristine Power to build a $280-million gas-fired generation plant on Vancouver Island.

The Georgia Strait Crossing Concerned Citizens Coalition (GSXCCC) filed a motion to disqualify the panel as a result of an in-camera discussion the panel had with B.C. Hydro representatives. That meeting shows the panel has prejudged the outcome of the hearing before receiving arguments and cross-examination from intervenors, the coalition says.

"The panel can not know the best option until it has heard the evidence and considered the options before it," said Tom Hackney, president of the umbrella organization of environmental groups and individuals opposed to the project. "The panel has made a decision and that is not proper. That is why we are asking that they disqualify themselves."

B.C. Hydro has said the plant is needed to meet Vancouver Island's increasing electricity needs. It will be especially necessary when undersea cables, carrying power from the mainland, are decommissioned in 2007 because of their age. Those cables provide about 80 per cent of Island needs.

The coalition is worried about pollution from the Duke Point project, and says more cost-effective ways of making up the electricity shortfall are available, such as conservation programs, replacing the undersea power cables, and renewable sources of energy.

"This is an application for an order that the commission panel disqualify itself on the grounds of a reasonable apprehension of bias and denial of procedural fairness and natural justice during the hearing," wrote coalition lawyer William Andrews in his application.

A transcript of the in-camera session shows panel chairman Robert Hobbs telling B.C. Hydro representatives he understood that while Hydro chose Pristine's project, they would have preferred to choose a slightly different Pristine option but the cost constraints of the call for tender process prohibited them.

And during a back-and-forth discussion, Hobbs suggests that value could be added for Hydro ratepayers by "moving us into the outcome that's in the customer's best interest. So you know what I want to try to do. I need your help in telling me how I can get there."

The coalition is arguing in its motion that, to the exclusion of other parties, the panel and Hydro have discussed how to approve a different option -- a variation of Pristine's Duke Point project -- even though it was not the winner of the call for tender process.

"It seems clear cut," said Peter Ronald, a coalition spokesman. "It appears the fix is in."

David Lewis, mayor of Gold River, said the actions of the panel and the fact it appears the commission has already made up its mind to approve the electricity purchase agreement between Hydro and Pristine, have him shaking his head.

"What you can't do as a chairperson is go in with a closed mind ... otherwise what the hell is the point of going (to a hearing)," he said.

The utilities commission hearings have adjourned until Wednesday morning in Vancouver to allow intervenors time to prepare arguments on the application for the disqualification of the commission panel. It is expected a ruling on that application will be issued the following day.

Hobbs could recuse himself leaving the commission panel with Lori Ann Boychuk as its lone remaining member; commission panelist Murray Birch recused himself Dec. 22 after the coalition suggested there was a possibility of bias because he was the acting president of Alliance Pipeline, a major natural gas transporter. Hobbs may also choose to dissolve the panel or rule there was no impropriety and continue.

If the hearings proceed they are likely to wrap up by the end of this week and a ruling on the electricity purchase agreement issued Feb. 17.

The counsel for the utilities commission panel did not return phone calls Monday, and B.C. Hydro was keeping its comments to itself.

"Just because they issue a press release doesn't mean we have to step up to the plate and debate it," said Hydro spokeswoman Elisha Moreno.

--

Posted by Arthur Caldicott on January 25, 2005

January 24, 2005

GSXCCC files motion to disqualify BCUC panel

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

For Immediate Release: January 24, 2005

GSXCCC files motion to disqualify BCUC panel

Vancouver, BC-The GSX Concerned Citizens Coalition (GSXCCC) today filed a motion to disqualify the BC Utilities Commission panel presiding over the Duke Point Power hearing based on an apprehension of bias and the denial of procedural fairness.

The challenge to the panel's fairness is a result of "in camera" discussions between the Commission panel and BC Hydro representatives that show the panel has prejudged the outcome of its hearing before receiving arguments and cross-examination from intervenors.

"The panel can not know the best option until it has heard the evidence and considered the options before it," Tom Hackney, GSXCCC president. "This panel clearly has already made a decision and that is not proper. That is why we are asking that they disqualify themselves."

The panel is tasked with reviewing the electricity price agreement BC Hydro contracted with Calgary's Pristine Power for the proposed Duke Point Power (DPP) natural gas-fired electricity generation project. DPP was selected as the most cost-effective proposal during a protracted BC Hydro Call for Tenders (CFT) process.

To the exclusion of other parties involved in the hearing, the Commission panel and BC Hydro discussed how the Commission could approve a different option, a variation of the DPP project, even though it did not win the CFT contest, and is not the subject of the current proceeding.

"A person informed of these developments would reasonably conclude that this panel can not decide this proceeding fairly," said Hackney. "On the basis of this test for bias, we are asking the panel to disqualify itself immediately. "

Oral submissions on the GSXCCC motion will be heard on Wednesday.

- 30 -

For more information contact:
Peter Ronald: (250) 381-8321
Arthur Caldicott: (250) 370-9930 x.22

GSXCCC motion to disqualify

All transcripts, including Jan 24 revised in-camera and the Jan 24 hearing, are available at www.sqwalk.com/home.shtml

Download this news release

Posted by Arthur Caldicott on January 24, 2005

BCUC Panel decides before hearing all evidence

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

For Immediate Release: January 24, 2005

BCUC Panel decides before hearing all evidence

Vancouver - The BC Utilities Commission panel reviewing BC Hydro's electricity purchase agreement with Duke Point Power LP has indicated on the record that it has already decided the outcome it wants, in advance of having heard all the evidence due to be given.

Public transcripts released on Friday give a partially censored account of an "in camera" meeting held two days previous between the two-member Commission panel and one of BC Hydro's witness panels. Commission Chair Robert Hobbs tells the BC Hydro witnesses that a project different than the winner of BC Hydro's Call For Tenders (CFT) should receive the Panel's approval.

Hobbs then says, "You know now what I want to try to do. I need your help in telling me how I can get there." (Transcript, p.1742) Mr. Hobbs then asks BC Hydro's for suggestions on how the Commission can approve the desired project even though it was not the winner of the CFT process. GSX Concerned Citizens Coalition and all other intervenors in the hearing were not allowed to attend the Commission's "in camera" session with BC Hydro.

"This is outrageous and clearly presents a reasonable apprehension of bias," said GSXCCC president Tom Hackney, "We and other intervenors have expert witnesses lined up to testify. We have a strong case against the Duke Point proposal. How can anyone now believe we will be heard?"

The transcript shows the Commission Panel chair openly asking BC Hydro to help subvert the outcome of the CFT and hand pick who should win the contract.

"There must be integrity in both the tendering and regulatory review processes," Hackney insisted. "How can power project bidders or the public have any faith in the fairness of this hearing?"

- 30 -

The revised "in camera" transcript released on Monday, January 24, is online at:
www.sqwalk.com/20050119ric(revised20050124).pdf

The transcript from Monday, January 24, is online at:
www.sqwalk.com/20050124.pdf


For further information, contact:
Steve Miller, GSXCCC Director, (250) 743-7055
Peter Ronald, GSXCCC Director, (250) 616-7895



January 24, 2005 - BCUC Panel decides before hearing all evidence

Backgrounder

Since 2000, BC Hydro has been trying to build natural gas-fired generation on Vancouver Island, first with the Port Alberni Cogeneration, then Port Alberni Generation projects. In 2003, BC Hydro proposed the Vancouver Island Generation Project (VIGP) for Duke Point, near Nanaimo. In September 2003, the BC Utilities Commission refused permission for that project but encouraged BC Hydro to hold a "call for tenders".

In the fall of 2003, BC Hydro initiated the Vancouver Island Call For Tenders (CFT) for power generation projects on Vancouver Island. Some 11 bidders with 23 projects prequalified for the main round of bidding. BC Hydro hired PricewaterhouseCoopers as the independent reviewer for the CFT, monitoring and reporting on fairness and BC Hydro's adherence to the CFT.

After initial screening, the CFT process assembled the projects into "portfolios" that could meet the Island's projected energy demand. Of the five portfolios assembled, the eventual winner was the Duke Point Power LP project (DPP), without duct firing. A competing proposal, the DPP project with duct firing was unsuccessful in winning the CFT contest.

Transcripts of an "in camera" meeting on January 19, 2005, indicate Panel Chair Hobbs and a BC Hydro witness panel agree that DPP with duct firing is actually more cost effective. Their discussions appear to effectively circumvent the CFT decision process as evidenced in the transcript when Hydro witness Mary Hemmingsen openly acknowledges that the Duke Point Power project, without duct firing, is not the most cost-effective project, despite having the lowest price tag.

On November 3, 2004, BC Hydro announced that DPP, a project of Calgary-based Pristine Power, was the CFT winner. The current hearing is reviewing the electricity price agreement BC Hydro entered into in awarding the CFT to DPP. The BCUC hearing began on January 17 and is expected to continue for another week.

On December 20, 2004, a key part of BC Hydro's natural gas strategy for Vancouver Island, the GSX Pipeline project was cancelled. On December 22, Commission panelist Murray Birch recused himself from the review panel in response to GSXCCC's submission that a reasonable apprehension of bias existed as Mr. Birch is the acting president of Alliance Pipeline, a major natural gas transporter.

BC Hydro's rationale for urgently building on-Island generation is a worst-case, theoretical power shortfall, caused by a planning assumption that “zero-rates” in 2007, a set of existing, aging, sub-sea transmission cables that bring hydroelectric power from the mainland.

BC Transmission Corporation now plans to replace the cables, and projects an in-service date for the replacement sub-sea transmission system by October 2008.

The agreement between BC Hydro and DPP, which will cost BC electricity users hundreds of millions of dollars over its 25 year term, is a grossly misplaced “solution” to a short –term bridging problem between 2007 and 2008.

For more information on DPP, VIGP, GSX or related topics, visit www.sqwalk.com
or contact:
Steve Miller, GSXCCC Director, (250) 743-7055
Peter Ronald, GSXCCC Director, (250) 381-8321

Download news release

Posted by Arthur Caldicott on January 24, 2005

January 18, 2005

Hydro's gas-fired fiasco

Brian Lewis
The Province
January 9, 2005

sqwalk.com
COMMENT: The Province's business editor Brian Lewis has been writing, once or twice a year, about GSX and BC Hydro's Vancouver Island mega-projects, since 2000. This article gets it marvellously right (I agree with him) on a number of points, and dreadfully wrong, on at least one big one.

Lewis is the first major media commentator outside of intervenors like the GSX Concerned Citizens Coalition, to suggest that government should get involved in what BC Hydro is up to, giving direction. With an entire electricity policy department watching what's going on, and putting its oar in the water late at night when no-one can see the effect, the Ministry of Energy and Mines has been involved. No matter what they say. But Minister Richard Neufeld has been all to ready to say that the government's hands are off, that oversight of BC Hydro is up to the BC Utilities Commission. But that's Neufeld's Believe It Or Not.

The BC Utilities Commission let BC Hydro run wild with the Call for Tenders, even after they'd been roundly browbeaten in December 2003 with the concerns that various intervenors had with the CFT. The BCUC wimped out. Lewis says that was the time for the government to step in. It's a bold statement for a journalist to make.

But when Brian Lewis suggests that a solution to island energy supply challenges is coal, he's dead wrong. The BC government wants to encourage coal fired generation, and it's a disappointment to find Lewis taking a pro-coal position. First of all, coal simply cannot be burned as "cleanly" as natural gas, in contradiction to Lewis' statement. And second, the cost of the scrubbing technologies that clean up coal emissions, are prohibitively expensive. If all of them were to be mandated, the economics of coal-fired generation, relative to natural gas, would collapse. Coal is a cheap fuel, but "clean coal" generation is damn expensive. The Nanaimo coal is likely to stay in the ground for a long long time.

Lewis' last call is for leadership from government. Given that two governments and many years have not resulted in anything other than furtive promotion by government of these misguided natural gas schemes for Vancouver Island, we can reasonably expect government to avoid wading directly into the Duke Point Power cesspit. - Arthur Caldicott
sqwalk.com

DUKE POINT: Electrical plant may burn Liberal gov't

There may be another "Fast Ferries" style project on the drawing board, one that has the potential for putting the governing Liberals in the hot seat as they ramp up for May's provincial election.

Unlike the previous NDP regime's $400-million aluminum ferry fiasco, this one doesn't involve building ships to move people to and from Vancouver Island, but it does centre on providing electricity to B.C. Hydro ratepayers on the Island.

Hydro and private sector partner Pristine Power of Calgary will be making their case before the B.C. Utilities Commission next week to build a 252-megawatt natural gas-fed power plant at Duke Point near Nanaimo at a cost of $282 million. The Calgary company will sell the power to Hydro under a 25-year contract and was selected by Hydro to build the facility following a call for tenders from the Crown-owned utility last year.

On the surface, it all looks copacetic but, as they say, the devil is in the details.

This is Hydro's second shot at trying to push its Duke Point project through the regulatory approval process.

The first application was turned down by the BCUC in September 2003 following a lengthy public hearing during which it became painfully obvious that the project was an uneconomic pig-in-a-poke.

That was the project Hydro had tied to the Georgia Strait Pipeline proposal which would have carried natural gas from the Mainland to feed the Duke Point Plant.

Not surprisingly, the GSX was also tossed aside as another of Hydro's poorly planned projects. In its September 2003 decision, the Utilities Commission ordered Hydro to issue a call for tenders.

But the way the call was structured meant that, basically, only proposals calling for a gas-fired plant at Duke Point would be considered.

Alternatives such as using on-Island available fuels like coal or wastewood to generate power, or utilizing energy savings from industry were never considered.

That's the point where the current Duke Point proposal left the tracks.

It's also the point where the Gordon Campbell government should have shown leadership and stepped in. It didn't.

Not surprisingly, critics such as Hydro's industrial and commercial customers will be hammering their tables at next week's BCUC hearing that if approved, the Duke Point plant locks Hydro and all its ratepayers into a plant fed by natural gas from the northeast corner of the province, gas that has increased roughly three-fold since Duke Point was first proposed.

That has led the Joint Industry Electrical Steering Committee, which represents Hydro's industrial customers, to warn that this project could trigger electricity rate increases of three per cent -- or more -- for everyone in B.C.

But hold on, it gets better, or worse, depending on your point-of-view.

The Duke Point plant will only be used during peak periods of Island electricity demand when or if it begins operation a few years from now.

At the same time Hydro is planning to build a new transmission line over to Vancouver Island which is expected to be in service by 2008 -- about one year after Duke Point's scheduled opening.

"In our view there's got to be a way of bridging that gap without spending $280 million on Duke Point," says Dan Potts, executive director of the industrial group. Penny Cochrane of the Commercial Energy Producers of B.C. puts it this way: "It seems Hydro wants to build a truck when a bicycle might do the job."

The critics also make an excellent point when they say shipping natural gas all the way from northeastern B.C. to Vancouver Island to generate electricity doesn't make sense -- especially when you consider that the Nanaimo region still has ample supplies of coal.

And these days coal-burning technologies make the fuel as clean as natural gas.

However, the Duke Point issue arose as a direct result of poor planning and neglect by Hydro for more than the past decade which has resulted in B.C. importing ever-increasing amounts of higher-cost electricity.

It's time for this foolishness to stop. It's time for leadership --but so far no one in Victoria seems to care.

-------------------------------
Brian Lewis is the Province's business editor. He can be reached at blewis@png.canwest.com.

© The Vancouver Province 2005

Posted by Arthur Caldicott on January 18, 2005

Green Party letter to Utilities Commission on Duke Point

Tuesday January 18, 2005

BC Utilities Commission
Rob Pellatt, Commission Secretary
Sent by email: commission.secretary@bcuc.com

Dear Mr. Pellatt,

As leader of the Green Party of British Columbia, I want to reiterate my party’s strong opposition to the proposed Duke Point Power gas-fired power plant.

Approval of this fossil fuel-burning mega-plant is unconscionable when there are economically feasible, renewable energy-based alternatives that can produce the needed electricity without increasing our output of greenhouse gasses.

Wind, solar, tidal and small-scale in-stream hydro projects are half the answer to meeting Vancouver Island’s energy needs. The other half of the solution is conservation of energy which is now wastefully being squandered and the use of “green” heating technologies like solar hot water and geo-exchange systems. These conservation and renewable energy-based alternatives are more economically viable, environmentally responsible and sustainable over the long term.

Canada has signed on to the international Kyoto Accord, committing Canadians to reduce the level of C02 emissions to 10 percent below our 1990 levels. We are already 30 percent above this level.

We will never reach the Kyoto goal, nor slow global warming, if the BC Utilities Commission caves into the pressure from BC Hydro to approve this project.

You have a moral obligation, if not a legal one, to take steps to meet Canada commitment to reduce the use of fossil fuels and help curb global warming.

I implore you to do the right thing and reject this project again. Future generations are counting on you.

Sincerely,
Adriane Carr
Leader of the Green Party of BC

cc: Premier Gordon Campbell, gordon.campbell.mla@leg.bc.ca
Richard Neufeld, Minister of Energy and Mines, richard.neufeld.mla@leg.bc.ca
Mike Hunter, MLA for Nanaimo, mike.hunter.mla@leg.bc.ca

Green Party release

Posted by Arthur Caldicott on January 18, 2005

Hydro defends Duke Point power plan

Scott Simpson
CanWest News Service
Tuesday, January 18, 2005

Residents of Vancouver Island will face an "unacceptable risk" of blackouts unless B.C. Hydro gets permission to proceed with plans for the Duke Point power project, a British Columbia Utilities Commission panel heard Monday in Vancouver.

The plant would serve about 10 per cent of Vancouver Island's electricity needs and carries fixed costs of $1.1 billion -- plus natural-gas requirements that could bring the total cost of the project to $4.5 billion over 25 years.

Hydro wants to develop the plant in partnership with a Calgary-based private company, Pristine Power.

At the opening of a BCUC hearing into Hydro's plans for a gas-fired generating plant to be located at Duke Point near Nanaimo, Hydro executive Bev Van Ruyven said the plant guarantees the Island a secure energy supply at a reasonable cost.

"Our foremost concern in this proceeding remains reliability of supply," Van Ruyven told a BCUC panel during a Hydro presentation.

She noted that Island residents set a record for electricity consumption last Friday -- many residents use electricity to heat their homes due to limited access to natural gas.

In addition, some high-voltage cables that carry electricity from the Mainland to Island residents will reach the end of their useful life in 2007 -- although replacements will not be available until 2008.

"We at B.C. Hydro are obligated to serve our customers. On Friday, we hit a new peak for Vancouver Island. At just under 2300 megawatts, this peak is higher than we were forecasting for 2008.

"A solution has been sought for Vancouver Island for over 10 years. We have studied and analysed the problem, and now is the time to act," Van Ruyven said.

Opponents have been questioning Hydro's assertions, saying that cheaper alternatives such as lowered industrial electricity consumption during times of peak residential demand would have the same impact for much less money.

The Joint Industry Electricity Steering Committee and other groups oppose the project, saying it's too costly to justify against the slight possibility of a blackout on a single cold day prior to the installation of new cables.

Posted by Arthur Caldicott on January 18, 2005

January 17, 2005

Hydro customers could pay $4.5b for new plant

Scott Simpson
Vancouver Sun
17 Jan 2005


BC Hydro customers will pay an estimated $4.5 billion over 25 years for a new gas-fired electricity plant that is being proposed to the B.C. Utilities Commission as the answer to Vancouver Island's looming energy crunch.

Hydro will go before the commission today with a proposal to partner with a Calgary company, Pristine Power, to develop a 252-megawatt plant at Nanaimo's Duke Point.

Total costs associated with the project have yet to be disclosed, although both Hydro and Pristine have begun to openly discuss fixed expenditures in recent days.

The Joint Industry Electricity Steering Committee, which opposes the project, has been furiously crunching numbers in preparation for Monday's hearing, and came up with the $4.5-billion figure this week after adding up fixed costs and making long-term projections on the price of natural gas.

The number is stated in a letter sent to the utilities commission by the committee.

Hydro has already spent $170 million over the past four years, but will recover only $50 million, leaving its customers -- the taxpayers of B.C. -- on the hook for the remaining $120 million.

But those costs pale in comparison to the amounts Hydro is prepared to pay out over the next quarter century -- although Hydro says the per-unit cost of energy from Duke Point is comparable to what it will pay for other private-sector operators, roughly $65 per megawatt for secure, high-grade electricity.

Pristine will invest about $285 million to build the plant, and will receive fixed monthly payments of $2.9 million for 25 years, according to Pristine president Jeff Meyers.

That adds up to a return on investment of $870 million over the life of the deal.

Meyers said Terasen Pipelines is guaranteed $9.6 million per year for gas delivery services in support of the plant -- $240 million over the life of the deal.

Meanwhile, the Joint Industry Electricity Steering Committee said the biggest single cost of Duke Point will be the gas that is necessary to run it.

It pegged the total, 25-year cost of the project at $4.5 billion, including gas purchases at present market prices, if the plant runs 80 per cent of the time as Hydro expects.

All of those costs will be borne by Hydro customers.

Hydro power planning manager Mary Hemmingsen says the facility is necessary to meet peak electricity demand on Vancouver Island, which hit a record for hourly electricity consumption on Friday morning.

Hemmingsen said Hydro expects that demand will continue to escalate amid solid economic and population growth.

She said the situation is so urgent on Vancouver Island that without Duke Point, Hydro may have to consider measures that could include a fleet of barges housing diesel-fuelled 23-megawatt generators.

Hydro would rely on a scheme involving power consumption curtailment by Norske Canada, and the barges, until BC Transmission Corporation can set down new high-voltage cables to the Island in 2008.

Hemmingsen said the existing cables will reach the end of their useful life in 2007 and Hydro would prefer to have Duke Point operational by that point to avoid a potential power crisis.

The Duke Point project has attracted opposition from virtually every stakeholder group in the province, who believe it is too costly a solution to the Island's growing energy needs.

The industry steering committee calculates that the net cost of electricity from Duke Point would be $200 per megawatt hour because the plant would only operate about 20 per cent of the time.

Those calculations were rejected this week by senior executives of Pristine, in a meeting with The Vancouver Sun.

"We think their numbers are just wrong," said Pristine president Jeff Meyers, adding that the true cost was $65 per megawatt -- given Hydro's expectation the plant will be in operation 80 per cent of the time.

Hydro says Duke will produce electricity for about the same price as other, smaller-scale, private sector projects that have recently been awarded power-supply contracts from the crown corporation.

The BCUC hearing will determine whether or not the project is a cost-effective solution to the Island's needs, but will not consider whether other cheaper options are available.

In 2003, the commission rejected Hydro's attempt to self-operate a Duke Point plant -- even though Hydro had already spent $170 million including $120 million for turbine equipment and $50 million in development costs for a gas pipeline project that was abandoned last month.

Hydro is coming back before the BCUC with a deal that would revive the 252-megawatt project with Pristine as developer.

"The important thing to understand in this bid is that the Island needs electrical capacity. It doesn't necessarily need electrical generation that runs on every hour," Meyers said.

Meyers said Duke Point was a better option for the Island.

"You have a wire serving the Island that is to be retired in 2007. That's a firm date. BC Hydro has an obligation to serve and they need to have reliable capacity."

He noted that Pristine supports alternative forms of electricity generation, such as run of river hydro, but says those technologies cannot deliver the same measure of security or steady output as a gas-fired generation plant.

"When everything starts to come on in the morning, Hydro needs resources they can absolutely switch on. You can't get that from wind, you can't get that from small hydro or a number of the alternatives."

© The Vancouver Sun 2005

Posted by Arthur Caldicott on January 17, 2005

January 15, 2005

Huge crowd decries Duke Point gas plant proposal

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

For Immediate Release: January 15, 2005

Huge crowd decries Duke Point gas plant proposal

Nanaimo, BC-More than a hundred people turned out to a BC Utilities Commission (BCUC) "town hall" meeting today to express their resolute objection to BC Hydro's plan to build a 252MW gas-fired electrical power plant at the Duke Point industrial park near Nanaimo.

Speaker after speaker decried the gas plant plan on a variety of grounds, including the increasingly high cost of its fuel, damage to local air quality and increased greenhouse gas emissions. Natural gas (methane) and carbon dioxide are two important human produced pollutants that are driving climate change.

"The Duke Point power plant is unnecessary and will leave a legacy of expensive and polluting energy on Vancouver Island," said Norm Abbey of the Society Promoting Environmental Conservation (SPEC). "BC Hydro is mortgaging our economic and environmental future," said Abbey.

Only two presenters spoke in favour of the proposal at the special day-long forum. Giant puppets and drummers joined the huge crowd at a noon-hour rally, sending a clear message to the BCUC, BC Hydro and politicians that residents want a different solution to Vancouver Island's long- and short-term energy challenge. A combination of conservation, industrial demand curtailment and replacement of the existing transmission cables can bridge a theoretical, short-term, worst-case supply gap that BC Hydro has used to justify the $280 million project.

"In the long term clean, renewable energy, such as wind, solar, and micro-hydro will be the foundation of Vancouver Island's energy future," said energy and climate change expert Guy Dauncey, president of the BC Sustainable Energy Association (BCSEA). "At this critical turning point, we should embrace clean, sustainable energy."

SPEC and BCSEA are two of 12 groups that have joined the Georgia Strait Crossing Concerned Citizens Coalition's (GSXCCC) legal intervention at BCUC hearings that begin Monday in Vancouver. The BCUC will consider the Electricity Price Agreement (EPA) between BC Hydro and Pristine Power, the Calgary-based company chosen by BC Hydro to build the plant.

BC Hydro originally proposed three large gas plants and the GSX pipeline to address the alleged energy supply gap. The GSXCCC and its allies have brought evidence in several federal, provincial and municipal hearings, and similar power plants in Port Alberni, North Cowichan and Nanaimo have been rejected. The GSX pipeline project was cancelled last month when BC Hydro conceded it was unnecessary.

- 30 -

For further information, contact:
Tom Hackney (250) 381-4463
Peter Ronald (250) 616-7895

Download news release

Posted by Arthur Caldicott on January 15, 2005

Finally, progress in the energy crunch

Les Leyne
Times Colonist (Victoria)
15 Jan 2005

Vancouver Island faces the remarkable prospect in the next few months of actually seeing some tangible progress when it comes to doing something about the looming energy crunch.

The new year marks the 10th anniversary of the first concerted effort to get more power on the Island. It's been a decade of studies, arguments, hearings and false starts. After all that time, there is a chance of a construction start this March on a big gas-fired generating plant at Duke Point near Nanaimo.

But first, there will be an open house today in Nanaimo. That will be followed by another round of arguments starting Monday in front of the B.C. Utilities Commission.

A number of intervenors, some of them potential customers, will press the case that the latest greatest plan to keep the lights on is the wrong way to go.

Opposition is based partly on the premise that it represents a big gamble, in that B.C. Hydro would be committing for the next 25 years to natural gas, which is an uncertain commodity with a mercurial track record in terms of price.

There is a chance the project could once again slip sideways and bring the Island closer to the point where an energy crunch becomes quite real.

But the BCUC hearings centre on a deal -- the electricity purchase agreement between Hydro and the company building the plant -- that the commission indirectly had a hand in bringing about.

So upsetting the applecart and starting over again, for the second time in a year, is viewed as an unlikely prospect.

Which means Duke Point Power could have shovels in the ground at the Nanaimo industrial park by March, although I'd have to see it to actually believe it.

The company was put together by an Australian firm that creates investment partnerships.

The operating people are from Pristine Power, a Calgary-based outfit created by people who had a hand in building the Island's first gas-fired plant, near Campbell River.

They won the dogfight that broke out after the utilities commission looked at Hydro's plan to build the Nanaimo plant and said: "Try again."

Almost two dozen companies piled into the breach created when that huge project was derailed.

A half-dozen made it to a short list and Duke Point Power won the day late last year.

If all goes according to plan, it will built the plant for $280 million and sell the power to Hydro for at least 25 years. (It's worth noting that nothing associated with this idea in the past decade has gone according to plan.)

The big difference between the private firm's gas plant and the gas plant envisioned by B.C. Hydro is that there is no new pipeline supplying it with natural gas.

In one of the more remarkable developments in this long saga, the $340-million pipeline vanished over the Christmas holidays.

Hydro teamed up with a private pipeline partner, spent about $50 million on preparations to build a pipeline under Georgia Strait and endured a National Energy Board hearing that stretched an incredible three years.

But GSX, as it was known, started to look sketchy when the utilities commission called for second thoughts.

Designed when the price of gas was about 30 per cent what it is now, and predicated on the assumption it would serve two or three big generating plants, it was formally buried last month, with Island critics cheering its demise. RIP GSX.

The new plan is to rely on the existing Terasen pipeline to supply the two big generating plants (Campbell River and Duke Point) and add new transmission lines, as well.

It's transmission lines that have been driving all these developments for years.

The big existing ones reach the end of their useful life in 2007 and with tougher national standards following the eastern blackout two years ago, that deadline is considered final.

Gas critics have argued all along that the lines should just be replaced, but that doesn't create any more power, it just gives the Island the luxury of enjoying more electricity without having to put up with actually creating it. And B.C. has been a net importer lately.

Pumped up by their success in getting the GSX cancelled, those same social, environmental and energy critics still have their sights set on the Duke Point plant.

So will the big industrial users, who are worried about price and supply. Critics certainly helped bring down the Hydro version of this project. Next week will be the last gasp effort do the same for this version, but time is short and the chances are slim.

Just So You Know: B.C. Hydro had to swallow all the sunk costs incurred by the Hydro-Williams partnership that went into the GSX project. That amounts to $50 million.

And the sunk costs that went into the Duke Point project amount to $70 million. But $50 million of those costs are recoverable from the company that wants to take over the project. So Hydro will be out a total of about $70 million before this project even gets started.

Trivia buffs will recall that was the original per-ship estimate of the cost of the fast ferries.

leyne@island.net

Posted by Arthur Caldicott on January 15, 2005

'Expert' opinions strangely divergent

John Kimantas
Assistant editor
Nanaimo News Bulletin
15 January 2004

A case can be made for almost anything by lining up statistics the right way, and this is painfully obvious in the debate for the proposed gas plant at Duke Point.

The B.C. Utility Commission begins its hearing today (Jan. 15) at the Coast Bastion Inn, and I'm sure the BCUC will be inundated with people citing the 2002 analysis by an environmental coalition stating the Duke Point thermal generator project will dump as much pollution into the Earth's atmosphere as all the vehicles currently in use on Vancouver Island.

That sure sounds bad.

Well, the 2002 Environmental Assessment Office report on the Vancouver Island Generation Project saw it differently. It concluded the project as presented would meet all applicable levels of pollution standards.

Now you'd think the EAO would be the objective body in all this, and so would be best suited to decide the health risk. But if so, why are there so many other official viewpoints on the same project?

For instance, Environment Canada was critical of the projected pollution levels because Harmac's contributions weren't included in the calculations. Why? Permit values apparently overstate the actual emissions.

The problem is, Harmac could increase its emission levels in the future, as it is entitled. So out the window goes the argument the emission analysis is conservative.

Health Canada was also of the view that levels may be underestimated.

Why? The Vancouver Island Energy Corporation (VIEC) estimated emissions by its own formula instead of using the emission rates specified by the turbine manufacturer General Electric.

So VIEC knows better than the product manufacturer? Wow.

Health Canada also questioned VIEC's analysis emissions from "cold starts" throughout the year.

Meanwhile, we've got the Vancouver Island Health Authority giving the project a thumb's up, stating the VIPG wouldn't have a measurable impact on air quality.

That's great, except I have to wonder who at the health authority is qualified to do more than rubber-stamp the figures presented by VIEC.

And if they aren't, what are they doing contributing to the conclusion?

In the end, I suspect the EAO is probably correct - a gas plant at Duke Point won't kill us. In 2004, though, I'm not sure that's the way we should be looking at pollution levels. We should be looking at cumulative effects and improving our well-being, not eroding it, and that seems to be where the environmental assessment analysis falls suspiciously short.

Do I feel protected by the EAO assessment? Not a bit. I'm not an expert to assess the risk, but if I can find holes in the methodology the experts are using, I get worried.

For my $280 million, I'd be more confident with a very aggressive energy-saving appliance and light bulb replacement program and a few green energy projects to fill the gaps.

It may not solve all our problems, but at least it won't create more. Naturally, the experts disagree.

- John Kimantas is assistant editor at the News Bulletin.

Posted by Arthur Caldicott on January 15, 2005

January 12, 2005

BC-SEA Watt's Happening, Jan 2005

BC SEA
Watt's Happening?
January 2005

A Monthly Letter from the BC Sustainable Energy Association

Dear Friends and Fellow BC SEA'ers,

We've got an exciting and a critical few days coming up, when the future of our electricity supply for Vancouver Island will be decided.

And we need your help!

The Duke Point Follies
At issue is BC Hydro's determination to build a 252 MW gas-fired power plant at Duke Point, in Nanaimo. I won't go into the details, as they're laid out on our website at http://www.bcsea.org, and in EcoNews at http://www.earthfuture.com/econews. There are also many good stories at http://www.sqwalk.com/home.shtml.

In a nutshell, the project is going to cost $280 million in hard cash, plus $2.5 billion in additional costs for natural gas, since price inflation is guaranteed. All this, just to bridge a possible peak power gap that may arise on a few cold days in the winter of 2007/8, since BC Hydro is choosing to zero-rate the subsea cable to the mainland 8 months before its replacement can be installed.

It just doesn't make sense. If the BCUC rules in favour of the plant at the Hearing in Vancouver, starting January 17th, it will set back the possibilities for green, sustainable energy on the Island for many years. And, gosh darn, that just don't seem right!

There is some hope that we might just win this battle if people speak up. We understand that the BC politicians and bureaucrats are very worried about the project, and likely to be swayed by public opinion. It's got "Fast Cat Ferries" written all over it.

So can you help, by adding your shoulder to the shove?

1. If you live on the South Island, there is still time to ask to speak at the Nanaimo Town Hall Meeting scheduled for this Saturday at the Coast Bastion Hotel, Malaspina Room. You must register by this Tuesday 11th by phoning Gordon Fulton (604) 687-6789 or emailing gfulton@boughton.ca. Don't say you represent the BC SEA, because the BCUC is taking the line that since we are an Intervenor, we've had our chance to speak.

2. If you live on the South Island and don't want to speak, you could still come to Nanaimo this Saturday to join the audience in the Coast Bastion, and the creative protest that will be happening outside the Hotel from 12-1pm, with hand-drummers, and three of the Gabriola Island Positive Energy Quilts. If you'd like to share a ride from Victoria, call Bill Pearce at 250-595-4994.

3. We need a deluge of letters, phone calls, and emails pointing out how ridiculous this is, sent to the BCUC, with copies to politicians and the media. The contact details are below. So read the articles, put your brain in gear, and enjoy yourself! As I said, we need all the help we can get.

More news soon! Watch our website at http://www.bcsea. And now: please get those letters and emails flowing!

With best wishes,
Guy Dauncey
President, BC SEA
http://www.bcsea.org

Duke Point: Please write to:

BC Utilities Commission:
Mr. Robert J Pellatt, Commission Secretary
BC Utilities Commission, Sixth Floor, 900 Howe Street, Box 250, Vancouver V6Z 2N3
Email: commission.secretary@bcuc.com

Gordon Campbell, Premier:
gordon.campbell.mla@leg.bc.ca
c/o Legislative Assembly, Victoria V8V 1X4

George Abbott, Minister of Sustainable Resource Management
Phone 250-356-9076
P.O. Box 9054 Stn Prov Govt, Victoria V8W 9E2
George.Abbott.MLA@leg.bc.ca

Richard Neufeld, Minister of Energy & Mines
richard.neufeld.mla@leg.bc.ca
c/o Legislative Assembly, Victoria V8V 1X4

Mike Hunter, MLA
Mike.Hunter.MLA@leg.bc.ca
c/o Legislative Assembly, Victoria V8V 1X4

Bill Barisoff, Minister of Water, Land and Air Protection,
bill.barisoff.mla@leg.bc.ca
PO Box 9047, Stn Prov Gov't, Victoria V8W 9E2

Honourable Joy McPhail
joy.macphail.office@leg.bc.ca
Room 104, Parliament Buildings, Victoria V8V 1X4

Letters to The Editor, Please!
Gabriola Sounder
Editor: Sue deCarteret
sounder@island.net

Harbour City Star
Editor: Terry Denomme
citystar@island.net

Nanaimo News Bulletin
Editor: Kevin Laird
edit@nanaimo.vinewsgroup.com

Nanaimo Daily News
Editor: Peter Godfrey
dnews@island.net

Times Colonist
Letters to the Editor
letters@tc.canwest.com

Vancouver Sun
Letters to the Editor sunletters@png.canwest.com

CBC RADIO
The Early Edition
earlyed@vancouver.cbc.ca

On the Island
victoria@cbc.ca 250-360-2227

BC Almanac
almanac@vancouver.cbc.ca

--

BC Sustainable Energy Association
395 Conway Rd, Victoria B.C. V9E 2B9
(250) 881-1304
http://www.bcsea.org

Posted by Arthur Caldicott on January 12, 2005

SPEC joins GSXCCC in opposing Duke Point Power

Immediate Release: Jan. 11, 2005

SPEC joins GSX Coalition in opposing Duke Point power plant.

The Society Promoting Environmental Conservation (SPEC) is joining the Georgia Strait Crossing Concerned Citizen’s Coalition (GSXCCC) in opposing a second attempt by BC Hydro and its private partner Pristine Power Corporation to build a 252 mw gas-fired power plant at Duke Point near Nanaimo.

“It was due to GSXCCC and thousands of Vancouver Island residents that BCHydro’s first attempt at constructing a fossil-fuel power plant at Duke Point was rejected by the BCUC (BC Utilities Commission) in 2003,” said SPEC President Gerry Thorne. “And the way Duke Point will finally be put to rest is by again working together to demonstrate the potential harm that would result if Duke Point were constructed.”

An independent analysis conducted in 2002 by SENES consultants for SPEC, GSXCCC and the David Suzuki Foundation, found that Duke Point would pump dangerous amounts of nitrous oxide, sulphur dioxide, fine particulate matter and other harmful air pollutants into the Nanaimo and Georgia Basin airshed.

“Duke Point would, moreover, emit more than 900,000 tonnes of greenhouse gases annually,” said Thorne. “This is ironic given that just last month the Provincial Government released its Climate Change Plan that calls for a reduction in greenhouse gas emissions in BC.”

In the 1970s SPEC was part of a province-wide coalition that prevented former Social Credit Premier WAC Bennett from building nuclear power plants on Vancouver Island. SPEC is also an intervenor in the process that has so far prevented a US corporation from building a gas power plant at Sumas that would adversely affect the air quality in Abbotsford and the Lower Fraser Valley.

The BC Utilities Commission will begin public hearings on Duke Point on January 17 in Vancouver.


Information: SPEC 604-736-7732 www.spec.bc.ca

Posted by Arthur Caldicott on January 12, 2005

Is BC Hydro “jamming” the Commission?

BC Hydro is stonewalling intervenors seeking information in advance of the DPP hearing which will begin in Vancouver on January 17. The BCUC itself has committed to a decision on February 17. It's a situation ripe for the botching - rushed, things done by halves, arguments formed without necessary information.

The BC Public Interest Advocacy Centre may have assessed the situation best in its letter dated January 11, 2005, to the BCUC Panel, filed as C3-10.

An extract:

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

These are the comments of BCOPAO et al. in response to Exhibit B-40, concerning BC Hydro’s procedural proposals in this matter.

As I warned the Panel at the Pre-Hearing Conference on December 17, it appears that BC Hydro is attempting to “jam” the Commission and produce a pre-ordained end result in these proceedings. A key element of this apparent strategy has been to hold a concocted deadline like a sword over the Commission’s head. The implied threat is that the slightest delay or extension of the hearing, and ultimately of the operation of the VIGP plant, will result in the lights going out on Vancouver Island on November 1, 2007. With inadequate time available prior to the posited deadline to conduct a proper exploration of the public interest, the remedy advocated by BC Hydro is to truncate the proceedings by narrowing the issues and hog-tying the participants.

Hydro’s way of minimizing the options before the Commission, and impelling the process toward approval of its pet project, has been to restrict the agenda to the limited menu of specific “solutions” selected by Hydro itself. This very constricted stance is itself a retreat from Hydro’s initial position, that the only issue before the Commission is whether the Call of Tenders procedure was conducted fairly!

BC Hydro has compounded the pressure on the Commission and hearing participants through an obstructionist approach toward information-disclosure: from one side of its mouth, it says that time-pressures require drastic and arbitrary limits to parties’ time for cross-examination; from the Robert J. Pellatt Commission Secretary January 11, 2005 other, its response to every request for pre-hearing disclosures is that parties may cross examine panels, using scarce hearing-time, to obtain more information. Hydro holds fast to this stance
even where disclosure would be a quick and simple way to reduce the pressure on hearing time.

On the subject of making efficient use of hearing time, Exhibit B-40 indicates that Hydro knows what witness panels it will produce; however, it has not seen fit to share this information with participants, to assist them to prepare for the hearing. Furthermore, we now are left playing yet another game of “blind man’s buff,” compelled to comment on our right of cross-examination but denied any inkling of the line-up of witness panels to assist us to evaluate these issues
concretely.

We ask that BC Hydro immediately advise participants which witness panels it intends to produce, and in what order, or that the Commission order Hydro to do so by the close of business today.

If ever there were a case before the Commission that cried out for “getting it done right” rather than plowing through a hasty process, this is it. This reincarnation of the VIGP has a long prehistory, whose genesis lay deep in the political arena. It now has all the hallmarks of a hobbyhorse driven by internal politics and turf.

If the Duke Point proposal is approved, it will have large and long-term ramifications for ratepayers. As things stand now, we would be strongly disinclined to recommend to our clients that they support it; we suggest to Hydro that it would be in its interests (assuming that the proposal is actually aligned with them) to afford us and other participants a full opportunity to be
convinced that the project makes more sense than is apparent now.

The Reasons for Decision for Order G-119-04 concludes, at page 4, that the effect of Policy Action #13 of the Provincial Government’s Energy Plan is “to establish competitive bidding processes as an important means to secure future supply.” All the more important that, in this first proposed major implementation of that Policy, the Commission get it right.

Read the entire letter here: C3-10

VICFT - DPP - EPA website

Posted by Arthur Caldicott on January 12, 2005

January 11, 2005

A 'BC Hydra' project that just won't die

Mark Jaccard
Vancouver Sun
11-Jan-2005

Hydra was a monster in Greek mythology that Hercules had difficulty slaying because each time he severed its head, one or two replacements popped out.

For citizens resisting BC Hydro's efforts to build an electricity plant fuelled by natural gas on Vancouver Island, the company's name has changed to BC Hydra.

Last month, after four years of struggle, including major public hearings before the National Energy Board and the B.C. Utilities Commission, BC Hydro cancelled the Georgia Strait crossing, a pipeline to ship gas to its proposed generation plant at Duke Point near Nanaimo.

But opponents of the pipeline and plant had no time to celebrate because Hydro simultaneously announced an agreement to sell the site to a private company, Duke Point Power, which will build the 250-megawatt plant and sell the power back to Hydro. The plant will be fuelled by natural gas from the existing Terasen Gas pipeline across the strait.

Opponents of generating electricity by burning natural gas, which emits local air pollutants and greenhouse gases, thought they had defeated the project when they convinced the B.C. Utilities Commission to reject Hydro's proposed plant in 2003.

But Hydra's (I mean Hydro's) pet project has popped back out, so they must battle again this month before the commission in a hearing to approve Hydro's electricity purchase agreement with Duke Point Power.

Ironically, the plant may not be needed. The B.C. Transmission Corp., now a separate company from Hydro, intends to replace some of the aging undersea cables supplying the Island with higher-capacity ones.

NorskeCanada, the largest consumer of electricity on the Island, has offered to shift operation of its pulp mills so that peak electricity demand can be met until the new cables are operating in 2008.

At the same time, BC Hydro is launching a province-wide electricity planning process that could lead to rejection of any natural gas plants for a decade or more because of the fear of rising natural gas prices and B.C.'s wealth of economical, environmentally friendly alternatives. These include more efficiency from Hydro's Power Smart program, combusting wood waste from pulp mills, small hydro and wind projects, cogeneration at industrial plants and large buildings, and perhaps large hydro.

A second irony is that while the provincial government and BC Hydro talk environmental stewardship, rejecting this natural gas plant is in fact the province's lowest-cost option for reducing greenhouse gas emissions that threaten climate change.

For the past 15 years, my research group at Simon Fraser University has been estimating for government, industry and non-government organizations the cost of alternative actions to reduce greenhouse gas emissions. It doesn't get any cheaper than this. Indeed, if natural gas prices continue their upward trend, we would reduce both our electricity bills and greenhouse gas emissions by cancelling the contract in favour of our other electricity options.

How did we get into this mess? BC Hydro's natural gas strategy is a legacy of the NDP government, abetted by Glen Clark's use of Hydro for political purposes, which included removing it from utilities commission oversight.

Once real dollars are spent on site acquisition, equipment and regulatory processes, it takes effort and time to turn the ship around.

The Liberal government, led by ministers Richard Neufeld and Joyce Murray, did the right thing in putting Hydro back under regulation. The commission, led by Robert Hobbs, did the right thing in rejecting the Duke Point project in 2003.

Even Hydro, under Larry Bell and Bob Elton, is now doing the right thing in launching a major electricity planning process to get the views of customers and other stakeholders.

But in a calamity of unintended consequences, the Duke Point project has re-emerged. There are many opportunities to play Hercules, but will any of the key players show leadership?

The government can tell its Crown corporation to drop the project for environmental reasons. When in opposition, Gordon Campbell called for cabinet rejection of the Kemano Completion Project for this very reason.

BC Hydro management can cancel the contract because of the gas cost risk and in the process give some credence to all those ads lauding its environmental image.

The utilities commission can reject the electricity supply agreement because of the gas cost risks.

What can you do? You might show up at the hearing. If you don't have time, you could at least write a letter to the premier and your MLA. Their ears function quite well in the months before an election.

You might even try writing BC Hydra. But Hercules would suggest caution.

Professor Mark Jaccard is with the school of resource and environmental management at Simon Fraser University.

Posted by Arthur Caldicott on January 11, 2005

BCTC seeks environmental assessment for new 230 kV cable system

On November 10, 2004, BC Transmission Corp filed an application with the Environmental Assessment Office requesting that the EAO voluntarily designate the Vancouver Island Transmission Reinforcement Project (VITRP) as a reviewable project.

On January 11, 2005, the EAO saw fit to post the letter of application and the EAO's order, to the website: www.eao.gov.bc.ca

The project is a new cable system from BC Hydro's Arnott Substation in Delta to the Vancouver Island Terminal Substation in Duncan. Its route is roughly - through Tsawassen, under the Strait of Georgia except where it crosses Galiano Island and Salt Spring Island, terminating just north of Duncan.

In service date is stated to be October 31, 2008.

The VITRP has been long sought by the GSX Concerned Citizens Coalition, and is believed to have been the solution preferred within BC Hydro to replace the aging HVDC cable system that follows the same route.

It is in the context of the Duke Point Power Proposal, for which the BCUC is conducting a hearing in January 2005 with a decision expected on February 17, 2005 (the VICFT-EPA proceeding, more about which is on www.sqwalk.com and at the BCUC website), that the VITRP is particularly of interest.

Since the HVDC are expected to be derated (note: not taken out of service) in March 2007, there is only an eighteen month gap during which Vancouver Island will be in supply deficit.

During this relatively brief interval, Norske Canada has made a Demand Management Proposal (NCDMP), to shift or curtail demand for between 30 and 210 MW at peak load periods. The BC Transmission Corp review of the NCDMP concluded:

"BCTC believes that NorskeCanada’s proposal, in combination with other stopgap measures, could help resolve the forecast short-term capacity shortfalls prior to the installation of the proposed Vancouver Island Transmission Reinforcement Project. (link)

For this reason, we and other intervenors in the VICFT-EPA review are strongly of the opinion that the Duke Point Power gas-fired project, costing at least $280 million before we even begin to tally up the cost of fuel for 25 years, is a badly misguided and inappropriate "solution" to a short term bridging problem.

Much as the GSX Pipeline triggered a lot of local concerns, so too is the VITRP. Of note, residents of Tsawassen are justifiably concerned that this brand new cable system is passing right through town and residential areas, above ground, with new unsightly towers, electromagnetic health impacts, etc. Moving it north, along the highway may be a better solution, as may be moving it underground.

For more information:

- keep tabs on www.sqwalk.com

- the Environmental Assessment at www.eao.gov.bc.ca

- BC Transmission Corp project site www.bctc.com

- BC Utilities Commission review of the Vancouver Island Call for Tenders - Electricity Purchase Agreement between BC Hydro and Duke Point Power: www.bcuc.com

Posted by Arthur Caldicott on January 11, 2005

January 04, 2005

Hydro rate increase looms

Scott Simpson
Vancouver Sun
03 Jan 2004

Three-per-cent hike predicted to help pay for new Island power plant

BC Hydro customers should learn in a few days the full cost they will pay for a new Vancouver Island electricity supply after the B.C. Utilities Commission ruled Hydro cannot keep secret the details of a $280 million deal with a private sector power company.

Industry stakeholders and other Hydro watchdog groups began this week to pore over financial details of a contract between Hydro and Pristine Power, and their preliminary estimates suggest a new gas-fired generating plant on the Island will boost electricity costs for all Hydro customers by about three per cent.

Hydro's own estimate, based on information provided to the B.C. Old Age Pensioners Association, is that consumer prices would have to rise 2.2 per cent in the first year of operation.

Hydro is seeking a secure supply of electricity for the Island and announced in November a deal with Pristine to buy electricity from a 252-megawatt gas-fired generating plant to be built at Duke Point, near Nanaimo.

Hydro and Pristine had sought to keep certain details of the deal confidential, particularly those that set out the price Hydro will pay for electricity from the plant, for what are described as competitive reasons.

But the BCUC rejected that stance in late December and critics of the project are now examining documents that set out, in complex fashion, the pricing formulas that will apply to Pristine's electricity sales to Hydro.

Hydro power planning manager Mary Hemmingson declined to comment on the commission's decision, saying the appropriate forum is before the BCUC.

A public hearing on Hydro's selection of Duke Point is scheduled for Jan. 17 in Vancouver. The deadline for interveners to file written evidence on the project is Thursday.

"We are still committed to the fact that the Duke Point award is the most cost-effective solution to meet the needs on Vancouver Island," Hemmingson said on Monday.

She said other options don't offer the same standard of reliability as Duke Point.

The Joint Industry Electricity Steering Committee, which represents Hydro's major industrial customers, expects it will take a few days to calculate the actual cost to consumers.

Dan Potts, the steering committee's executive director, said recently that Hydro customers should "brace themselves for higher prices" if the utilities commission approves the Duke Point plant.

Hydro plans to use Duke Point only on a part-time basis, to bump up electricity production when demand is strongest.

Potts says the net effect of that plan will push the production cost of Duke Point electricity to $200 per megawatt hour -- more than three times the amount Hydro residential customers now pay for electricity.

"We were frustrated that we didn't have access to the kinds of details that we think the public deserves to see," said steering committee spokesman Brian Battison.

"The public can only make informed decisions or comment if they have all of the facts. Those facts were not forthcoming, and so we welcome the utilities commission's decision to make the details of that contract public.

"With that information we can now make a determination on the cost impact for all electricity consumers in the province, from the VIGP project."

Meanwhile, the industry steering committee and other groups continue to express concern about Hydro's selection of a project relying on natural gas as fuel.

Natural gas has tripled in price since the Duke Point project was first announced in 2000, and there is a strong belief among market watchers that gas is no longer a cost-effective fuel for electricity generation.

The National Energy Board has been warning for two years that the maturation of the nation's gas patch, the Western Canada Sedimentary Basin means a permanent tightening of North American gas supplies.

In November, the Canadian Energy Research Institute described natural gas as "an unattractive option for baseload power" if gas prices remain high -- a scenario it portrayed as likely.

"That is consistent with our concern with respect to this project -- the vulnerability that ratepayers have in terms of their exposure to gas prices," Battison said.

JIESC wants the utilities commission to reject Duke Point.

© The Vancouver Sun 2005

Posted by Arthur Caldicott on January 04, 2005

December 31, 2004

Wind energy projects in BC

The GSX Concerned Citizens Coalition was asked about its opinion on offshore wind in BC. The response turned into a summary of wind in BC, and we felt was worth sharing.

One of GSXCCC's strong opinions is that we do not need gas-fired electricity generation on Vancouver Island. We believe that with a balanced approach to energy issues, including robust transmission links from the mainland, investment in efficiencies, conservation, and renewable energy technologies, especially wind, that Vancouver Island could become a global showcase for progressive sustainable energy solutions.

At GSXCCC, however, we have been focussed for five years now on fighting BC Hydro's fossil fuel "solution" for the island, and have never had the resources or opportunity to turn our attention to these better solutions.

In 2004, the BC Sustainable Energy Association was launched, to respond to that need for an organization whose purpose is to advocate for the sustainable energy vision. Check BC-SEA out at www.bcsea.org, and their wind section. BC-SEA has new chapters forming across British Columbia almost monthly.

Wind studies that have been done in BC have inconclusive findings. Some are exuberant at the potential, like the Helimax study.

The recently announced Canadian Wind Energy Atlas doesn't rank BC as high as Alberta, for example. That's misleading because BC has many spots with excellent wind potential, even if our winds may be more seasonal and gustier than Alberta's.

A poorer assessment of wind potential in BC is one done at considerable expense by BC Hydro a few years ago. Hydro did it in part as a sop to GSXCCC's opposition to the Vancouver Island gas projects. It extrapolated from known wind data to places miles from the data source, gave higher factors to mountain tops, and ignored shorelines and offshore - and in general was the modern equivalent of one of those unempirical maps of the world from the middle ages, where the cartographer (or in this case the computer) made it up when it didn't have any real information. BC Hydro has more (and better) info now at its Green Power site

There are four wind projects that we are aware of in BC:

1. The Holberg Wind project on the northwest coast of Vancouver Island, near Holberg, is the only wind project with a contract with BC Hydro. It has completed a review by the BC Environmental Assessment Office (EAO). It will be the first production wind site when it eventually gets built. Proposed at 58.5 MW, with 45 turbines. It is 50% owned by Stothert Power Corp of Vancouver and 50% by Global Renewable Energy Partners which is in turned owned by Vestas, which dominates the world's wind turbine business. EAO Company

2. The Sea Breeze Energy Knob Hill project, also on the north of Vancouver Island, has EAO approval, but has no customer. Until the Knob Hill project gets a contract with BC Hydro (or some other customer - unlikely, I think) it won't get built. It's 450 MW with 150 turbines - though by the time it gets built, the technology may have progressed considerably. Sea Breeze Power Corp (SBX on the TSE-Ventures Exchange) has a large presence in BC wind energy circles, but to date has no actual projects on the ground - like the other three listed here. EAO Company

3. A company called Nomis Power Corp has a new application into the EAO for the Nahwitti Wind Power project, again on the north of Vancouver Island. Interestingly, the contact for Nomis is Russ Hellberg, former mayor of Port Hardy, and a strong proponent of offshore oil and gas development. Starting at 50 MW and growing to 400 MW, the project expects to begin with 25 turbines. EAO

4. The Nai Kun Wind Farm, proposed off the northeast coast of Haida Gwaii, in Hecate Strait intersect, is the only offshore wind project that I am aware of. It's taking a long time to get moving, and has big challenges, but it is the most exciting of the four. It is large - 700 MW - and has a big additional expense getting power onto the grid. The proponent just announced an agreement with the Council of the Haida Nation - which brings the Haida in as an equity participant, allows the company to install wind and seabed testing equipment, and ensures that the project won't be encumbered by Aboriginal Title and Rights claims. It also has an application before the EAO. The company estimates 140 to 235 turbines. Nai Kun Wind Development is owned by Uniterre Resources (UNT on the TSE-V) EAO Company


Posted by Arthur Caldicott on December 31, 2004

December 30, 2004

BC Hydro to tweak Campbell River water flows

Grant Warkentin
Campbell River Mirror
29 December 2004

BC Hydro is determined to make a power plant at Duke Point part of its long-term plan to power Vancouver Island.

"It's a balance of green energy, Powersmart and Duke Point," Tom Veary of BC Hydro told council Monday night.

Veary said BC Hydro is banking that the latest incarnation of its plan to put a natural gas-fired power plant at Duke Point in Nanaimo will be accepted by the BC Utilities Commission in the new year. He said the plant, coupled with ongoing Powersmart programs and green energy projects, such as the wind farm proposed for Holberg, will help make sure there is enough electricity to keep the lights on in Vancouver Island homes.

Veary said the utility has the responsibility to make sure there will be enough power for Vancouver Island in three-four years, when supply and demand are estimated to be too close for comfort. Right now, 60 per cent of Vancouver Island's power supply comes from underwater cables linked to the Mainland. About 20 per cent comes from hydroelectric generation, such as the John Hart Dam near Campbell River, and about 10 per cent comes from the Island Cogeneration plant by the Elk Falls mill.

The Duke Point power plant would be similar to the Campbell River cogen plant, generating just over 250 megawatts of electricity.

Veary said that even if the Duke Point project, now proposed to be built by an Alberta company instead of BC Hydro, is rejected, BC Hydro will still be able to keep the Island powered.

"We will do it - it's just a matter of how we do it," Veary said, explaining that the utility has several contingency plans in place to make sure the Island's electricity supply is planned for, no matter what happens. That could include replacing sets of underwater cables, more Powersmart promotions and more green energy projects.

Veary was excited about the possibilities northern Vancouver Island holds for green power generation, from the Holberg wind farm to tidal power projects to micro-hydroelectric power generation.

He suggested that in a decade or two, Vancouver Island could possibly produce more power than it uses if it keeps on with green energy projects.

Veary said the utility plans to introduce programs to offset greenhouse gas emissions caused by projects such as the Duke Point power plant.

That could include planting more trees, incentives to help corporations become more efficient or offering credits and even cash for communities to dedicate green spaces as carbon sinks, areas permanently dedicated to absorbing greenhouse gas emissions and producing oxygen.

Near Campbell River, BC Hydro plans to tweak the way it generates power. A new water use plan, expected to receive final approval in March or April, details how BC Hydro should use the Campbell River water system to generate hydroelectric power at its three dams between Gold River and Campbell River.

The plan will slightly increase the water flows through the John Hart Dam, allowing the utility to generate a bit more electricity as well as make river access easier for fish.

The slightly increased flows will allow fish better access to the river system. BC Hydro also plans to increase flows in the Elk Canyon and plans to release water in pulses, to mimic the actions of a natural river.

Veary said flows at the dam could increase in the next couple of weeks - local reservoirs are at a higher level than normal for this time of year.

He said that's unusual, considering the dry summer kept reservoirs at lower levels than normal this summer and fall.

Posted by Arthur Caldicott on December 30, 2004

Alcan settles Enron claim with Powerex for $110M US

CBC Business News
29 Dec 2004

sqwalk.com
COMMENT: This rather complex arrangement between Alcan, BC Hydro/Powerex and Enron results in $110 million payment to Powerex from Alcan. Gee, what sunk costs might that offset? Or will it have to go to repayments to California?

More importantly, perhaps, is the announcement by Alcan that it intends to cancel the long term supply agreement with BC Hydro, effective 2009. This means 140 MW (approx 1200 GWh of electricity) of capacity that Alcan will no longer deliver to Powerex.

In its 2004 Integrated Electricity Plan, published in March 2004, BC Hydro says this of the Alcan deal: "BC Hydro assumes that these projects will continue to supply electricity upon the expiry of their current contracts." This now means that there will be 140 MW less capacity in BC Hydro's supply basket in 2009 than Hydro had been planning on.

This may have no impact in the current BC Utilities Commission review of BC Hydro's "VICFT-EPA" for Duke Point Power. On the other hand, perhaps BC Hydro will try to have it considered in the context of a "no award" outcome, with cable replacement in the 2008-2010 time frame. The logic there is that if Duke Point Power does not go ahead, the power shortfall would have to come from the mainland. This Alcan announcement means there will be 140 MW less available from the mainland in 2009 than previously planned on.

Could be that Alcan is just playing a negotiating strategy here, too. It has no forecast need for the power. Its recent actions in Kitimat seem to be to not add to aluminum production and to sell power. BC Hydro, notorious for its stonewalling or dysfunction with negotiations, may not get down to the short strokes with Alcan until the eleventh hour. And as we've seen before, it may take the BCUC or even the government, to force a resolution.

We must be vigilant, in the VICFT-EPA and in future BC Hydro antics, that it isn't the people of BC who get jerked around by the corporate agendas.—Arthur Caldicott
sqwalk.com

MONTREAL - Alcan Inc. announced Wednesday that it has paid $110 million US to Powerex, a subsidiary of B.C. Hydro, to settle a claim arising from the collapse of American energy trading company Enron.

Alcan said following the cancellation of its Kemano Completion generating project in northwestern B.C., it assigned to Enron Power Marketing Inc. the right and obligation to deliver specified volumes of electricity to Powerex.

When Enron went bankrupt in late 2001, Powerex filed a claim against Alcan and an arbitrator upheld the claim.

The company said it recorded a pre-tax charge of $100 million US in the fourth quarter of 2002. The remaining $10 million US will be charged to income in the fourth quarter of 2004.

Alcan terminating agreement with B.C. Hydro

Alcan also announced Wednesday that it has given B.C. Hydro five years notice that it will stop selling 140 megawatts of power to the utility under a long-term electricity purchase agreement.

The agreement, signed in 1990, gives Alcan the right to recall electricity for its own industrial purposes.

"In light of our recent experiences with low water levels in British Columbia and in consideration of our future potential industrial needs in British Columbia, Alcan is acting responsibly with regard to this initiative," said Cynthia Carroll, president of Alcan's primary metals group.

All energy deliveries under the agreement will end on Dec. 31, 2009.

Shares of Alcan closed down 22 cents at $58.91 on the TSX.

www.cbc.ca

Posted by Arthur Caldicott on December 30, 2004

December 29, 2004

Heroic efforts stopped GSX pipeline

Peter Ronald
Letter-to-the editor
Victoria Times Colonist
December 28, 2004

The heroic efforts of many dedicated volunteers received short shrift in your recent editorial on the GSX pipeline’s demise (“GSX idea floats away;’ Dec. 22). The project’s cancellation is indeed very good news, but for all of Vancouver Island and Gulf Islands residents.

Cobble Hill and the besieged marine environment of Boundary Pass and Satellite Channel will be spared another utility corridor and B.C. Hydro’s Vancouver Island overall gas strategy has been weakened.

The breadth of public opposition included hundreds of people who attended five days of hearings in Port Alberni, 900 people in two days at North Cowichan, three massive public meetings in Nanaimo, more in Campbell River — all opposed to gas-fired plants in their communities.

Hundreds more expressed their pipeline objections at National Energy Board and Federal Energy Regulatory Commission meetings, hearings, information and scoping sessions in Victoria, Sidney, the Gulf Islands, Whatcom and San Juan Counties.

Thanks are due to these many caring and courageous residents who read voluminous reports, prepared briefs, participated in regulatory hearings, signed petitions, donated money and otherwise organized to warn of the significant economic and environmental flaws of this project. Without this effort we would still be saddled with a bloated white elephant impeding other future energy options.

Increasingly expensive, locally polluting and greenhouse-gas-producing, natural gas is not a sustainable path for our Island’s energy future.

Peter Ronald, Director,
Georgia Strait Concerned Citizens Coalition
& Marine Habitat Program Co-ordinator,
Georgia Strait Alliance, Victoria.

Posted by Arthur Caldicott on December 29, 2004

December 22, 2004

BCUC panelist removed for apprehension of bias

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

For Immediate Release: December 22, 2004

BCUC panelist removed for apprehension of bias

VANCOUVER, BC-The Georgia Strait Crossing Concerned Citizens Coalition (GSXCCC) today brought forward motions charging that a perception of bias exists among the members of the British Columbia Utilities Commission (BCUC) panel that is preparing to review the BC Hydro-Duke Point Power natural gas plant electricity price agreement (EPA).

Coalition lawyer William Andrews asserted that member Murray Birch should not be sitting on the panel because of his current position as president of Alliance Pipeline Ltd., a major player in the natural gas pipeline sector. After a mid-day recess, the panel returned to announce Mr. Birch would no longer serve on the panel.

"A reasonable person cannot be expected to accept that the president of a major natural gas company could be impartial in considering a project of this size and importance to his industry," argued Andrews. "If it's okay for the member to sit on this panel then the conclusion would be that it's okay for the natural gas industry to regulate B.C. Hydro. The issue is fundamental to fairness and the public's confidence in the regulatory process."

In a second motion, GSXCCC challenged the behaviour of panel chairman Robert Hobbs who appeared to have made a decision regarding Mr. Birch's participation before allowing any input from the intervenors. The panel dismissed this application.

"Apprehension of bias is not conflict of interest; we are not alleging wrong doing," said Tom Hackney, GSXCCC president. "The critical point is that justice must be seen to be done in proceedings that affect the interests of the people of this province. The public must have confidence in the people and the processes that are determining our energy future."

The panel is conducting a pre-hearing conference in preparation for next month's hearing into the electricity purchase agreement (EPA) recently filed by BC Hydro and Pristine Power, the company proposing the Duke Point Power Partnership natural gas fired electrical generation plant at Nanaimo.

With Mr. Birch gone, Commissioner Hobbs and Commissioner Boychuk will continue to consider pre-hearing motions, including the question of whether the terms of the EPA should be kept secret or not. So far BC Hydro has refused to reveal the price it has committed to pay for electricity from the proposed gas plant. Hydro has also refused to reveal most of the other details of the contract.

- 30 -

For more information contact: Peter Ronald (250) 616-7895 (cell)

GSX CCC news release

Hearing Transcript Volume 4 - Pre-hearing Conference-December 22

BC Hydro VICFT - Electricity Purchase Agreement

Posted by Arthur Caldicott on December 22, 2004

December 21, 2004

News coverage of GSX cancellation

Scott Simpson, Vancouver Sun, 21 Dec 2004
Andrew Duffy, Times-Colonist, 21 Dec 2004
Aubrey Cohen, Bellingham Herald, 21 Dec 2004
The Province, 21 Dec 2004
Globe and Mail, 21 Dec 2004
Steve Mertl, National Post, 21 Dec 2004
Robert Barron, Nanaimo Daily News, 21 Dec 2004
Editorial, Times-Colonist, 22 Dec 2004
Aaron Bichard, Cowichan News Leader, 22 Dec 2004
Andrea Rondeau, Cowichan Valley Citizen, 22 Dec 2004
Ladysmith Chronicle, 28 Dec 2004
Grant Warkentin, Campbell River Mirror, 29 Dec 2004


BC Hydro kills pipeline to Island
Despite $50 million spent, gas prices make project uneconomical

Scott Simpson
Vancouver Sun
21 Dec 2004

BC Hydro abandoned its plans for a $340-million gas pipeline to Vancouver Island on Monday, saying rising natural gas prices have made the controversial project uneconomic.

Hydro has already spent $50 million on preparations for the Georgia Strait Crossing (GSX) project, including a drawn-out hearing before the National Energy Board that attracted a swarm of community, environmental and aboriginal groups who were strongly opposed.

Abortive decisions associated with the foundering GSX megaproject have cost Hydro ratepayers -- and B.C. taxpayers -- $120 million this year.

Hydro generation executive vice-president Dawn Farrell said the Crown corporation now believes Vancouver Island energy needs are best served by adding new electrical transmission lines from the mainland, and by gas deliveries from an existing Terasen pipeline between the mainland and the Island.

The 16-kilometre marine crossing from Sumas, Wash., to Duncan, was conceived as part of a $760-million megaproject that included construction of a series of gas-fired thermal generating plants on Vancouver Island.

Hydro was developing GSX in partnership with Williams Co., an Oklahoma-based energy company, but Hydro will absorb all costs associated with the project.

"The original GSX project was anticipating that there would be a number of gas plants built on the Island to support the growth of loads on the Island, and that there would also be growth of [gas-fired] plants on the mainland side," Farrell said.

"In combination, all those gas plants would require a fairly big pipe. That demand has not materialized."

The price of natural gas has effectively tripled since the GSX project was announced in March 2000.

Farrell said the project "no longer made economic sense."

She said it was cheaper for Hydro to abandon the project than to carry it through.

"In the short run and the long run, stepping away from it -- even after paying the $50 million -- will be less expensive for ratepayers," Farrell said.

In November, Hydro announced it would absorb $70 million in costs associated with its failed bid to build a gas-fired generating plant at Duke Point near Nanaimo.

That project was rejected by the B.C. Utilities Commission after Hydro had already spent $120 million on studies and equipment.

The commission said Hydro, as a public institution, could not carry through with Duke Point and instead had to transfer the costs and risks of new electricity infrastructure projects to the private sector.

The Duke Point project has rematerialized as a private sector project supported by Hydro, but the Crown corporation is only getting back $50 million of its original expenditures.

Farrell said electricity rates will not be affected by the decision.

Energy lawyer David Austin called GSX a "financial boondoggle" that shows all Hydro projects should be subject to a detailed cost accounting before they proceed "and become a 120-car train wreck."

"BC Hydro should not be allowed to pursue any similar projects unless it does a full, public analysis before spending any more large sums of money," Austin said.

Members of a Vancouver Island residents' coalition that opposed the project are "jubilant" about Monday's decision.

"Our group certainly didn't want a pipeline going through its backyard, but having learned more about Hydro's broader electricity strategy, we also were not happy with the idea of simply committing the Island to a fossil-fuel electricity future," said Tom Hackney, president of the GSX Concerned Citizens Coalition.

"It looks as if gas prices and the price calculations have validated our concerns."

The coalition and other groups, including Hydro's major industrial customers, continue to argue against construction of the Duke Point plant, calling it too expensive.

The B.C. Utilities Commission is expected to stage a hearing in January at which those concerns will be aired.

"We're happy to see that GSX project cancelled," said Brian Battison, spokesman for the Mining Association of B.C.

"We think that's the right decision. The next decision they should make is to cancel the Duke Point project. That would be a wise decision to cancel that very questionable project."

Existing electrical transmission lines that run from Tsawwassen to the Island are expected to be at the end of their useful life by 2006 and will be replaced.

Terasen, meanwhile, has a proposal before the B.C. Utilities Commission to push more gas through its existing gas pipeline to the Island, rendering the GSX pipeline redundant.

© The Vancouver Sun 2004

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Pipeline to Island scrapped

Andrew A. Duffy
Times Colonist; with files from Canadian Press
21 Dec 2004

B.C. Hydro and its U.S. partner, Williams Gas Pipelines, announced Monday they are scrapping the proposed $340 million Georgia Strait Crossing pipeline.

The GSX was to provide gas-fired electricity generation on Vancouver Island, but has been dropped because it's too expensive and no longer fits the Island's energy needs.

A coalition of opponents that had long argued the project didn't make economic or environmental sense is "thrilled beyond words," said Peter Ronald, director with the GSX Concerned Citizens Coalition.

"It's been nearly five years of unsupported hard work by the grass roots community."

Despite having spent $50 million over four years to get the GSX through regulatory hearings, Hydro officials said Monday the GSX is no longer a competitive supply option as the number of gas-fired plants needed on the Island never materialized.

"It's quite a large pipeline, and required a lot of gas plants being built in the future to have it make economic sense," said Dawn Farrell, Hydro's executive vice president for generation.

The project was designed on the assumption that Vancouver Island, with a population of about 640,000, would have three gas-fired generating stations, but so far only one has been built and a second has stumbled through the regulatory approval process.

Hydro is also exploring options with Terasen, which has existing facilities and a pipeline to the Island, for ways to deal with peak demand.

The GSX was a 136-kilometre pipeline that was to begin at the Huntington-Sumas trading hub, travel 53 kilometres across Washington state to Cherry Point, 67 kilometres across Georgia Strait and then 16 kilometres on Vancouver Island to connect with the existing Terasen Gas pipeline at Shawnigan Lake.

The gas was to be used to fuel a proposed $370 million 265-megawatt Vancouver Island Generation Project at Duke Point in Nanaimo and the existing 240-megawatt generation plant at Campbell River.

But the VIGP was killed by the B.C. Utilities Commission for being too large and expensive given the Island's energy needs.

That prompted Hydro to issue a call for tenders to find on-Island generation.

Last month Hydro announced Duke Point Power Ltd., a wholly owned subsidiary of Macquarie Essential Assets, Pristine Power and a group of private investors, was the successful bidder to provide Vancouver Island with a new source of electricity.

Their project is a 252 megawatt, gas-fired power plant to be built at Duke Point for $280 million. It will be reviewed by the BCUC next year.

How it will be fueled has yet to be determined.

Hydro has already said it would prefer to use a proposal from Terasen -- seen as much cheaper -- to increase gas supply to the Island as the means to fuels the plant.

And Farrell says that's one of the reasons the GSX was killed, despite the fact it provided a fall-back plan to bring fuel for the project.

"This takes the GSX off the table as an issue," she said of it being brought up and compared during Terasen's BCUC hearings.

Hydro hopes to sit down with Terasen over the next few months to discuss options.

"This is something that we think bodes well for the future, for ourselves, for B.C. Hydro and for our customers on Vancouver Island," Terasen spokesman Dean Pelkey told the Canadian Press

"We've said all along that we believe we can provide natural gas to B.C. Hydro for this project. I think what we're seeing now is they are coming around to agreeing with us.

© Times Colonist (Victoria) 2004

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Natural-gas pipeline scrapped

Aubrey Cohen
The Bellingham Herald
21 Dec 2004

BC Hydro to seek alternative to county line

A proposed natural-gas pipeline from Sumas to Vancouver Island will not be built, Williams Pipeline Co. and BC Hydro announced Monday.

The two companies went public in 1999 with plans for a $209 million pipeline to serve three planned power plants on Vancouver Island. The line would have run 33 miles from Sumas to Cherry Point, then under the Georgia Strait.

One of those plants is unlikely to be built, and there are cheaper alternatives to serve the others, BC Hydro spokesman Stephen Bruyneel said. BC Hydro officials also thought the pipeline could serve another power plant on the British Columbia Lower Mainland, but that did not happen.

The decision to build the pipeline had been on hold since September 2003 pending a review of energy needs on Vancouver Island, Williams said in a statement. Bruyneel said the utility wrote off the $34 million spent on the project against last year's earnings.

Opponents of the pipeline, who had raised a variety of environmental concerns, celebrated Monday's news.

"Ding dong the witch is dead," said Fred Felleman, president of Fuel Safe Washington.

It was obvious from the start that there were cheaper and less damaging alternatives, such as pressurizing an existing pipeline, Felleman said. "Why were we put through this process in the first place?"

North Sound Baykeeper Wendy Steffensen agreed.

"There were several alternatives that appeared cheaper and less environmentally degrading and they all went through Canada," she said.

Point Whitehorn resident Eliana Steele-Friedlob said she also was pleased.

"It's not that we're against energy. We all need gas and oil," she said. "It's just that we have to be careful about how these projects are designed and who they benefit."

Steele-Friedlob worried that Williams might try to pursue some sort of pipeline within the United States and noted that the company had bought rights-of-way through the county. Williams spokeswoman Beverly Chipman said BC Hydro owns the rights-of-way, and Bruyneel said BC Hydro officials did not yet know what they would do with them.

The pipeline had federal approvals in the United States and Canada. Federal courts were considering an appeal of a U.S. Federal Energy Regulatory Commission ruling, which said that Washington state and Whatcom County waived jurisdiction in the matter by missing review deadlines.

Reach Aubrey Cohen at aubrey.cohen@bellinghamherald.com or 715-2289.

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Hydro pulls the plug on Georgia Strait Crossing project

The Province
21 Dec 2004

Gas demand pipeline designed to satisfy just not there, say project partners
B.C. Hydro and its U.S. partner Williams Gas Pipelines have scrapped a $340-million line to Vancouver Island after concluding the customer base wasn't there.

The Georgia Strait Crossing, or GSX, project, proposed in 2000, was to bolster supply for Williams' customers in northwestern Washington and feed gas-fired electricity generation facilities on Vancouver Island.

But Hydro concluded the large gas requirements that GSX was supposed to feed have not materialized, said Dawn Farrell, the Crown corporation's executive vice-president for generation.

The pipeline would have stretched about 60 kilometres from a point on the Canada-U.S. border to an existing pipeline south of Duncan, on Vancouver Island.

The project was designed on the assumption that Vancouver Island, with a population of about 640,000, would have three gas-fired generating stations. But so far only one has been built and a second has stumbled through the regulatory approval process.

Hydro's share of the pipeline's planning costs was $50 million, which it wrote off its books last year. Farrell said Hydro is pursuing alternatives to supplying Vancouver Island to help cover peak winter demand.

They include boosting power transmission from the B.C. mainland and working with Terasen Inc. to supply Hydro's proposed Duke Point power project near Nanaimo through Terasen's existing line to the island.

But the B.C. Utilities Commission rejected Hydro's initial proposal for Duke Point in September 2003, telling it to look for a cheaper alternative. Hydro put out a call for private-sector proposals and last month settled on one by a consortium of investors led by Pristine Power Inc. of Calgary.

The $280-million proposal for a smaller plant now must go through another commission hearing, scheduled to begin next month.

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B.C. Hydro puts clamp on natural gas pipeline

Globe and Mail
21 Dec 2004


Vancouver -- British Columbia Hydro and Power Authority and Williams Gas Pipelines, a unit of Williams Cos. Inc., announced yesterday they are cancelling a $340-million natural gas pipeline to Vancouver Island. The Georgia Strait Crossing (GSX) project, proposed in 2000, was to bolster supply for Williams' U.S. customers and feed gas-fired electricity generation facilities on Vancouver Island. "A large capacity pipeline like GSX is no longer a competitive supply option because the large gas supply requirements it was designed to meet have not materialized," B.C. Hydro spokeswoman Dawn Farrell said in a release. The line was predicated on the building of three thermal-electric plants on Vancouver Island. Only one, ICP, has been built so far and a second, the Duke Point facility near Nanaimo, is working its way through the regulatory process. WMB (NYSE) rose 12 cents to $16.37. CP

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B.C. Hydro, Williams cancel $340-million GSX gas pipeline to Vancouver Island

Steve Mertl
Canadian Press
12 Dec 2004

VANCOUVER (CP) - B.C. Hydro and its U.S. partner Williams Gas Pipelines have scrapped a $340-million line to Vancouver Island after concluding the customer base wasn't there.

The Georgia Strait Crossing, or GSX, project, proposed in 2000, was to bolster supply for Williams' customers in northwestern Washington and feed gas-fired electricity generation facilities on Vancouver Island. But Hydro concluded the large gas requirements that GSX was supposed to feed have not materialized, said Dawn Farrell, the Crown corporation's executive vice-president for generation.

The pipeline would have stretched about 60 kilometres from a point on the Canada-United States border, east of Saturna Island, B.C., to an existing pipeline south of Duncan, on Vancouver Island.

The project was designed on the assumption that Vancouver Island, with a population of about 640,000, would have three gas-fired generating stations, Farrell said in an interview.

But so far only one has been built and a second has stumbled through the regulatory approval process.

"In order for the pipeline to be required, you'd have to have a third plant on the island, plus some more requirements for gas supply here on the Lower Mainland," said Farrell.

"We don't foresee that in the short term. So what we've determined is the pipeline is no longer a competitive supply option for getting gas to those plants."

Williams spokeswoman Beverly Chipman said the cancellation poses no problems for the company. Williams did not have any customers signed up for the proposed line and will look at alternatives to meet future demand in northwestern Washington.

Farrell said Hydro is pursuing alternatives to supplying Vancouver Island to help cover peak winter demand.

They include boosting power transmission from the B.C. mainland and working with Terasen Inc. (TSX:TER) to supply Hydro's proposed Duke Point power project near Nanaimo through Terasen's existing line to the island.

"This is something that we think bodes well for the future, for ourselves, for B.C. Hydro and for our customers on Vancouver Island," Terasen spokesman Dean Pelkey said in an interview.

"We've said all along that we believe we can provide natural gas to B.C. Hydro for this project. I think what we're seeing now is they are coming around to agreeing with us."

Farrell said concerns about economic growth were not behind the GSX project's cancellation.

"In fact economic growth is taking place in B.C.," she said. "Our loads are growing quite well. It's more, what is the lowest-cost way to serve those loads?

"Right now with gas prices being higher, we're looking at a number of other supply options."

The issue of supplying gas and electricity to Vancouver Island has been problematic for years.

Hydro's Island Cogeneration Plant was built in Campbell River after residents of Port Alberni opposed it for environmental reasons.

Terasen now is locating a liquified natural gas storage facility at Port Alberni to supply fuel to meet cold-weather demand.

Pelkey said it could also play a role in supplying the Duke Point power project, if it is built. Terasen would also add compressor stations to its existing line to the island to ensure an adequate supply, he said.

"Now it's a question of us and them sitting down together and coming to some kind of agreement," he said.

Farrell said discussions on Terasen's proposed options should take place over the next couple of months.

But the Duke Point project has had problems of its own.

The B.C. Utilities Commission rejected Hydro's initial proposal in September 2003, telling it to look for a cheaper alternative.

Hydro put out a call for private-sector proposals and last month settled on one by a consortium of investors led by Pristine Power Inc. of Calgary.

The $280-million proposal for a 252-megawatt plant - down from Hydro's 265-megawatt project - now must go through another commission hearing, scheduled to begin next month.

The revamped Duke Point project is still opposed by major B.C. industrial power users who say it's little different from Hydro's original plan and will boost electricity rates to all B.C. customers by three per cent.

"We're glad (the GSX pipeline) was cancelled," said Brian Battison of the Joint Industry Electricity Steering Committee. "This project should also be cancelled."

Duke Point essentially would provide expensive power for peak-load periods, demand that could be met using existing transmission lines from the mainland and through industrial load management, he said.

Hydro's new lines to Vancouver Island are scheduled to go into service in 2008, one year after Duke Point is supposed to come on stream, said Battison.

"So this is an expensive project for a one-year gap when you can fill that gap through other means," he said.

© The Canadian Press 2004

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GSX idea floats away

Editorial
Times-Colonist
22 Dec 2004

Five years after the initial announcement stirred the waters, the controversial Georgia Strait Crossing pipeline has died — officially, at least with barely a sound.

B.C. Hydro and Williams Gas Pipelines of Salt Lake City said this week that they were scrapping their plan for a $340-million line linking the mainland to Vancouver Island. The customer base wasn’t there, they said.

The project, known as GSX, was unveiled in September 1999. The theory was that GSX would provide the raw material for two co-generation power plants on the Island, and help to ensure that our supply of electricity would remain stable for decades.

The initial plan called for the pipeline to be in operation by 2002, but that proved to be optimistic. The last scheduled completion date was in October 2005, but there was no way the companies could have made it they had already missed several interim targets this year.

Only one gas-fired power plant has been built on the Island, and another has faced major hurdles getting through the regulatory process.

Those plants will rely on gas provided by Terasen Inc., which owns the natural gas pipeline built at the north end of the strait 14 years ago.

The GSX pipeline would have stretched from the Sumas area in Washington State to the strait, passed the Gulf and San Juan islands and connected with the existing pipeline near Duncan.

The cancellation is good news for many residents in the Cobble Hill area, who would have been directly affected by the construction work on the Island, and by the risk of something going wrong.

In the long term, though, we shouldn’t be surprised if we hear of other proposals that could be just as controversial. The population of the Island continues to rise, and the increased use of technology means our demand for electricity is rising faster than people are moving here.

Even after the Duke Point plant starts producing power, and after the new hydro lines from the mainland are completed in 2008, it will just be a matter of time before there are calls for more sources of energy.

So while GSX is dead, don’t kid yourself — the debate over new power sources is only sleeping.

This editorial triggered a letter to the editor from GSX Concerned Citizens Coalition director Peter Ronald: Heroic efforts stopped GSX Pipeline

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Hydro cancels pipeline plan

Robert Barron
Daily News
21 Dec 2004


The proposal for a $340-million Georgia Strait Crossing natural gas pipeline proposal was taken off the table Monday after B.C. Hydro determined there are now lower cost options available.

Ted Olynyk, a Hydro spokesman, said the large supplies of natural gas that were originally thought to be required to meet Vancouver Island’s growing energy needs “never materialized.”

“One reason for this is Campbell River’s Island Cogeneration Plant has switched from using only natural gas and now has the capability of switching back and forth with diesel,” he said.

“As well, Terasen Gas’ Resource Plan lessens the need for the GSX pipeline.”

Terasen has plans for a natural gas storage facility, which would be fed with its own cross-strait gas lines, in south Nanaimo which would help supply the proposed gas-fired electrical generation plant at Duke Point and other needs,

The 136-kilometre GSX gas line project proposal, by B.C. Hydro and Utah-based Williams Gas Pipeline, from Sumas, Washington, to Vancouver Island was intended to help meet the gas requirements of the Island Cogeneration Plant, the proposed Duke Point power plant and a possible third plant on the Island.

Olynyk said about $50-million has already been spent on the GSX project in research, regulatory work, environmental studies and other costs, and Hydro intends to take a provision against its 2004 fiscal income to cover the amount.

B.C. Hydro’s proposal for a $370-million 265-megawatt gas-fired electrical generation plant Duke Point was not given the green light by the B.C. Utilities Commission last year after the BCUC determined Hydro had failed to prove it was the least costly means to fill the Island’s energy needs.

However, the BCUC encouraged Hydro to seek proposals from the private sector.

Last month, after a Call for Tender process, Hydro announced it intends to enter into a purchase agreement with Alberta’s Pristine Power, who intend to privately build a 252-megawatt plant at the same location, if BCUC approval is given.

Terasen Gas and storage facility

Plans by Terasen Gas to build a $100-million liquefied natural gas storage facility, capable of holding one-billion cubic feet of natural gas, near Timberlands Road are also before the BCUC.

Hearings into Terasen’s proposal are expected to reconvene when the BCUC makes a final decision on the Duke Point plant.

If the BCUC denies the Duke Point power plant proposal a certificate of public convenience and necessity, the justification for Terasen’s project would then be challenged as the Duke Point plant is part of the mix in its resource plan.

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Locals rejoice as Hydro finally crosses out GSX

Aaron Bichard
Cowichan News Leader
22 Dec 2004

Steve Miller, vice-president of the GSX Concerned Citizens Coalition, received an early Christmas present Monday when BC Hydro announced the official scrapping of the $340-million plan to pipe natural gas across the water.

The company said due to the failure of anticipated supply requirements to materialize, the Georgia Strait Crossing pipeline is no longer the most cost-effective way to deliver energy to Vancouver Island.

"When I heard, I felt like jumping up and down for joy, but then I realized we are not out of the woods yet," Miller said. "They are backing out on their massive gas strategy but it does not mean they are not going to still use gas to produce energy.

"We are now going to fight the Duke Point plant."

BC Hydro had been moving ahead with the GSX since 2000, spending $50 million on engineering studies, plans and research to get the project going.
"We need a firm supply by 2007 and natural gas is a firm, dependable supply," Hydro spokesperson Ted Olynyk said. "But as soon as we realized there were alternative solutions at lower costs we cancelled this project and will go with Terasen's alternatives."

Part of the solution is to rely on Campbell River's duel fuel Island Co-generation Plant, as well as to utilize the proposed Duke Point Power Project and Terasen's Ladysmith storage facility. A possible third site is also being considered on Vancouver Island.

"The cost savings come in the alternative ways to provide the gas," Olynyk said. "Our goal is to provide services for low costs."

Miller said the four-year fight was a good example of concerned citizens forcing change.

"We, the people, were able to delay them long enough for the cavalry to arrive and in this case the cavalry was time," he said. "It was long enough for them to realize the demands they were basing their plans on weren't going to become a reality.

"Now local farmers can rest easy."

The GSXCCC opposed the pipeline because members didn't want it buried in their neighbourhood.

Miller and his group also believe there are more environmentally sound and cost-effective alternatives to natural gas and are going to continue trying to stop the Nanaimo project from moving forward.

Hydro is aiming to have new cables laid across the Strait as early as 2008 but is going to continue pursuing natural gas as a means to deliver low cost energy.

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Hydro cancels GSX

Andrea Rondeau
Cowichan Valley Citizen
22 Dec 2004



Click for larger image

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Hydro scraps Island pipeline

Ladysmith Chronicle
28 December 2004

Terasen's proposal to build a liquified natural gas storage tank north of Ladysmith is one step closer to regulatory approval, with BC Hydro and its American partner, Williams Gas Pipelines, announcing last week they are scrapping the Georgia Strait Crossing (GSX) pipeline.

The pipeline was a complicating factor in ongoing hearings into Terasen's project by the BC Utilities Commission (BCUC), which must approve the storage facility before construction can go ahead.

Key to the commission's decision is who would supply gas for a proposed 252-megawatt, gas-fired power plant at Duke Point, awarded to Duke Point Power Ltd. last month in Nanaimo.

The BCUC is expected to approve or reject the plant next year. The GSX pipeline project, worth an estimated $340 million, was to begin at Sumas, Washington and run 67 kilometres under the Strait of Georgia to connect with the existing Terasen pipeline at Shawnigan Lake. The gas was to help fuel the existing 240-megawatt generation plant at Campbell River, as well as the proposed $370 million, 265-megawatt Vancouver Island Generation Project at Duke Point. The latter was rejected last year by the BCUC for being too large and too costly.

Hydro spokesperson Dawn Farrell said the large gas requirements the GSX pipeline was designed to meet have not materialized, thus defeating the rationalization for the project.

"There are lower cost alternatives to meet these gas requirements which, together with the fuel switching capability [from gas to diesel] now available at the Island Cogeneration Plant in Campbell River, means there can be enough reliable gas supply on the Island to meet required demands without GSX," Farrell said in a release.

The decision to kill the pipeline eliminates a potential roadblock in the approvals process for both the Terasen and the Duke Point projects, said Farrell.

"Cancelling the project now will stop all further expenditures on the project and also eliminates it as an issue," she said. Hydro had spent an estimated $50 million on the GSX project in research, environmental studies and other related costs.

A Terasen Gas spokesman told Canadian Press last week the cancellation of GSX bodes well for the company's future, its customers on Vancouver Island, and BC Hydro.

"We've said all along that we believe we can provide natural gas to BC Hydro for this project," said Dean Pelkey. "I think what we're seeing now is they are coming around to agreeing with us."

Hydro plans to meet with Terasen over the next few months to discuss options.

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Cogen plant impacts decision

Grant Warkentin
Campbell River Mirror
29 December 2004

Campbell River's Island Cogeneration plant was a major factor in BC Hydro's decision last week to scrap a $340 million natural gas pipeline to Vancouver Island.

"The Island cogeneration plant now has dual fuel-switching capabilities which lessened the load for natural gas supply during peak demand for natural gas supply on Vancouver Island. That was a big help," said Ted Olynyk, BC Hydro's spokesperson in Nanaimo. "That obviously had a big play in consideration for cancelling GSX (the Georgia Strait Crossing pipeline). That, coupled with Terasen's proposal, made GSX no longer competitive as a supply of natural gas on Vancouver Island."

Curtis Mahoney, manager of the cogen plant located next to NorskeCanada's Elk Falls mill, said the plant added its capability last year to burn two types of fuel to produce electricity. "Last summer we had a major overhaul and after that we had the commissioning of that process," he said.

The plant primarily burns natural gas to generate up to 250 megawatts of electricity. It can also burn distillate, a form of diesel fuel, as a backup during peak demand for natural gas. Dawn Farrell, executive vice-president of generation for BC Hydro, said there was not enough demand to justify building the pipeline, which would have connected Vancouver Island with Washington State. The project was a partnership between BC Hydro and Williams Gas Pipelines.

"A large-capacity pipeline like GSX is no longer a competitive supply option because the large gas supply requirements it was designed to meet have not materialized," she said. "There are other, low-cost alternatives to meet these gas requirements which, together with the fuel-switching capability now available at the Island Cogeneration plant in Campbell River, means there can be enough reliable natural gas supply on the island to meet required demands without GSX."

BC Hydro's original plan was to construct three natural gas-fired power plants on Vancouver Island and connect them with the natural gas pipeline. Only one cogen plant was ever built, located in Campbell River as a second choice because Port Alberni residents opposed the plant for environmental reasons.

The Georgia Strait Crossing pipeline has been opposed since it was first proposed in 2000. The GSX Concerned Citizens Coalition celebrated BC Hydro's decision and said they would now like to see the utility halt its plans to build a natural gas-fired power plant at Duke Point in Nanaimo.

"Over-sized and over-priced, GSX was doomed from the start," said Arthur Caldicott, director of the citizens' coalition. "So many people on Vancouver Island, the Gulf Islands, the Lower Mainland and Washington State have fought long and hard against the pipeline project and they all deserve credit for this great victory today."

Dodie Miller, a director with the citizens' coalition, said BC Hydro has always overestimated Vancouver Island's power needs.

"Now that Hydro has acknowledged the pipeline was misguided, it is time to re-examine the need for Duke Point," Miller said. "This project is not the least-cost option because gas-generated electricity is no longer cheap, and it is time BC Hydro recognized this."

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Posted by Arthur Caldicott on December 21, 2004

December 20, 2004

Lights finally go out on GSX Pipeline

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

For Immediate Release: December 20, 2004

Lights finally go out on GSX Pipeline

Victoria, BC-BC Hydro & Williams Gas Pipeline announced earlier today that their GSX pipeline project is finally well and truly dead. The need for natural gas on Vancouver Island was overestimated and less expensive and less damaging alternatives are available. The same economic and environmental arguments should now help cancel the proposed Duke Point Power gas plant in Nanaimo, according to the GSX Concerned Citizens Coalition (GSXCCC).

"BC Hydro recognized their mistake and has had the courage to admit it," said GSXCCC president Tom Hackney. "We trust they will now move as quickly as possible to renew the sub-sea cable system to Vancouver Island, which should have been the priority all along."

However, GSX was only one part of the BC Hydro's gas strategy for Vancouver Island. The crown corporation still intends to go ahead with the Duke Point gas plant, an expensive and polluting long-term solution to a short-term energy supply problem.

"BC Hydro consistently overestimates Vancouver Island's future energy demand," said Dodie Miller, a director of GSXCCC. "Now that Hydro has acknowledged the pipeline was misguided, it is time to re-examine the need for Duke Point. This project is not the least-cost option because gas-generated electricity is no longer cheap, and it is time BC Hydro recognized this."

Cost effective solutions to meet the Island's short-term energy needs are available: Norske and other large industrial users have offered to take action to compensate for the theoretical brief periods of time, estimated at a few hours per day over a week at most in the winter of 2007/08, when equipment failure could potentially cause a power shortfall.

"Over-sized and over-priced, GSX was doomed from the start," said GSXCCC director Arthur Caldicott. "So many people on Vancouver Island, the Gulf Islands, the Lower Mainland and Washington State have fought long and hard against the pipeline project and they all deserve credit for this great victory today."

The GSX Concerned Citizens Coalition has campaigned since 2000 against BC Hydro's gas strategy for Vancouver Island. The Coalition has a hundred individual members and eight member groups, including the Sierra Club of Canada - BC Chapter, Georgia Strait Alliance; Council of Canadians - Victoria and Cowichan Chapters, Saturna Island Community Club, Pender Island Conservancy Association, Shawnigan Lake Watershed Watch and the Canadian Parks And Wilderness Society - BC.

- 30 -


For further information, contact:
Tom Hackney (250) 381-4463
Arthur Caldicott (250) 370-9930 x.22

Download news release

Posted by Arthur Caldicott on December 20, 2004

GSX Pipeline Project Cancelled

BC Hydro news release
Williams news release


Proposed GSX Pipeline Project Cancelled

December 20, 2004

Other Options More Cost Effective at Ensuring Reliable Supply for Vancouver Island

PROVINCE-WIDE – BC Hydro and Williams have today announced the cancellation of the Georgia Strait Crossing (GSX) pipeline project. The $340 million natural gas pipeline had been proposed by the two companies in 2000 as the best way to meet the demand for gas transportation along its United States route and to natural-gas fired electricity generation facilities on Vancouver Island.

"A large capacity pipeline like GSX is no longer a competitive supply option because the large gas supply requirements it was designed to meet have not materialised," said Dawn Farrell, Executive Vice President, Generation. "There are other lower cost alternatives to meet these gas requirements which, together with the fuel switching capability now available at the Island Cogeneration Plant (ICP) in Campbell River, means there can be enough reliable natural gas supply on the Island to meet required demands without GSX."

"Cancelling the project now will stop all further expenditures on the project and also eliminate it as an issue in ongoing regulatory processes relating to Terasen and the Duke Point Power Project."

In April 1998, BC Hydro sought private sector proposals to help it meet the natural gas requirements for ICP, a proposed natural gas fired (then to be situated in Port Alberni) and a possible third facility somewhere else on Vancouver Island. BC Gas (now Terasen), Centra/ West Energy and Williams Gas Pipelines submitted proposals. Williams' proposal was deemed the most cost effective at that time.

"Our goal now remains the same as it was when we starting looking at GSX – to ensure the lowest cost, most reliable electricity for our customers on Vancouver Island," added Farrell. "There are a range of lower cost alternatives to GSX, including a number with Terasen. These will ensure that on-Island electricity generating facilities – including the proposed Duke Power Project in Nanaimo – have enough natural gas supply to maintain their firm reliable supply of electricity for our customers even during the most critical winter months."

Contact:
Stephen Bruyneel
BC Hydro
Phone: (604) 623-4344

Beverly Chipman
Williams
Phone: (801) 584-7048

BC Hydro news release


Williams Announces End to Proposed Georgia Strait Project

December 20, 2004

TULSA, Okla. — A unit of Williams (NYSE:WMB) announced today an agreement to discontinue development of the Georgia Strait Crossing pipeline project.
Williams Gas Pipeline and British Columbia Hydro and Power Authority – co-sponsors of the project – have mutually agreed to end plans to construct a $209 million natural gas pipeline across the Strait of Georgia to serve electric generation facilities on Vancouver Island, B.C.

Project development costs, estimated at approximately $34 million, were funded by BC Hydro. Under the terms of the agreement with Williams, BC Hydro assumes full responsibility for all project costs.

The decision on whether the project would proceed has been on hold since September 2003 pending a regulatory review of energy needs on Vancouver Island.

As a result of the Canadian regulatory process, BC Hydro has decided to pursue other alternatives to meet short-term energy needs and will move forward with plans to replace aging electric transmission cables.

“In light of BC Hydro’s decision to pursue other alternatives, we agree that it is time to terminate the project,” said Allison Bridges, vice president of commercial operations for Williams Northwest Pipeline. “When it was originally proposed, this was a viable alternative for supplying Vancouver Island’s long term energy needs, and we believe it also held long term, cost-effective options for future industrial development in western Washington.”

The 84-mile pipeline project received a FERC certificate in September 2002 and similar approval from the National Energy Board of Canada in December 2003.

About Williams (NYSE:WMB)
Williams, through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. The company also manages a wholesale power business. Williams’ operations are concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast, Southern California and Eastern Seaboard. More information is available at www.williams.com.

------------------------
Contact Information:
Beverly Chipman Williams Media Relations 801-584-7048
Courtney Baugher Williams Investor Relations 918-573-5768

Williams news release

Posted by Arthur Caldicott on December 20, 2004

December 17, 2004

The Bottom Line

Dr. Patrick Moore
The Province
17 Dec 2004

sqwalk.com
COMMENT: What a wierd article, this piece by Patrick Moore.

The first sentence talks about renewable potential in geothermal, wind and biomass. That's the come-on, like calling your band Bare Naked Ladies.

The second sentence says we should offset some of the costs of implementing these renewables with revenues from oil and gas.

The rest of the article is a promotion of offshore drilling . The comparison fails here because the BNL do make great music, though they wear clothes and aren't ladies at all.

BC's windfall revenues from existing terrestrial drilling license sales and gas production royalties are already an opportunity to build up the fund that Dr. Moore champions. This fund is in fact one step recommended in "Oil and Gas in British Columbia, 10 Steps to Responsible Development", a set of policy recommendations proposed in 2004 by Dogwood Initiative, West Coast Environmental Law and other organizations.

The first two sentences are absolutely supportable. But it does not follow from the setup, that BC needs to or should expand oil and gas extraction into the ocean, as Dr. Moore proposes.

It is disingenuous and manipulative of Dr. Moore to construct the argument this way. It's the way Imperial Tobacco sells cigarettes: using images of someone climbing a mountain, surrounded by blue skies and clean air, to sell Players brand smokes.

Footnote: Patrick Moore's description of the benefits to marine life of drilling rigs on the ocean floor is reminiscent of a comment by Williams of one benefit of the GSX Pipeline, that its presence would "provide a new environment around which fish may congregate." An artist's impression of how this might look, is here - Arthur Caldicott
sqwalk.com


Three sources of renewable energy are undeveloped in B.C.: Geothermal heat pumps (solar energy stored in the ground for heating and hot water), wind and biomass (using waste wood to generate electricity and heat).

So why not use revenue from oil and gas development to research and implement these renewable energies of the future? Such a fund could turn British Columbia into a global leader in sustainability.

The record of safety in offshore drilling has already been established by activities in the North Sea, China, the Gulf of Mexico and Hibernia off Newfoundland.

Indeed, there are marine benefits to such drilling. Undersea infrastructures become artificial reefs that provide habitats for thousands of marine species -- from shellfish to herring. An artificial reef society in Vancouver sinks decommissioned vessels and aircraft to enhance marine life for the benefit of divers.

The U.S. is also putting the artificial reef concept to action. Research funded by the Minerals Management Service, the U.S. Geological Survey and the industry-supported California Artificial Reef Enhancement Program involved extensive underwater surveys of marine life at rigs and natural reefs in the Santa Barbara Channel.

The research shows that drilling platforms are important not just as collectors of marine life but also as fish producers. The rigs harboured huge numbers of young rockfish in greater concentrations than the natural reefs, as well as more large adult rockfish than did the natural habitats. The rigs were home to more fish and more species of fish than the natural reefs.

Offshore drilling and aquaculture can also work hand-in-hand. In California, there is a proposal for an aquaculture cage system to be anchored to a decommissioned oil platform, allowing aquaculture in an exposed location.

There are over 3,000 oil rigs in the Gulf of Mexico. When some were exhausted, the government and the oil companies began planning to remove them. Unexpectedly, it was the fishermen who demanded the rigs be left in place. It turns out 85 per cent of all fishing trips in the Gulf target oil reefs because that is where most of the fish can be found. The artificial reef is a powerful enhancer of marine productivity.

There is no reason why active aquaculture operations could not take place while an offshore oil platform was in active production. By ensuring any negative environmental impacts are detected early, the farmed fish or shellfish would act as the proverbial canaries in the coal mine.

The offshore energy initiative offers economic development to struggling coastal communities and provides enhanced marine productivity. Proceeds can be used to develop renewable energies to keep B.C. green well into the future.

The people, economy and environment will benefit. It makes sense.

- Dr. Patrick Moore, was a co-founder of Greenpeace and is chairman and chief scientist of the Vancouver-based Greenspirit Strategies Ltd.

Posted by Arthur Caldicott on December 17, 2004

JIESC minces no words with the BCUC

Power at $220/MWh?
Collusion between BCUC and BC Hydro?
You gotta be kidding!

The Joint Industry Electricity Steering Committee is joining other intevenors in the BCUC review of the proposed Electricity Purchase Agreement between BC Hydro and Duke Point Power.

Excerpts from the JIESC letter:

Electricity price

Whatever the precise costs are it is clear they are substantial and BC Hydro’s submissions must seen and must be tested. The JIESC estimates that this project will have annual fixed costs in the range of $75 million per year, and that at an 80% utilization rate the costs will be approximately $88/MWh.
Furthermore, we are advised that at current gas prices the Duke Point Gas Plant will only be utilized about 20% of the time, like most similar plants, and will have a cost of around $220/MWh, several times the prices contemplated in the VIGP Decision.

Ratepayers are the ones who will pay the cost of this agreement for the next twenty five years and the public interest dictates that they must have an opportunity to examine the costs of the EPA and must have the time and information to allow them to have informed input to your decision.

Secret communications

The JIESC is also concerned by the unprecedented secret or confidential direct
communications
between the Commission, its staff and the Applicant. These communications, to the extent the intervenors are aware of them ....

We request that the Commission immediately and fully disclose all communications by the Commission Panel or its staff with the applicant and/or Duke Point Power ....

JIESC Dec 16 Letter to BCUC.pdf

Posted by Arthur Caldicott on December 17, 2004

December 16, 2004

Ticking Time Bomb

John Atcheson
Baltimore Sun
15 Dec 2004

The Arctic Council's recent report on the effects of global warming in the far north paints a grim picture: global floods, extinction of polar bears and other marine mammals, collapsed fisheries. But it ignored a ticking time bomb buried in the Arctic tundra.

There are enormous quantities of naturally occurring greenhouse gasses trapped in ice-like structures in the cold northern muds and at the bottom of the seas. These ices, called clathrates, contain 3,000 times as much methane as is in the atmosphere. Methane is more than 20 times as strong a greenhouse gas as carbon dioxide.

Now here's the scary part. A temperature increase of merely a few degrees would cause these gases to volatilize and "burp" into the atmosphere, which would further raise temperatures, which would release yet more methane, heating the Earth and seas further, and so on. There's 400 gigatons of methane locked in the frozen arctic tundra - enough to start this chain reaction - and the kind of warming the Arctic Council predicts is sufficient to melt the clathrates and release these greenhouse gases into the atmosphere.

Once triggered, this cycle could result in runaway global warming the likes of which even the most pessimistic doomsayers aren't talking about.

An apocalyptic fantasy concocted by hysterical environmentalists? Unfortunately, no. Strong geologic evidence suggests something similar has happened at least twice before.

The most recent of these catastrophes occurred about 55 million years ago in what geologists call the Paleocene-Eocene Thermal Maximum (PETM), when methane burps caused rapid warming and massive die-offs, disrupting the climate for more than 100,000 years.

The granddaddy of these catastrophes occurred 251 million years ago, at the end of the Permian period, when a series of methane burps came close to wiping out all life on Earth.

More than 94 percent of the marine species present in the fossil record disappeared suddenly as oxygen levels plummeted and life teetered on the verge of extinction. Over the ensuing 500,000 years, a few species struggled to gain a foothold in the hostile environment. It took 20 million to 30 million years for even rudimentary coral reefs to re-establish themselves and for forests to regrow. In some areas, it took more than 100 million years for ecosystems to reach their former healthy diversity.

Geologist Michael J. Benton lays out the scientific evidence for this epochal tragedy in a recent book, When Life Nearly Died: The Greatest Mass Extinction of All Time. As with the PETM, greenhouse gases, mostly carbon dioxide from increased volcanic activity, warmed the earth and seas enough to release massive amounts of methane from these sensitive clathrates, setting off a runaway greenhouse effect.

The cause of all this havoc?

In both cases, a temperature increase of about 10.8 degrees Fahrenheit, about the upper range for the average global increase today's models predict can be expected from burning fossil fuels by 2100. But these models could be the tail wagging the dog since they don't add in the effect of burps from warming gas hydrates. Worse, as the Arctic Council found, the highest temperature increases from human greenhouse gas emissions will occur in the arctic regions - an area rich in these unstable clathrates.

If we trigger this runaway release of methane, there's no turning back. No do-overs. Once it starts, it's likely to play out all the way.

Humans appear to be capable of emitting carbon dioxide in quantities comparable to the volcanic activity that started these chain reactions. According to the U.S. Geological Survey, burning fossil fuels releases more than 150 times the amount of carbon dioxide emitted by volcanoes - the equivalent of nearly 17,000 additional volcanoes the size of Hawaii's Kilauea.

And that is the time bomb the Arctic Council ignored.

How likely is it that humans will cause methane burps by burning fossil fuels? No one knows. But it is somewhere between possible and likely at this point, and it becomes more likely with each passing year that we fail to act.

So forget rising sea levels, melting ice caps, more intense storms, more floods, destruction of habitats and the extinction of polar bears. Forget warnings that global warming might turn some of the world's major agricultural areas into deserts and increase the range of tropical diseases, even though this is the stuff we're pretty sure will happen.

Instead, let's just get with the Bush administration's policy of pre-emption. We can't afford to have the first sign of a failed energy policy be the mass extinction of life on Earth. We have to act now.

John Atcheson, a geologist, has held a variety of policy positions in several federal government agencies.


© 2004 Baltimore Sun

Posted by Arthur Caldicott on December 16, 2004

Power plant plan creating unlikely allies

Patrick Hrushowy
Cowichan News Leader
15 Dec 2004

sqwalk.com
COMMENT:Patrick Hrushowy has used his News Leader soapbox in the past to natter at the GSX Concerned Citizens Coalition for harbouring accursed NIMBYs and environmentalists. Think about it, folks - what could be more natural and virtuous than a passion to protect one's own backyard and environment? Migosh! How could values we all subscribe to - protect our own place - become such an iconic label of disparagement as NIMBY and environmentalist have become in the pens of people like Mr. Hrushowy?

The GSX Concerned Citizens Coalition (GSXCCC) has since its informal beginning in 2000 been critical of the GSX Pipeline and the gas-fired generation plants it is intended to provide fuel to. That's five years now. And we have learned a lot, and earned the respect of the NEB and BCUC for our effective and substantial contribution to the hearings we have participated in. It is however, a mark of the full spectrum of shortcomings with the gas-fired strategy, that we found reason to criticize the projects on so many grounds. We pointed out those shortcomings, at meeting after growing meeting, in town after town, and earned the approbation of Mr. Hrushowy.

Before the National Energy Board (NEB) review of GSX began, a Marine Coalition had formed out of some of the early members of GSXCCC to address marine issues with the pipeline proposal. It is an impressive coalition, as well, comprised of scientists of many stripes and even a former chair of the Canadian Association of Petroleum Producers.

Another friendly breakaway: the landowners on the GSX Pipeline route decided to form their own organization, the Vancouver Island Pipeline Landowners Association (VIPLA). They formed an alliance with the (deep breath) Canadian Association of Pipeline Landowner Associations (CAPLA) and engaged a lawyer to represent their interests.

Which left the GSXCCC holding the bag on all the other issues. Just a group of local people ... from Cobble Hill, Nanaimo, Port Alberni, Campbell River, Victoria, Vancouver, Bellingham, Seattle, San Juan-Saturna-Pender-Salt Spring Islands, and member groups like the Sierra Club of BC, Canadian Parks and Wilderness Society, Georgia Strait Alliance, Council of Canadians.

Sure, we were and still are critical of the gas-fired strategy on many fronts. Here are two:
Safety: a gas pipeline like the GSX carries gas at a pressure nine times that of the propane bottle on your barbeque. GSX is the same diameter - 16" - so picture that propane tank stretched from the landfall at Cherry Point, to Nanaimo. Bang. Oops, sorry to scare you. A pipebomb joke.
Seismic: we're so accustomed to living in an area with constant seismic activity, that we discount the seriousness of making our energy infrastructure dependent on a system that is highly vulnerable to seismic events.

Our three big issues, though, and the ones our members are most passionate about are:
Greenhouse gases and global warming You're an empiricist, or you don't believe the evidence of our senses and tools and science. Either way, human-caused climate change is the greatest threat to life on earth and earth as we know it, since humans first evolved.
Economics Vancouver Island gas-fired electricity will be the most expensive electricity generated in the province, well above the $55/MWh that BC Hydro is prepared to pay for green energy, and the $24/MWh cost to BC Hydro of hydroelectric power in BC. The price of natural gas remains at levels three times its price when BC Hydro and the BC government first concocted the gas strategy for Vancouver Island - and it shows no sign of falling anytime soon. They're just not making more of the stuff fast enough
Need for the electricity BC Hydro has been hammering at Vancouver Island residents for five years telling us the lights were going to go out. It was an emotional gun to the head that was impossible to rebut, until the GSXCCC came along and one of our directors, an economist and statistician, pulled the guts out of BC Hydro's self-serving and indefensible load forecasts. Hydro ended up sacking its forecasting wizard, rewrote its forecasts, suffered the acute embarrassment of having its new forecasts cut in half by the BCUC because of the evidence led by GSXCCC, and ultimately had its Duke Point project rejected by the BCUC.

Solutions The bottom line is, Vancouver Island can meet its energy needs for years to come with a sustainable and balanced portfolio of initiatives:
- conservation and efficiencies - referred to as "demand side management"
- replace the aging HVDC cable from the mainland
- move aggressively to sustainable energy sources, including micro-hydro, wind, tide, solar, geothermal.

For the record, Mr. Hrushowy, the GSXCCC has never taken a position on the pulp industry, never discussed it at any meeting, public or private, and you are flat wrong in suggesting a link between GSXCCC and groups that would shut down the pulp industry, if indeed there are any. Lots of people belong to many different things in all organizations. The membership of GSXCCC is indeed diverse, and that is a reflection of the broad range of things that are wrong with BC Hydro's gas strategy.

Thanks for the mostly positive recognition in your column, Mr. Hrushowy. "Our own GSX Concerned Citizens Coalition" feels kinda good. - Arthur Caldicott
sqwalk.com


Some strange bedfellows are linking arms figuratively to try to stop the Duke Point power plant project at Nanaimo that BC Hydro is selling to private sector operator Pristine Power.

The 252 megawatt power plant proposal that BC Hydro recently chose as the winning project to meet Vancouver Island's near term power needs is at serious risk of being stopped before anyone can begin construction. Hydro's choice for this project, and the Energy Purchase Agreement that goes with it, still needs the approval of the B.C. Utilities Commission. Hearings are scheduled to begin in Vancouver on Jan. 11 and there will be a town hall meeting in Nanaimo on Jan. 15.

The line up of opponents is a mile long but standing out are our own GSX Concerned Citizens Coalition and the Joint Industry Electricity Steering Committee.

In the rarefied world of utility regulation, intervenor lists a mile long are common and seldom merit media attention as lawyers and experts figuratively argue over how many angels can dance on the head of a pin.

This one is different. The JIESC, for instance, is the group representing the pulp mills on Vancouver Island and the Lower Coast - the largest electrical energy consumers in the province. They are digging in their heels and are prepared to block this project, even if it means appealing to the highest court available.

JIESC believes the project is just plain wrong in economic terms. It's too expensive, they say, with electricity costing almost four times as much as BC Hydro is currently paying for electricity generated in small private run-of-river projects.

Duke Point will be fired with natural gas, a premium fuel whose cost is forecast to continue to rise. Not only that, the JIESC says BC Hydro still does not have a firm fix on the cost of bringing extra natural gas to Vancouver Island to fire the project. Terasen has made some estimates but has not finalized the figures. They, too, need to go before the BCUC for approval for their plans, which includes the proposal to build a facility in North Oyster to liquefy and store natural gas. Only when Terasen finalizes its application to the BCUC will the full costs be known.

There are some in the JIESC that worry that this Duke Point project has all the makings of a new fast ferries fiasco, the financial debacle that was largely responsible for bringing down the former NDP government.

The GSXCCC is opposing on environmental grounds, along with economic arguments. This group has proven its determination and has learned a lot since forming to fight this project several years ago. They will present far more cogent arguments than the emotional environmental rhetoric that characterized their positions in the past.

These are strange bedfellows, indeed, with a lot of the people involved in GSXCCC being members of other groups that would love to shut the pulp industry down on environmental grounds.

Got a tip or comment? E-mail me at phrushowy@shaw.ca.

Posted by Arthur Caldicott on December 16, 2004

December 14, 2004

Hydro silent on payments to Island power producer

Scott Simpson
Vancouver Sun
14 Dec 2004

Pristine Power is to build a power generation plant near Nanaimo


BC Hydro is coming under heavy criticism for its secrecy about the price it will pay for electricity from a proposed power generating facility on Vancouver Island.

Stakeholders expect the gas-fired plant near Nanaimo to drive up electricity prices for all Hydro customers in B.C. -- but said on Monday that it's impossible to fairly evaluate the project when a key piece of information is missing.

The Pristine Power project is planned to undergo a hearing in front of the British Columbia Utilities Commisson next month.

"This is a 25-year-minimum project, and we have no idea what we are getting into," said Jim Quail, legal counsel for the B.C. Public Interest Advocacy Centre, on Monday.

"It might be a great price. It might be a terrible price. Either way, it's going to have an impact on the rate that we all pay for our electricity, possibly for a long time to come."

Hydro announced on November 3 that it had selected Pristine Power to carry forward a minimum $280 million project to build a generating plant at Duke Point near Nanaimo in an effort to address a looming electricity shortfall on Vancouver Island.

Neither Hydro nor Pristine would disclose how much Pristine will be paid for its electricity.

Later that month the British Columbia Utilities Commission (BCUC) appeared to agree that the details should remain secret -- disappointing Hydro watchdog groups that represent industry as well as ordinary consumers.

Hydro maintains that price information must remain confidential, in order to protect bidders' competitive interests -- particularly as future opportunities emerge for private sector companies to join the province's electricity grid.

"It's purely for competitive reasons and bidders have reinforced to us that it's critically important for them to participate in these types of processes that maintain confidential their bid information," said Mary Hemmingson, Hydro's power planning manager.

Hemmingson said Hydro has received 500 information requests from stakeholders in advance of next month's hearing and said those requests will be met by a BCUC-imposed deadline of this Friday.

"The one piece we don't feel is appropriate to release -- because it could compromise the competitive process -- is the specific price information for either the successful bidders or the unsuccessful bidders," Hemmingson said.

She added that the BCUC has endorsed Hydro's request for confidentiality on the Pristine bid -- and noted that the commission will itself review the price information and make its own determination about whether the cost of the project is appropriate.

The price of Duke Point energy is partially contingent on the price of natural gas -- and will assuredly be more expensive than what consumers now pay for a system that is dominated by low-cost hydroelectric generating facilities.

The project has also attracted controversy because it resurrects a BC Hydro Vancouver Island energy plan that the utilities commission decided last year was too expensive.

The rewritten plan requires Hydro to book $70 million in corporate writeoffs which will ultimately be borne by the province's taxpayers, based on costs already incurred by Hydro in its own, earlier, efforts to carry the project forward.

© The Vancouver Sun 2004

Posted by Arthur Caldicott on December 14, 2004

December 04, 2004

CBC Yellowknife, on GSX and MGP

CBC - Yellowknife

03 Dec 2004

sqwalk.com
COMMENT:On Thursday, Dec 2, I was interviewed by CBC - Yellowknife about our experience with the GSX proceeding conducted by the National Energy Board.

The context and audience was for the Mackenzie Gas Pipeline Project (MGP), for which a "Joint Review Panel" has been assembled to conduct a review of the project under the Canadian Environmental Assessment Act and for which a sometimes-in-parallel and sometimes-sequential process will be conducted by a smaller panel under the National Energy Board Act. The internet gateway into the thing is through the Northern Gas Project Secretariat.

The MGP process is different than that received by GSX. With GSX, a three person "Joint Review Panel" reviewed the project under both Acts, in a single proceeding.

Another difference: participant funding for GSX was $100,000, while for the MGP it's a little higher, at $1.5 million. (GSX Concerned Citizens Coalition received $25,000 in the GSX proceeding, thanks in large part to Tom Hackney's marvellous ways with the forms and reports required by bureaucrats)

The two projects had/have Rowland Harrison as a panel member in common. My impression of Harrison was that he brought a conservative, conventional force to the panel.

I am caught out on a factual error. I said that the NEB never denies approval. I was wrong.

- In April 2004, an NEB panel turned down the high profile and highly unpopular application for a powerline from the proposed Sumas Energy 2 generation project in Sumas Washington to BC Hydro's Clayburn Substation in Abbotsford. Given that the project was opposed by MPs, MLAs, the BC government, local governments, hundreds of local citizen intervenors, and only the proponent, a privately held US company, was for the powerline, it became an easy decision to oppose for the NEB. NESCO, the proponent, is now taking the NEB to court.

- The NEB has also turned down a rates revision request by TransCanada Pipelines, in Feb 2003, and a request by New Brunswick to relax gas export rules, in Sept 2002.

An interview with Denis Tremblay of the NEB follows mine in this transcript - Arthur Caldicott
sqwalk.com

---

(6) Mackenzie Gas Project

CBC Special Report, Thursday, December 3, 2004, 5:15 p.m.

CBC: The National Energy Board will have a large role in approving construction of a pipeline down the Mackenzie Valley. The board is an independent agency of the federal government. The NEB isn't well known in the North, but it is on Vancouver Island. About a year ago the board approved construction of a 60-kilometre pipeline from a point on the Canada/U.S. border to a point south of the town of Duncan, British Columbia. The Georgia Straight Crossing is a small project compared with the proposed Mackenzie pipeline, but the review process is similar.

Arthur Caldicott is a founding director of the Georgia Straight Crossing Concerned Citizens Coalition, a group that opposed the pipeline and he joins us from Vancouver Island. Good afternoon Arthur.

CALDICOTT: Good afternoon.

CBC: So tell me why you were opposed to the pipeline?

CALDICOTT: Well the pipeline, all of these projects, the Mackenzie gas pipeline and the GSX pipeline that was proposed for Vancouver, these projects are always the instrument of some large well funded corporation or corporation and government from outside the community who wants to impose their big visions on small communities or on First Nations and we were a typical small community on Vancouver Island that had this big gas pipeline being proposed to run right through it. Very quickly community concerns grew about many issues; pipeline safety, the marine implications of putting a new pipeline in the ocean, land owner concerns about alienating farm land and particularly firing up Vancouver Island with gas fired electricity would mean in the narrower global warming was becoming the most acutely relevant concern. So the concerns were you know spread across quite a vast range, but it all started with a big project being imposed on a small community and the community pushing back.

CBC: Now I want to talk about I guess your whole experience with the National Energy Board. What did you expect from the NEB going into the hearing?

CALDICOTT: Well we didn't know what to expect because we were all knew to this as are most of the people up the Mackenzie Valley. So we knew nothing about what a regulatory proceeding was and the National Energy Board probably did the best they could to try and introduce the community to what their processes are and in doing that they encouraged people from all of the communities along the pipeline route to come out and present their concerns to the board. Where that backfired for the National Energy Board and I think we were misled by them was that by encouraging the public to get involved they led to the public to believe that the public could actually have a say in the decision and that proved not to be the case cause at the end of the day after all the public has gone home the doors on the room close and the hearing becomes an exercise for lawyers, experts, highly funded people who can stand their professional lives doing these things.
It's no place for common citizens. So you know we kind of learned this as we went and we managed to find some funding from supportive people and from some supportive agencies that enabled us to hire a lawyer to represent us in the hearing. Much of the work we did we did on our own, two in the morning when our regular jobs were finished we were digging through transcripts and digging through previous regulatory proceedings and learning an awful lot about energy and pipelines. I think we did quite a valiant job, but at the end of the day of course the project was approved.

CBC: So during the hearing did the board question a lot of what you had proposed or addressed?

CALDICOTT: The way a proceeding or a hearing is conducted is all of the interveners, you have to formally get registered as an intervener, all of the interveners ask questions of each other through a formal process called information requests and file evidence. Once again, the evidence has to be filed formally as well. So the only record you get to ask questions on are the evidence that's been filed and through that process you can ferret out quite a bit of information, but you don't get it all of course. Most of the questions are asked of the proponent, the applicant, the company that wants to build a project. Very seldom does the proponent or does the National Energy Board ask questions of an intervener and in our case particularly very few persons were asked of us because of course we weren't providing much original evidence.
We did on gas supply, however, and we did on some of the load forecasting numbers that B.C. Hydro was providing to the National Energy Board, but largely the questions aren't asked of us. The tough asking questions are the proponent and without a big bank of experts it's hard to position questions that expose the weak parts of a proponents set of arguments and evidence, but really when it comes down to it it's what the National Energy Board is there to do. Their purpose is to find where the public convenience is in a project that is being proposed and to determine whether or not there's a need for the project that's being proposed and the public view of what a public convenience or what's serving in the public interest is and what need is is quite different. It's vastly different than what the board construes public convenience to be and need to be in terms of a project that's being proposed to them.
It's that big gap between the board's interpretation of public convenience and necessity and the public that was probably one of the biggest learning experiences for us.

CBC: Do you think then that this process favours the developer?

CALDICOTT: Yes, it clearly favours the developer. It always favours the developer. The National Energy Board to the best of my understanding has never turned down a project. Some get withdrawn when they see their opportunity to getting approval are slim, but for the most part the National Energy Board approves projects. Now they may condition their approval. They may say, well in the case of the GSX Pipeline, they said you can't build a pipeline unless you build a gas plant to use fuel from it, but that's pretty much self evident. The company is not going to build the pipeline unless there's somebody to buy the fuel. But no, largely the National Energy Board works with industry to facilitate industry's projects. That's pretty much their mandate in the absence of the government that more strongly represents the interests of people, of communities and First Nations. The National Energy Board will always be to some extent the handmaiden of industry.

CBC: So how can the NEB address disparity or resources between the groups?

CALDICOTT: Well one fellow who participated in the Sable Island pipeline said you've got to de-lawyerize and de-expertize the process first of all because by making it a club for highly specialized professionals you cut the people out of the picture. Most people can't quit their jobs and go be full-time regulatory participants. Somehow that has to be balanced out so that the people can actually participate on a fair and equal level with industry, with corporations and with government. You know in this real world or real politics what Canada needs is some sort of national energy strategy that represents more strongly and gives more weight to the interests of the environment or weight to the interests of aboriginal entitlement, more weight to the interest of communities and land owners cause right now the deck is hopelessly stacked in favour of industry.

CBC: So what did you learn from being involved in this process Arthur?

CALDICOTT: Well the first thing I would counsel anybody getting into a big project like this is make sure you're equipped for the long run. We naively kind of though this thing would all be over in three weeks or three months, it's five years now and we're still working on it. So I would counsel anybody to build an organization around them that doesn't depend solely on the energies of one or two or three people, that has some carrying some capacity and some continuity should any of the key people burn out, which almost certainly they are going to do, make sure there's funding in place, make sure there's some sort of paid staff on board because volunteers can't do all of this all of the time. That would be one thing. Lobby governments, make sure that the public are continuously well informed. Going back to the early days of Green Peace I strongly recommend implementing as much as possible of all hunters ideas of planting mind bombs, using the media in the minds of people,
make use of all electronic technologies at your disposal, the internet, e-mail, websites.

CBC: Well I'm glad you made that distinction between mind and mine.

---Laughter

CALDICOTT: Right.

CBC: All right Arthur, so it could be a lengthy process for anyone that's involved in the review of the Mackenzie gas pipeline up here?

CALDICOTT: Oh, of all the projects in Canada this one is going to be far and away the biggest. I encourage everyone to get as much support as possible to those interveners with public interest and aboriginal interveners on the Mackenzie gas pipeline cause they are going to need all the support and help they can get.

CBC: All right Arthur, thank you very much for this today.

CALDICOTT: My pleasure.

CBC: Okay, bye-bye.

CALDICOTT: Cheers.

CBC: Arthur Caldicott is the founding director of a group called the Georgia Straight Crossing Citizens Coalition. He lives on Vancouver Island. Now Arthur said that the NEB has never said no to a project. That contradicts some of the research CBC reporter Julie Green has gathered. The NEB told her that they have turned down two proposals over the last 14 years and we'll find out more tomorrow about the NEB hearings here in the Territory and how you can get involved. You can tune into the Trail Breaker tomorrow morning between six and eight thirty.

CBC Special Report, Friday, December 3, 2004, 7:25 a.m.

CBC: Yesterday on the Trail Breaker we brought you the story of how hundreds of people got involved in the review of a power line in Abbotsford, British Columbia. The review was conducted by the National Energy Board. The NEB will also play a major role in the review of the Mackenzie gas project and now is the time for the public to get involved and to tell us how we're joined by Denis Tremblay. Mr. Tremblay is a spokesperson for the board and we've reached him at his office in Calgary. Good morning sir.

TREMBLAY: Good morning.

CBC: Well if I want to tell the NEB what I think about the pipeline what do I need to do?

TREMBLAY: Well as you know the NEB has scheduled the project for public hearing and in there there's three ways that people can participate in the hearing process. One of the ways is by a letter of comment, sending in a letter to the board and giving their opinion or their views about the project. Then a second one is a oral statement process where the people can schedule and come to the hearing and give their point of view at the public hearings that will be held eventually on this project. A third one is to file as a full-fledged intervener in the hearing.

CBC: And what does an intervener do?

TREMBLAY: Well the intervener can ask written questions from the applicant up until the public hearing and then during the public hearing it can cross-examine the witnesses of the applicant and other parties and it can present its own witnesses.

CBC: Well the role of an intervener sounds at the very least time

consuming and probably expensive. What help is available from the board?

TREMBLAY: Well as far as the expense the board has no funding, intervener funding process. So that's up to the interveners.

CBC: Yeah, is there any other way NEB can help?

TREMBLAY: Well it can help…

CBC: By sharing information or anything like that?

TREMBLAY: Well it has to be careful of what type of information it shares with any of the parties, even the applicant or interveners because it is a quasi judicial body and it's limited by how much assistance it can give to any party.

CBC: I wonder sir, can you tell me what's the difference between the review by the National Energy Board on this project and the review by the Joint Review Panel?

TREMBLAY: Well they are both looking at, like the Joint Review is dealing with the socioeconomic matters and environmental matters and the

NEB is looking at all the other matters like engineering, land matters, economics, markets and all that.

CBC: So if someone makes a presentation to the Joint Review Panel will they have to make the same points to the National Energy Board?

TREMBLAY: No, the National Energy Board will be using the Joint Review Panel's report as part of its hearing process. So all the environmental and socioeconomic evidence presented to the Joint Review Panel, the board will use that report before making its final decision on its subjects.

CBC: All right. So now I understand the Joint Review Panel will begin their hearings in March. What about the National Energy Board hearings?

TREMBLAY: Well the way I understand it right now they'll try to follow shortly after them. It will be sort of concurrent hearings. Like the Joint Review might do let's say for example one week in Inuvik, then the board would follow shortly after that and do its process. So they'll be more or less concurrent. They'll be running around the same time.

CBC: So Mr. Tremblay, where can people get more information about this process?

TREMBLAY: About the NEB process?

CBC: Yeah.

TREMBLAY: Well first of all one of the processes of the hearing is the hearing order itself, which is available upon request of the board or it's available on our website and as far as when we conduct public information sessions, like we've had about four or five already to inform the public, right now it's to inform them how the board works and all that, but then there might be some other information sessions as we get closer to the hearing to let people know exactly how a hearing process works. So we intend to have public information sessions to inform the people of our process and what we are.

CBC: All right. Well with that Denis Tremblay, thank you very much for joining me this morning.

TREMBLAY: You're welcome.

CBC: Bye-bye now.

TREMBLAY: Bye-bye.

CBC: Denis Tremblay is a spokesperson for the National Energy Board in Calgary.


Posted by Arthur Caldicott on December 04, 2004

December 03, 2004

Gold River holds faint hope


Andrew A. Duffy
Times Colonist
03 Dec 2004


Gold River mill
CREDIT: Deddeda Stemler, Times Colonist
The Green Island Energy site would occupy the old mill facility at Gold River.

sqwalk.com
COMMENT:The BC Utilities Commission is an unfriendly place for citizens. Lawyers, experts, corporate batboys - these people are more at home in the BCUC's formal regulatory proceedings. That hasn't daunted the folks who live in Nanaimo and on Gabriola Island, and it sure hasn't intimidated the citizens of Gold River, who have filed as intervenors or interested parties in the (deep breath) BCUC review of BC Hydro's application for an Electricity Purchase Agreement with Duke Point Power Partnership.

In September 2003, the BCUC denied BC Hydro's application for the Vancouver Island Generation Project (VIGP). BC Hydro responed with a Call for Tenders (CFT) process to elicit bids for lower-cost power solutions for Vancouver Island. In the CFT, BC Hydro was looking for projects up to 300 MW capacity, and Green Island Energy put in a bid for a 75 MW "biomass" plant to be located in Gold River.

In November 2004, BC Hydro picked its same old VIGP, privatized, reduced in cost (How? That's another question entirely and most of the intervenors in the EPA review are trying to get answers to that very question.), and renamed Duke Point Power (DPP). BC Hydro told Green Island Energy that it just couldn't fit GIE's 75 MW project with others to get the package it needed. GIE is screaming unfair, and indeed, unfair it is.

It is nevertheless wonderful to see the people of Gold River mobilizing around this issue, and taking steps to barge through the doors of the arrogant BC energy club, normally the exclusive domain of BC Hydro, BCUC, Ministry of Energy & Mines, and a few academics and consulting firms - and demanding a voice in energy decisions.

This is not an endorsement of Green Island Energy's Gold River project. Burning garbage is a risky business, fraught with the potential and likelihood of releasing an obscene stew of toxins into the local environment. Rumours persist that GIE would resort to coal from the nearbly Quinsam Mine if other fuels were not available. If or when the GIE project has commercial viability, if not out of the CFT, perhaps in a subsequent call for capacity or energy from BC Hydro, the project itself will have to undergo a rigorous environmental assessment. Unfortunately, in British Columbia today, with the existing Environmental Assessment Act, such an assessment is not likely to happen. In the meantime, go for it, people of Gold River. - Arthur Caldicott

BC Hydro VICFT - Electricity Purchase Agreement link

Green Island Energy's letter of intervention and letter from counsel
sqwalk.com


The short-term future of Gold River is in the hands of the B.C. Utilities Commission.

When the BCUC meets in January to examine the electricity purchase agreement between B.C. Hydro and the group that intends to build a gas-fired generation plant in Nanaimo, it will in essence be deciding the fate of programs and services available in the mid-Island village.

If the BCUC approves the deal between B.C. Hydro and Duke Point Power Ltd., a wholly owned subsidiary of Macquarie Essential Assets, Pristine Power and a group of private investors, it will all but kill plans to build a thermal generating power plant in Gold River. And in so doing will take away any economic certainty the village of 1,359 may have had.

"There's no question it will have an impact in the short term," said Gold River mayor David Lewis. "Right now in our budget we don't have enough money to run some of our recreation facilities next year.

"At least if (the plant was built in Gold River) it would give us some certainty going forward and we could work around it."

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

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

"We lost 83 per cent of our tax base, our budget has been cut but services haven't really subsided," said Lewis, noting the Green Island plant, rumoured to cost $250 million to build, would replace a good chunk of that lost tax revenue.

It would also provide 30-40 year-round jobs in a town where, according to the 2001 census, there are only 750 jobs.

"And that's significant," said Lewis.

But the Green Island project lost out in the call-for-tender process to Pristine's 252 megawatt, gas-fired power plant to be built at Duke Point in Nanaimo.

If approved by the BCUC, at a cost of $280 million, the Pristine plant would replace the supposedly dead-and-buried Vancouver Island Generation Project, a 265-megawatt plant Hydro intended to build on the same site at a cost of $370 million.

That project was originally rejected by the BCUC as too large and costly a way to make up the Island's energy shortfall, prompting the call for tenders.

Lewis says the BCUC hearings -- to take place in Nanaimo Jan. 12-15 at the Coast Bastion Inn -- are the last chance to overturn the deal.

And he argues it should be overturned not just because Gold River needs its plant, but because it's in the public interest.

"We feel the decision Hydro made was biased in favour of the Duke Point project, but there is a low-cost alternative," he said, adding he felt the Gold River project wasn't evaluated because it did not fit into Hydro's narrow criteria.

He's hoping the BCUC will look into that tender process as well during the hearings and force Hydro to reconsider its decision.

"I'm comfortable and confident the commission panel will uphold the public interest," he said.

B.C. Hydro spokeswoman Elisha Moreno says the utility will not comment on any of the projects or proponents until after the hearing in January as it would compromise the process. However, she did say that on a cost-effectiveness basis the Duke Point project was the clear winner.

- - -

Posted by Arthur Caldicott on December 03, 2004

December 02, 2004

Nai Kun Wind Project agreement with Haida Nation

Leanne Ritchie
The Prince Rupert Daily News
02 dec 2004

sqwalk.com
COMMENT: It's wonderful to see sustainable energy projects that respect the land, the oceans, and First Nations. Nai Kun Developments have met directly with the Council of the Haida Nation and a rare agreement between the company and the Haida Nation has been forged that will allow Nai Kun to proceed with a wind study mast, and that will ensure that the Haida people are full participants and beneficiaries of the project.

Backed by ABB, the Nai Kun project has financial and technical credibility that is missing from the Holberg Wind Project, and the Sea Breeze Power Knob Hill Project. Nevertheless, it is still missing the one thing that will make it happen - a customer. Holberg has one - BC Hydro, but Sea Breeze and Nai Kun do not. - Arthur Caldicott]

Environmental Assessment Office Nai Kun project centre
Nai Kun Wind Development Inc.
sqwalk.com


The company which wants to install a large scale wind farm north of Haida Gwaii has made several steps forward in its agreements with the Council of the Haida Nation.

On Friday, Nai Kun announced that the Council of the Haida Nation has granted Nai Kun a permit to install a temporary wind mast to undertake a sea bed survey at the site of its proposed 700 MW wind farm in Hecate Strait.

"We've been working with the Council of the Haida Nation for three years, from the beggining of the project, explaining what our objectives are and listening to theirs," said Michael C. Burns, CEO of Nai Kun and Uniterre Resources. "It's to the point were we are now at a win-win situation."

The wind mast will also have attached to it temperature, wave and current monitoring devices, as well as an x-band radar unit to monitor sea birds in the area of the proposed site. Nai Kun has agreed to retain the services of the Council of the Haida Nation dive team to conduct eight scuba surveys in the vicinity of the mast.

"The granting of this permit represents a milestone in the relationship between the Council of the Haida Nation and Nai Kun," said Burns.

"This permit, in addition to those granted by the federal and provincial governments, allows the company to proceed with installation and survey work in the spring of 2005."Nai Kun does have data from 12 years of data from Envorinment Canada's Rose Spit mast located on land in the vicinity of the farm site.

Burns said by putting a new mast in the water, they will be able check that data against data from the site and then be able to chose the best equipment for the project.

In addition, Burns as chairman of Uniterre Resources, said that Uniterre has agreed to issue a share purchase warrant entitling the Haida Tribal Society, which represents the Council of the Haida Nation and the Haida people, to acquire to 860,193 common shares of Uniterre for a period of two years at a price of $.22 per share for the first year and .25 per share for the second year.

The shares have been granted to provide the Haida people an opportunity to participate in the ownership of Nai Kun and to further the partnership between the Haida people and Nai Kun for the development of the significant wind resource off the shores of Haida Gwaii.

Burns said the Haida see potential in the project in and in their involvement so "owning a piece of the rock makes sense."

When fully operational, up to 350 wind turbines will generate enough electricity to power 240,000 homes. Expected to begin construction in 2006, the project is currently raising development financing and undergoing environmental review.

Up to 350 wind turbine towers, with blades and generators, will rise approximately 80 meters above the ocean surface. The towers will be fixed into the sea bed in shallow waters. The strong winds over Hecate Strait will turn the blades and generators to produce electricity. The electricity from the turbines will be gathered offshore and transmitted to a nearby BC Hydro substation via sea-cable and land-based transmission line.

Burns added as the project moves forward There will 100s of man years of employment created.

"There will be continued opportunities for everyone in the region," he said.

Nai Kun Wind Development Inc. and ABB New Ventures of Mannheim, Germany are the partners in the project. Nai Kun Wind Development Inc. is a B.C. company created for the sole purpose of developing the Nai Kun Wind Farm.

ABB is a global leader in power and automation technologies and will design and provide engineering services for the project.

Posted by Arthur Caldicott on December 02, 2004

Court rejects challenge to proposed pipeline

The Associated Press
Bellingham Herald
02 Dec 2004


DENVER - The 10th U.S. Circuit Court of Appeals on Wednesday rejected a pipeline safety group's challenge to a proposed natural gas pipeline that would cross Whatcom County on its way from Canada back into Canada.

The ruling does not clear the project. The 10th Circuit still is considering whether Washington state and Whatcom County waived jurisdiction over the pipeline by missing deadlines for reviewing applications for the pipeline project.

In Wednesday's case, Fuel Safe Washington challenged the Federal Energy Regulatory Commission's decision to approve the 47 miles of pipeline, a joint project of Salt Lake City-based Williams Northwest Pipeline and British Columbia Hydro and Power Authority.

The $248 million line would stretch from a point on the U.S.-Canadian border near Sumas, and cross part of Whatcom County before connecting to an existing pipeline on Vancouver Island, where it would fuel a proposed power plant.

Fuel Safe argued that FERC's environmental review of the project was inadequate, that FERC failed to consider alternative Canadian routes for the pipeline, and that the agency has no jurisdiction over the pipeline because it wouldn't cross state lines.

A three-judge panel of the 10th Circuit unanimously rejected those claims Wednesday. The panel said the environmental review was adequate, and that Fuel Safe could not argue that FERC lacks jurisdiction because it failed to make that argument during earlier hearings before the agency
--

Posted by Arthur Caldicott on December 02, 2004

November 20, 2004

Environmental Assessment for Duke Point Power

For people concerned about the Duke Point Power plant, winner of BC Hydro's CFT, it may be advisable to pursue the Environmental Assessment Office environmental certification process as well as the BCUC process:

The BC Utilities Commission is operating under a set of fairly legalistic rules, and they are supposed to be mainly concerned with parties who have shown that they have an "interest" in the project, i.e. who stand to be affected by the project. This means that if, as a ratepayer, you think this will result in your being overcharged for electricity, you have an interest. If you have environmental concerns, the BCUC may well say that that is not their area of concern (since the Environmental Assessment Office is responsible here). If you can argue that, as a ratepayer, your electricity rates are likely to go up as a result of Duke Point's liability for environmental harm, that would, technically engage the BCUC. (That said, the BCUC may have a certain amount of sensitivity to public calls for a conference or review in Nanaimo, so by all means ask for it.)

Regarding environmental concerns, I recommend writing to the Environmental Assessment Office and to the relevant Minister(s) (Sustainable Resource Management; Water, Lands and Air Protection; Energy and Mines) -- whichever are in charge of deciding whether the environmental certificate that was issued for the Vancouver Island Generation Project can be adapted and applied to the Duke Point Power Plant. This is quite a political issue, and enough public input could force a separate environmental review for the new plant.

Duke Point Power is probably writing to the EAO and the Minister right now, asking to have the VIGP certificate shifted to them. There is no mandated public process, no public notifications. So get your views in fast.

GSX Concerned Citizens Coalition

Posted by Arthur Caldicott on November 20, 2004

BC Hydro applies for EPA for Duke Point

November 19, 2004

BC Hydro has filed the following documents with the British Columbia Utilities Commission:

BCUC has scheduled a Procedural Conference on 29 November 2004 regarding the regulatory process for the review of this EPA filing (BCUC Order G-99-04).

Posted by Arthur Caldicott on November 20, 2004

November 19, 2004

First Nations report on BC's offshore moratorium

Rights, Risk and Respect
A First Nations Perspective on the Lifting of the Federal Moratorium on Offshore Oil & Gas Exploration in the Queen Charlotte Basin of British Columbia
[ Download PDF ] [ View Table of Contents ]


EXECUTIVE SUMMARY
The First Nations Engagement Process (FNEP) on the question of whether or not to lift the federal moratorium on offshore oil and gas exploration in the Queen Charlotte Basin of British Columbia’s coastal waters was announced by Minister Efford on February 18, 2004. Originally slated to end June 30, the information gathering phase was extended to September 3, 2004. By that time the Minister’s representative Cheryl Brooks and NRCAN’s Zoë Carlson had held
meetings and conversations with representatives of approximately seventy First Nations communities, including the majority of the communities directly adjacent to or near to the boundaries of the Queen Charlotte Basin. Other communities were from the Winona, Tofino and Georgia Basin areas and a few from inland British Columbia.

The numerous First Nations of the Northwest Coast and other coastal communities and inland communities of British Columbia who participated in the FNEP unanimously indicated that it is not in the best interests of their people to lift the oil and gas exploration moratorium in the Queen Charlotte Basin. A small number added the qualifier that “it should not be lifted at this time”.

There are two perspectives contributing to this conclusion. One view is that an
informed decision cannot be made on the basis of currently available information. The second view is that there is enough information available now to definitively conclede that the moratorium should absolutely not be lifted.

Though not one First Nation that met with FNEP endorsed the lifting of the
moratorium, many First Nations indicated a preparedness to more fully explore the issue of offshore oil and gas exploration provided they are adequately resourced and given enough time to do so.

Posted by Arthur Caldicott on November 19, 2004

"Priddle Report" on BC's offshore moratorium

Report of the Public Review Panel (the "Priddle Report") on the Government of Canada Moratorium on Offshore Oil and Gas Activities in the Queen Charlotte Region British Columbia
[ Download PDF ] [ View Table of Contents ]

The "Priddle" report fairly represents and summarizes the views presented to the panel. 75% of the public are opposed to lifting the moratorium. Significant knowledge gaps exist. The panel recommends four options to government, and gives no preference to any of them. The four options are:
1. retain the moratorium
2. retain the moratorium and fill the knowledge gaps
3. lift the moratorium, issue no exploration permits, fill the knowledge gaps
4. lift the moratorium


CONCLUSIONS PRESENTED
The Panel concludes in Section 5 that the strongly held and vigorously polarized
views it received do not provide a ready basis for any kind of public policy compromise at this time in regard to keeping or lifting the moratorium. It formed the impression that there had been little recent dialogue among stakeholders and that increasing this dialogue could be helpful. The need to address First Nations interests and concerns was the major area of near consensus. Ecosystem protection was a widely shared priority, but there is
fundamental disagreement on how it could best be achieved: by keeping the moratorium, or by lifting it and relying on a modern regulatory regime.

There was near consensus among participants that there are significant information gaps regarding biophysical data and environmental and socio-economic impacts information for the QCR, were oil and gas activities to proceed. However, participants wishing to keep the moratorium consider it unsafe to lift the moratorium prior to filling those gaps, while participants wishing to lift the moratorium are of the view that the only way to fill those gaps is to lift the moratorium. Information gathering and consensus building activities would serve to reduce areas of disagreement.


RECOMMENDATIONS
The Panel in Section 6 sets out for the Government of Canada’s consideration
options ranging from: keeping the moratorium (Option 1), which would be supported by 75% of those who took part in its process; to keeping the moratorium or deferring the decision on it while undertaking a suite of activities and taking a decision at a future time (Option 2); to lifting the moratorium and undertaking a suite of activities prior to accepting any oil and gas activity applications (Option 3); and to lifting the moratorium (Option 4) which would be supported by 23% of participants. The Panel had not specifically asked participants for views on Options 2 and 3, where the issues in regard to doing further work include: the activities to be pursued; the parties to be involved; and the process for that involvement. In addition to considering these options, the Panel considers that any further studies related to the moratorium should give particular attention to the following matters: environmental effects; fisheries; information issues; technology; hydrocarbon resources; regulatory regime; protected areas; alternative energy sources; the Kyoto Protocol; cultural values; and social and economic impacts. The need to address First Nations concerns is of central importance.

Posted by Arthur Caldicott on November 19, 2004

November 17, 2004

Reliable, cost-effective power for the Island

Bob Elton
Special to the Vancouver Sun
17 Nov 2004

sqwalk.com
COMMENT: BC Hydro CEO Bob Elton is using his office to help sweep his Call for Tenders (CFT) decision through the BCUC review process. He adds nothing to the discussion. He doesn't address any of the concerns with the Duke Point Project (DPP) that was selected as best-in-class from the CFT.

For example: the CFT was constructed to give DPP, and other proposals that resubmitted BC Hydro's failed VIGP back into the CFT, a $50 million bottom-line advantage. BC Hydro is still taking on all the gas price risk, in an era in which natural gas prices have been at record high levels and promise to go higher in the future.

As Elton presents it here, the BCUC and BC Hydro are working together to rush the DPP project through to a construction start. If the BCUC is to retain any credibility, it will respond positively to those interveners - as diverse as the GSX Concerned Citizens Coalition and the Joint Industry Electricity Steering Committee and conduct a full, open, oral hearing into BC Hydro's application for an Electricity Purchase Agreement
sqwalk.com

BC Hydro's recent announcement that Pristine Power was the successful proponent in the Vancouver Island Call for Tender (VICFT) process has generated a lot of attention.

And that is understandable -- we have been working on a solution to the Island's electricity problem for over a decade and there have been a vast array of opinions on the best way to do that.

I think that diversity of views has been very valuable, and BC Hydro has learned from it. And we look forward to continued discussion with all interested parties as part of the B.C. Utilities Commission's process to review the outcome of the VICFT, which begins on Nov. 29.

In advance of that process, I thought it might be useful to reiterate some of the principles that guided us through the VICFT.

The first was our primary goal -- to ensure the reliable supply of electricity to our customers on Vancouver Island after 2007. We cannot -- and will not -- compromise on that goal, as BC Hydro has an obligation to serve its customers.

We have known for some time now that obligation was threatened by the deteriorating undersea high voltage direct current transmission cables to the Island that we won't be able to count on after 2007. So we needed to find a solution that was guaranteed to work by that time.

We originally proposed our own solution -- the Vancouver Island Generation Plant. But last year the BCUC -- while agreeing with the problem and timing on Vancouver Island -- decided that ours was not the most cost-effective solution.

That was where the VICFT process came in.

We designed the VICFT based on the recommendations of the BCUC. That included using its determination of what the most "cost-effective" solution would be, as well as hiring an independent, third-party reviewer to ensure the process was fair and competitive.

For the latter, we selected PricewaterhouseCoopers, and it has monitored the process right from the beginning of the VICFT. I am pleased to say that at every step of the process PwC has confirmed the fairness and competitiveness of the VICFT. Its reports on this matter are listed on our website at www.bchydro.com.

It is Pristine Power, then, which has the successful proposal in the VICFT. It will be a 252-megawatt natural gas-fired generating station at Duke Point in Nanaimo that will be in place by 2007. We feel confident this will help ensure we can continue to provide the reliable, cost-effective power our customers need on Vancouver Island.

That is some of the background on our recent announcement. As I mentioned, we look forward to discussing this further with all interested parties as part of the BCUC process that begins on Nov. 29. Working together through this regulatory process will ensure we can continue to meet our obligation to keep the lights on for our customers on Vancouver Island.

Bob Elton is president and CEO of BC Hydro.

© The Vancouver Sun 2004

Posted by Arthur Caldicott on November 17, 2004

November 16, 2004

Nov 26 deadline for EPA review

Fri Nov 19 - BC Hydro expected to file application for EPA with BCUC
Fri Nov 26 - deadline for applications to attend Nov 29 Procedural Conference
Fri Nov 29 - Procedural Conference, 8:30 am, 4th floor, 855 Homer, Vancouver

Action item: write a letter to the BCUC. More info below.

We have just become aware that the BC Utilities Commission is already "expediting" its review of the Electricity Purchase Agreement (EPA) that it expects BC Hydro to file an application for on November 19. See Order G-99-04.

The EPA is the agreement between BC Hydro and Duke Point Power(DPP), the company that has successfully proposed to resurrect BC Hydro's Vancouver Island Generation Project (VIGP) at Duke Point. The BCUC review of the EPA will be the only regulatory process that the DPP project has to undergo - no environmental assessment, no review of the project, just the business agreement between BC Hydro and Duke Point Power Ltd.

When BCUC denied BC Hydro its permit for VIGP, and encouraged BC Hydro to proceed with the Call for Tenders (CFT), it said it would expedite the EPA review that would be the expected outcome of the CFT.

On November 29, in Vancouver, the BCUC will hold a Procedural Conference regarding the regulatory process for the EPA. Be there, or lobby like hell between now and then to have one held in Nanaimo.

Now is the time to write to the BCUC. Here are some worthy things to write about:

1. demand a Procedural Conference in Nanaimo, as well as or instead of Vancouver. Lots of good reasons for this. The Vancouver location is convenient only for the BCUC and the regular industry interveners (who have big expense accounts) whereas people from Vancouver Island have to personally cover travel costs to Vancouver.

2. apply as an intervener, or at least as an interested party, in the EPA review of DPP (no fancy language required. That sentence is just about all you require, though you might want to skip the abbreviations, explain why you are interested, and what your objectives are.

3. be critical of the obscurity of the notice of the registration deadline and date for the Procedural Conference. (That is, it was sent only to a selected list - interveners in BC Hydro's Revenue Requirement hearing - and buried in unfindable obscurity on the BCUC website.)

4. remind the BCUC that expediting doesn't mean short-circuiting due process, or the public's right to be made aware of and participate in the process.

5. ask why there were no ads in local papers. The BCUC was aware that in the VIGP review there wass a great deal of local concern and public concern that is not necessarily local, about gas-fired electricity generation projects on Vancouver Island. The BCUC must make efforts to be inclusive.

6. tell the BCUC that you want a full oral hearing for the DPP EPA.

THE DEADLINE IS FRIDAY, NOVEMBER 26 TO REGISTER TO HAVE ANY SAY IN WHAT HAPPENS NEXT.

THE HEARING IS NOVEMBER 29, 8:30 AM, 855 HOMER, VANCOUVER.

Write to:

Mr. Robert J. Pellatt
Commission Secretary
BC Utilities Commission
Sixth Floor, 900 Howe Street, Box 250
Vancouver, BC, V6Z 2N3
Fax: 604-660-1102
Email: commission.secretary@bcuc.com

Re: Order G-99-04, Review of Electricity Purchase Agreement

Thank-you
Steering Committee
GSX Concerned Citizens Coalition and
Nanaimo Citizens Organizing Committee

Posted by Arthur Caldicott on November 16, 2004

Coalition Against GSX Cites More Key Setbacks for Controversial Pipeline

For Immediate Release
16 Nov 2004


For more information, contact:
RE Sources for Sustainable Communities, Wendy Steffensen, (360) 733-8307, waters@re-sources.org
Fuel Safe Washington; Fred Felleman, (206)595-3825, felleman@comcast.net
Neighbors for Birch Point; Jo Slivinski, (360) 371-0301, josl@nas.com
Smart Growth Birch Bay; Alan Friedlob, (360) 371-3441, citizenscience@comcast.net
Friends of the San Juans; Stephanie Buffum, (360) 378-2319, Stephanie@sanjuans.org
North Cascades Audubon Society, Paul Woodcock, (360) 671-1537, paulwoodcock@earthlink.net
GSX Concerned Citizen Coalition of BC; Arthur Caldicott (250) 370-9930, x22, arthurcaldicott@sqwalk.com


On Tuesday, November 9, 2004, the San Juan Board of County Commissioners denied on appeal a Shoreline Substantial Development Permit applied for by GSX (Georgia Strait Crossing) Pipeline, LLC that would allow a massive natural gas pipeline to cross through San Juan County via the Strait of Georgia on its 84.5-mile crossing from Sumas through Whatcom County to Cherry Point and then on to Vancouver Island, BC. The U.S. portion of the pipeline is part of a larger project jointly sponsored by British Columbia Hydro and Power Authority (BC Hydro) and Williams Gas Pipeline Company (Williams). FRIENDS of the San Juans had challenged the San Juan County Hearing Examiner's earlier approval of the Shoreline Substantial Development Permit for the GSX permit.

On November 4, BC Hydro's Senior Vice President of Distribution, Bev Van Ruyven, stated, "We would go with the Terasen alternative [instead of GSX] if Terasen does get regulatory approval, and we can firm up costs." Terasen operates the existing pipeline to Vancouver Island and is currently seeking regulatory approval from the BC Utilities Commission to upgrade the system. Terasen claims, and BC Hydro concurs, that the upgrades will be cheaper than GSX. BC Hydro's statement was corroborated the same day by Richard Neufeld, Minister of Energy of Mines, who said that if the regulatory review of Terasen's application is successful, "then GSX would not be needed."

These developments underscore the fundamental reality that Williams' stated purpose for the pipeline-to transport natural gas from Canada through Whatcom and San Juan counties to Vancouver Island-is not viable. The project has no local support on either side of the border and no certain buyer for the gas it was designed to deliver. Also, in Whatcom County, the decision-making process has been slowed because Williams did not apply for a Substantial Development Permit, which the Whatcom County Council maintains is required.

Furthermore, according to Fred Felleman of Fuel Safe Washington, who is awaiting a decision from the 10th Circuit Court of Appeals on their challenge to FERC's {Federal Energy Regulatory Commission] authority to permit the project in the first place, "It is clear that Whatcom and San Juan Counties are being asked to shoulder the burden of an unneeded project. Unfortunately," continued Felleman, "the Department of Ecology's failure to respond to the applicant in a timely manner and the failure of the Washington Attorney General's office to defend the Counties' interests essentially leaves the protection of our increasingly imperiled waters in the hands of a Canadian business decision."

Yet Washington State, Whatcom and San Juan Counties are all on record as opposing the implementation of GSX, and now BC Hydro, the original sponsor for this project, is almost certain to withdraw its support. With BC Hydro's announcement and the reversal of the San Juan County decision, coalition organizations remain "cautiously optimistic" about these recent developments on both sides of the border, regarding the future of GSX.

Wendy Steffensen of RE Sources stated, "I am very pleased that BC Hydro has acknowledged that Terasen is the cheaper alternative. Environmental and neighborhood groups have been saying for years that they were cheaper alternatives to GSX. The destruction of farmland, and marine and riparian habitats for the GSX pipeline is absolutely unnecessary."

Our coalition of organizations expects that BC Hydro will choose Terasen over GSX and will force the withdrawal of this proposal by Williams. If Williams does not withdraw GSX, we will continue to actively fight the implementation of this pipeline project that provides so little benefit to Washington State relative to its formidable environmental and safety risks.

#

Posted by Arthur Caldicott on November 16, 2004

The flaws in the Duke Point deal

Dan Potts
Joint Industry Electricity Steering Committee
Special to the Vancouver Sun
16 Nov 2004

sqwalk.com
COMMENT: After BC Hydro was denied a permit in September 2003 for its gas-fired generation project at Duke Point, it began a year long process - the Call for Tenders (CFT) - to find the lowest cost generation solution to meet a 2007 shortfall on Vancouver Island.

Critics of the process ranged from environmentalists and community groups to industrial users. In a mini-hearing in late 2003, the BCUC said that the CFT could proceed, but that questions about the process and decision criteria in the CFT would be addressed in their review of any electricity purchase agreements applied for following the Call.

This opinion from the industrial users of electricity is a major shot across the bow of the EPA. - Arthur Caldicott
sqwalk.com

The proposed award of a power supply contract to Duke Point Power Limited Partnership raises important concerns.

The contract to build and operate a 252-megawatt gas-fired combined-cycle power plant at Duke Point, near Nanaimo, includes the provisions that the site and equipment BC Hydro has acquired at Duke Point will be sold to Duke Point Power for $50 million and, if the contract is approved by the B.C. Utilities Commission, the company will construct and operate the plant.

Total reported capital cost of the facility is $282 million. This leaves Hydro with a write-off of $70 million, which it also intends to collect from customers.

In proposing to proceed with the sale and power purchase agreement, BC Hydro is effectively reactivating the project previously rejected by the BCUC in late 2003. Just one year after that rejection we are right back where we started, proposing the same questionable project but with a different owner.

Ratepayers have serious reservations regarding the economics of this proposal. To attract proponents, BC Hydro has had to structure the bid solicitation very differently than would normally be the case when purchasing power from third parties.

Normally a contract with an independent power producer would involve the purchase of a certain quantity of electric power at an initial price plus some allowances for price increases related to inflation over time.

Once the contract is signed, the price and quantity of electric power can be estimated rather closely over the term of the contract.

Not so in this case. Here, the proposed contract includes annual payments to Duke Point Power for the fixed costs of supplying the capacity, and then an amount per kilowatt hour when the power is produced using natural gas paid for and delivered by BC Hydro.

To estimate the cost of the power you must estimate the cost of the gas for the length of the 25-year contract and also estimate the amount of time the plant will operate. Both estimates are subject to an extreme degree of uncertainty and will likely render the plant uneconomic for much of its useful life.

Market conditions for natural gas and electricity for 2004 up to November illustrate the problem. For a plant of the type proposed for Duke Point the price of importing power from the U.S. was less than the fuel cost for this plant for 80 per cent of the time.

Since power is available for import at lower costs than the fuel cost, the plant would operate economically for 20 per cent of the time and may also operate to alleviate transmission constraints during brief periods of extreme winter cold on Vancouver Island.

But under the proposed contract, the payments for capacity, sufficient to pay the fixed costs and provide a reasonable rate of return to investors, will continue. This raises the real possibility that high fuel costs and low utilization will make the power from this plant horrendously expensive.

BC Hydro is a regulated utility with a guaranteed rate of return of 13.91 per cent on equity. Rates are set by the BCUC to recover costs and provide that rate of return. Energy costs above projections flow into a deferral account for eventual payment by customers, and customers are the ones that will bear the full brunt of both the gas price and utilization risk associated with the proposed plant at Duke Point.

BC Hydro is expected to shortly make application to the BCUC for approval of the proposed contract. We would hope that the BCUC will require BC Hydro to provide some real alternatives for an economic comparison.

These alternatives could include increased maintenance for the existing transmission lines, management of industrial load to reduce peak power requirements, the possibility of expediting construction of additional transmission capacity to the Island and the alternative of generating power using available, lower-cost fuels.

Better options must be developed if BC Hydro is serious about supplying reliable low-cost power for generations.

Dan Potts is the executive director of the Joint Industry Electricity Steering Committee that represents the major industrial users of purchased electric power in B.C.'s pulp and paper, mining and mineral processing, and electro-chemical industries.

(c) The Vancouver Sun 2004

Posted by Arthur Caldicott on November 16, 2004

Alternative energy pathfinder: Who needs fossil fuel anyway?

Terence Chea
Associated Press Writer
Helena Independent Record
16 Nov 2004

Amory Lovins drives a hybrid that gets 64 miles per gallon and lives in a solar-powered house that is so energy-efficient he's able to grow bananas in an indoor jungle high in the Colorado Rockies.

Yet the 54-year-old renewable energy evangelist, who emerged as one of the most influential energy thinkers three decades ago during the last oil crisis, is no anti-establishment foe of the free market.

The United States can end its dependence on foreign oil and make money along the way, he argued at a recent environmental conference in San Rafael, Calif., with the salesman-like flair of a Fortune 500 chief preaching to a hall of shareholders.

Crude prices have hit record highs this year as haggard U.S. soldiers daily meet death in the country with the world's second-largest oil reserves, casualties in an expensive war Lovins would argue it's folly to fight if - as some Bush administration critics charge - it's really all about fossil fuel.

''The United States can get completely off oil and revitalize its economy led by business for profit,'' says Lovins, who runs the Rocky Mountain Institute in Snowmass, Colo. ''Saving and substituting for oil costs less than buying oil. Getting completely off oil makes sense and makes money.''

A new book by Lovins and his think-tank colleagues, ''Winning the Oil Endgame,'' offers a technology-driven blueprint to wean the country off petroleum within a few decades: first, double the fuel efficiency of cars, trucks and airplanes; then replace gasoline with alternative fuels such as ethanol and hydrogen.

The transition to a post-petroleum future will generate jobs, create new industries, reduce greenhouse gases and improve national security, he says.

For now, automakers and energy firms need to adopt new business strategies, and lawmakers need to craft policies that promote this oil-free future. By Lovins' estimates, it will require an investment of $180 billion over 10 years.

That's less than the U.S. involvement in Iraq will end up costing, and Lovins says it will save $70 billion a year by 2025.

''Right now, the world supply-demand balance for oil is so terribly tight that any little thing just throws the market into a tizzy,'' Lovins said in a recent interview. ''We're not going to drill our way out of this one.''

Many experts agree that the country's oil dependency is unsustainable and encourages economic volatility, global warming and geopolitical instability. Automakers are already developing more fuel-efficient vehicles that run on hybrid-electric engines, clean diesel, biofuels and hydrogen fuel cells.

But Lovins says the auto industry won't move fast enough without the guiding hand of federal authorities. To fuel a quicker transition to alternative fuels, Lovins says the government should spend more on research into fuel efficient technology, advanced materials and alternative fuels.

To pay for such programs, Lovins proposes fees on gas-guzzling vehicles and the opposite - rebates - for fuel-efficient vehicles. In addition, low-income Americans would be assisted financially to buy or lease efficient vehicles.

Lovins' message doesn't sit well with the auto industry.

It's consumers, not think tanks, who determine whether more energy-efficient technologies will succeed commercially, said Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers.

''Consumers are in the driver's seat,'' she said. ''Many consumers don't want to sacrifice performance, passenger room, cargo space, safety and even towing ability for greater fuel efficiency.''

Other obstacles also block the road to an oil-free future - hydrogen- and biofuel-powered vehicles are years away from becoming mainstream.

Lovins acknowledges the challenges, but is convinced that good sense - along with environmental sustainability - are on his side.

He's certainly never been content to follow convention. Born in Washington, D.C., he studied physics at Harvard and Oxford universities, but dropped out of both to pursue his interest in energy policy.

''I realized that energy was at the root of many security, development and environment problems,'' says Lovins, who gained national attention in 1976 with his Foreign Affairs essay, ''Energy Strategy: The Road Not Taken.''

While most analysts were focused on how to secure more oil - what he calls the ''hard energy path'' - Lovins argued for the ''soft energy path'' of boosting fuel efficiency and developing alternative fuels.

Lovins has since authored more than two dozen books, founded the Rocky Mountain Institute in 1982 and advised governments and industries worldwide.

While other environmentalists argue about political approaches, Lovins crunches the numbers needed to win over business executives and policy-makers in Washington.

His plan in brief:

Oil consumption can be reduced by half by doubling fuel efficiency, mainly through ultralight vehicles with advanced materials such as carbon fiber that improve both safety and performance.

''We no longer have to choose between making cars light and safe,'' he says.

Meanwhile, the nation must transition to alternative fuels. Ethanol from corn is now sold in some Midwestern states but hasn't proven economical elsewhere. Lovins advocates making ethanol from plant waste, such as corn stalks, switchgrass and poplar trees.

Another alternative is hydrogen, often touted as the fuel of the future. Hydrogen fuel cells generate electricity through a chemical reaction between hydrogen and oxygen without harmful emissions. Lovins wants to boost the efficiency of natural gas and use the saved energy to produce the hydrogen.

If his ideas were widely adopted, Lovins calculates that the country could stop importing oil by 2040 and run without oil by 2050.

Long before then, fuel efficient cars and alternative fuels could become new growth industries for urban and rural America.

''We're in that period where one idea is dying and another is struggling to be born,'' Lovins says.

On the Net:

Rocky Mountain Institute: http://www.rmi.org

Winning the Oil Endgame www.oilendgame.org

Amory Lovins video clips

Winning the Oil Endgame presentation

Download Winning the Oil Endgame

Exploring Vancouver Island's Energy Future, a report commissioned by BC Hydro and prepared by Amory Lovins' Rocky Mountain Institute. This report shows a multitude of ways forward with pricing signals, sustainable energy, conservation, demand management. The workshop was held in July 2003, in the middle of regulatory hearings into GSX and VIGP. Only BC Hydro and a few industry and government cronies were present, that is, no-one from the progressive side of the energy debate. It was a day and US$47,000 spent with the leading visionaries in the energy sector.

Money wasted in this case. What has BC Hydro done with the report and its recommendations? Nothing.

Posted by Arthur Caldicott on November 16, 2004

November 14, 2004

Vision put forward of world without oil

Nanaimo News Bulletin
Melissa Fryer
13 Nov 2004

Eventually people will have to find a way to live without oil - sooner rather than later.

That's the message author and environmentalist Guy Dauncey brought in his address to a forum on the challenges and opportunities facing Nanaimo in a world without fossil fuels.

He said future historians will identify the current time period as the fossil fuel age. They will say that humans were either very sensible for switching to sustainable energy or that humans had failed, causing climate change and the death of millions of plants and animals.

"We are the people who are going to decide how that goes," Dauncey said.

Climate change, increased heat and dryness are directly related to our use of fossil fuels, said Dauncey.

Evidence comes from the B.C. forest fires and the melting ice in the Arctic.

"The Arctic is the canary in the coal mine for the world," Dauncey said.

"You cannot have polar bears and burn fossil fuels. Polar bears need ice; fossil fuels melt ice."

Dauncey points to initiatives in Europe, for examples, of sustainable energy use in homes and in vehicles.

Some housing developments include solar panels for heat and hot water. Budings are small, making them easier to heat, with stores close by to promote pedestrian trips.

Increasing walking, cycling and use of transit helps to cut down on fuel use. Car share programs allow members access to a range of vehicles, allowing people to choose the right car for their trip.

New vehicles that use fuel sources other than gasoline also help reduce dependence on fossil fuels, said Dauncey.

"We will have to. There won't be the oil and gas to heat ourselves," Dauncey said.

The City of Nanaimo's advisory committee on the environment sponsored the forum. Made up of councillors and members of the community, the committee advises city council and raises environmental concerns in the community.

Guy Dauncey is founding president of the BC Sustainable Energy Association, publisher of a number of books on the challenges of climate change, and publisher of EcoNews. You can reach Guy through BC-SEA or EarthFuture.

Posted by Arthur Caldicott on November 14, 2004

November 11, 2004

Private power plant approved for Nanaimo

Mark Lowey
Business Edge

Duke Point set for Vancouver Island community

Vancouver Island residents are going to get a new natural gas-fired power plant at Nanaimo after all – just not one built by BC Hydro.

Duke Point Power Limited Partnership is the successful bidder in BC Hydro’s call for private-sector bids to supply much-needed power to Islanders.

The Duke Point partnership is majority owned by Macquarie Essential Assets Partnership (MEAP), Pristine Power Inc. of Calgary and a group of private investors.

MEAP is part of the global Macquarie Group of companies, headquartered in Australia. Macquarie Bank established MEAP, an unlisted fund of $460 million, last May to offer investors the ability to invest – especially in deregulated power markets – in relatively low-risk essential infrastructure assets, including electricity transmission and distribution networks.

The Duke Point partnership successfully bid to build a 250-megawatt power plant in the Duke Point Industrial Park in Nanaimo.

It’s exactly the same place BC Hydro had planned to build its gas-fired power plant, before the BC Utilities Commission decided in September 2003 that Hydro’s $370-million plan was too expensive and ordered the Crown corporation to call for private- sector proposals.

Like the defunct Hydro power plant, the Duke Point partnership’s facility will use proven combined-cycle natural gas-fired turbine technology.

Pristine Power will be responsible for the day-to-day management.

The independent power firm estimates it will be able to build the power plant in 18 months for $280 million in “hard-capital costs” (excluding the cost of carrying interest on the debt during construction). That’s $90 million cheaper than what Hydro had in mind.

Pristine and its partners’ biggest hurdle now will not be getting through B.C.’s streamlined regulatory process.

The challenge will be convincing Nanaimo residents, many of whom don’t want the plant in their backyard, that it should be built there so all Islanders aren’t left in the dark.

BC Hydro spent $120 million developing its Duke Point power project, but will recover only $50 million of that amount in the deal announced with Pristine, according to a report.

So who’ll get stuck with the remaining $70-million tab? Ultimately, it will be B.C. taxpayers, either though higher electricity rates for all Hydro customers, a cut in Hydro’s dividend to taxpayers or a slash in the Crown corporation’s budget.

Posted by Arthur Caldicott on November 11, 2004

November 10, 2004

Jury still out on plant's savings

Editorial Board
Nanaimo News Bulletin
10 Nov 2004

Back in September, 2003 B.C. Hydro went before the B.C. Utilities Commission seeking permission to build a natural gas power plant at Duke Point.

The request was denied on the basis that B.C. Hydro had not demonstrated the power plant was the most cost-effective way to generate power.

As a result B.C. Hydro issued a call for tenders. A number of companies responded, with one - a proposal by Pristine Power Inc. - being chosen.

To no one's surprise, the proposal is for a natural gas power plant at Duke Point. So we're back to square one with a private company building it instead.

For anyone who believes that the private sector can do better than a government agency, here is an apples-to-apples comparison - except for the small print. The Pristine Power Inc. facility will indeed be cheaper to build, but that's thanks almost certainly to the groundwork already laid by B.C. Hydro.

The corporation was forced to write off considerable costs from the Duke Point project, including $50 million for environmental approval costs, $61 million for a gas and steam turbine and $9 million for the property at Duke Point.

If so, are the savings real? That is, will Vancouver Island be assured of electricity as cheap or cheaper than it would under the B.C. Hydro proposal?

Hopefully the utility commission that started this whole process will end it with good news for hydro customers - news that also takes into consideration the $120 million in writedowns. If not, there's a very real chance all the utilities commission did was create paperwork and put the future of the Island's electricity in private instead of public hands.

That's an odd directive of a commission that (to the best of our knowledge) was never given that mandate.

News Bulletin editorial board

---

Posted by Arthur Caldicott on November 10, 2004

San Juan County hearing examiner's decision on GSX overturned

Yesterday, San Juan County joined neighbouring Whatcom County and British Columbia, in reducing the likelihood that the GSX Pipeline will go ahead.

"Hearing examiner's decision on GSX overturned [by San Juan County Commissioners]", San Juan Islander, Nov 10, 2004 (link)

"they [Terasen] could put in enough storage for peak use and that will be reviewed by the BCUC and if that in fact is the case then GSX would not be needed." Richard Neufeld, Minister of Energy of Mines, CKNW Radio, Nov 4, 2004

"if they [Terasen] do get regulatory approval and we can firm up costs, we would go with the Terasen alternative" Bev van Ruyven, Vice-Pesident, BC Hydro, CBC Radio, Nov 4, 2004

"[Whatcom County] Council delays action on pipeline", John Stark, Bellingham Herald, Oct 28, 2004 (link)


from the San Juan Islander...

Hearing examiner's decision on GSX overturned

posted 11/10/04
In a two to one vote, San Juan County Board of County Commissioners overturned Hearing Examiner Wick Dufford's decision about a gas pipeline. He had approved a permit for the Georgia Strait Crossing Pipeline Project after listening to testimony in an April 9, 2004 hearing. The project includes a four-mile segment in county waters.

The Friends of the San Juans appealed the decision to the BOCC on the grounds Dufford erred when he approved the permit. "We believe the hearing examiner essentially rewrote San Juan County shoreline code," said FOSJ attorney John Karpinsky. Pipelines were only to be allowed if there were no feasible alternatives. Dufford interpreted feasible as preferable, Karpinsky said.

In order to be approved, the pipeline would have to be in the public interest. "The hearing examiner said because someone is going to make money, it is a benefit to the state. People can make money off prostitution," said Commissioner Rhea Miller said. "I don't see anyway this (the pipeline) promotes public interest."

Commissioner John Evans did not think there was an error of law and voted against overturning Dufford's decision. He also noted, "it is not a crime to make money."

Commissioner Darcie Nielsen believed Dufford made a stretch to approve the permit. She voted with Miller to overturn the decision and go back to the original staff recommendation to deny the permit.

Because federal agencies including the the Federal Energy Regulation Commission (FERC) are involved in permitting the project, it is unclear how much of an impact the county's decision will have. The next step in the permit process would be an appeal to the Shoreline Management Hearings Board if the pipeline company decides to appeal the BOCC decision.


This article is followed in the San Juan Islander with a series of articles on GSX going back to March 2000. You can obtain this article and the historical ones at:
http://www.sanjuanislander.com/county/permit_center/gsx_pipeline.shtml

Posted by Arthur Caldicott on November 10, 2004

November 09, 2004

More illumination is needed on Hydro's Duke Point deal

Editorial
Vancouver Sun
09 Nov 2004

The B.C. Utilities Commission created an awkward problem when it derailed the Vancouver Island Generation Project last year.

B.C. Hydro had already spent $120 million on the plan to build a gas-fired, 265-megawatt generation plant at Duke Point in Nanaimo and a related gas pipeline to Washington state.

The Utilities Commission, which was given regulatory control over the project following the change in government in 2001, said the plant was larger than needed and asked Hydro to consider private-sector alternatives.

In response, Hydro put out a call for tenders for the supply of power for Vancouver Island.

Hydro has now announced a winning project, but the details of that choice raise a number of troubling issues about how well ratepayers are being served by this whole exercise.

Hydro's plan for Duke Point had a projected cost of $370 million plus the cost of the gas pipeline -- another $340 million.

It's not at all clear that the proposal announced by Hydro last week will be any less expensive for electricity users; in fact, it might cost more over time.

The new plant will be built by Pristine Power, a Calgary-based company, which plans with its partners to pay Hydro $50 million for equipment already purchased and built and to operate a plant similar to the one Hydro was planning.

Pristine estimates it will spend at least $280 million in "hard costs." In addition, Pristine will face financing and other costs related to getting the plant up and running.

Hydro's construction budget had included $34 million to $41 million for interest cost during construction. There is no reason to assume Pristine's financing costs will be any less.

Hydro has not said what price it will be paying for power from the Duke Point plant, but we have to assume it will include a reasonable rate of return on the new company's investment.

On top of that, Hydro will have to eat $70 million in write-offs because its project and the associated gas pipeline are not proceeding.

So the B.C. Utilities Commission will have to explain to ratepayers how they are better off with what is essentially the same project proceeding under private ownership a year after they told Hydro to think again.

They will also have to explain to the other private-sector companies -- that spent time and money developing alternate proposals -- how this process has been fair to them.

Hydro has a clear conflict of interest in choosing a proposal here because of the carryover from its original project. Without the $50 million Pristine will pay for equipment already purchased for the Duke Point Plant, Hydro was looking at having to write off the entire $120 million.

British Columbians who buy their electricity from Hydro have a mixed interest here. On one hand, any losses suffered by the publicly owned utility will affect our power rates.

On the other, we have a long-term interest in attracting private power producers to the province.

If they cannot be assured they will be treated fairly, they will simply go elsewhere at a time when we need their investment and innovation here.

---

Posted by Arthur Caldicott on November 09, 2004

November 04, 2004

Island deal leaves Hydro on the hook for $70m

Customers or taxpayers likely 'options' to cover Nanaimo project costs

Scott Simpson
Vancouver Sun
04 Nov 2004


BC Hydro customers could be on the hook for $70 million in corporate writeoffs that were incurred during a controversial, drawn-out process to address a looming electricity shortfall on Vancouver Island.

Hydro distribution vice-president Bev Van Ruyven announced Wednesday in Nanaimo that Pristine Power of Calgary will build a 252-megawatt gas-fired generating plant at Duke Point to provide Island residents with a reliable electricity supply.

Hydro originally spent $120 million developing the project, but will recover only $50 million of that amount in the deal it announced with Pristine.

Van Ruyven said it's up to the B.C. Utilities Commission to decide how Hydro will make up the other $70 million it spent.

Options include higher electricity rates for all Hydro customers, a reduction in the dividend that Hydro pays to B.C. taxpayers as a Crown corporation, or Hydro may have to slash its budget to make up the $70 million, Van Ruyven said.

Hydro estimates that without the Duke Point plant, Island residents could be facing brownouts by 2007 due to constraints on supply and aging undersea transmission cables.

Pristine estimates hard capital costs of the project at $280 million -- $90 million less than what Hydro was planning to spend -- and expects it will take 18 months to put the plant into production, pending regulatory approval.

For its money, the Calgary-based company gets a brand new gas turbine at a steep discount and inherits a project that has already received all regulatory approvals necessary to proceed.

Hydro set out in 1999 to take on the project itself at an estimated cost of $370 million -- investing $120 million for equipment, permits and land.

However, with the $120 million already spent, the B.C. Utilities Commission (BCUC) in September 2003 rejected Hydro's application to proceed with the project.

The commission said Hydro's project was too expensive, and ordered the Crown corporation to find a private-sector partner in order to cut costs.

The cash crunch isn't entirely Hydro's fault.

The Vancouver Island generating project was underway before the B.C. Liberals took power in May 2001.

At the time, Hydro was not under the jurisdiction of the utilities commission.

But the Liberals put Hydro under BCUC control as part of a new provincial energy plan that called for the private sector to develop all new electricity supply for British Columbia's steadily growing demand.

Hydro decided to keep pushing the project ahead with a promise to find a private-sector buyer when it was finished.

But Hydro was brought up short when the BCUC sided with Hydro critics -- including the province's largest industrial customers -- who were concerned that the Island generating project wasn't the cheapest possible option.

Van Ruyven expects Hydro will be called before the BCUC some time next year to defend its actions and propose options for recovering the $70 million.

"We had been directed by the government," Van Ruyven said. "We will argue that we were headed down a path to build that ... gas-fired plant and we incurred those expenses prudently.

"Now we've got an opportunity with a private-sector partner coming in who says that they can build it and operate it for less than we said we could.

"They are going to write us a cheque for $50 million too. That's a good thing."

It's up to the utilities commission to decide how long it will deliberate over the proposed deal between Hydro and Pristine Power.

Van Ruyven said Hydro is hopeful that the commission will render a verdict in the deal in about three months.

"They did say they would make a decision on an expedited basis," Van Ruyven said. "We're obviously pretty anxious to get going on this and they completely agree with our issues on security of supply and the aging cables. So they know we're up against a crunch here."

Pristine president Jeffry Myers described the company as a group of "power industry veterans" who are confident that they can start delivering electricity 18 months after start of construction.

Again, it's up to the BCUC to decide when that construction will begin.

Myers provided some details about the deal, but would not disclose the full cost of the project nor the rate that Hydro will pay Pristine to purchase its electricity.

"Our hard capital costs will be around $280 million. Then there are some soft capital costs, like the cost of carrying the interest on the debt during construction," Myers said.

"Then we look at getting a return on our money to satisfy our investors over a 25 year term of the contract."

The process Hydro undertook in its Vancouver Island call for tenders was reviewed and pronounced sound by PricewaterhouseCoopers LP.

Hydro's original plan also called for construction of a $320 million gas pipeline from Washington State to Vancouver Island, across Georgia Strait, to feed the Duke Point plant.

Hydro already has regulatory approval from the National Energy Board to construct that pipeline in partnership with a U.S. energy company, Williams.

But Van Ruyven said that project may be unnecessary because Terasen Inc., is pursuing a project that would increase the capacity in its existing gas transmission lines to Vancouver Island.

Terasen is currently before the BCUC with that project.

"They have provided us with a new gas tooling price which is significantly less expensive than the Georgia Strait Crossing," Van Ruyven said.

"If they are able to get regulatory approval and firm up that tolling price to us, it wouldn't be prudent for us to refuse it."

The deal was criticized by GSX Concerned Citizens Coalition, a group of Vancouver Island who have argued that Hydro should seek environmentally friendly alternatives to a project that will diminish air quality in the Nanaimo area.

"Gas-generated electricity just keeps going up in price because gas keeps going up in price," said GSX director Arthur Caldicott.

We are disappointed because it locks Vancouver Island into a gas-fired electricity solution. But we are encouraged by the unofficial indicators we got on Georgia Strait Crossing that that pipeline probably won't get built."

BC Citizens for Public Power executive director Mark Veerkamp said Hydro's decision overrides the concerns of the community that must play host to the project.

"Here's a community in outrage over a gas plant in their area, the thing gets killed at the B.C. Utilities Commission, and it comes back as a private project with less public accountability.

"So I think it's a bit of a lose-lose situation for people on the Island.

"Hydro says the project is going to be cost effective, but we don't get a chance to see what rates are going to be charged back to BC Hydro.

"We don't know what BC Hydro is paying for the power."

© The Vancouver Sun 2004

http://www.canada.com/vancouver/vancouversun/index.html

Posted by Arthur Caldicott on November 04, 2004

Duke Point project to power Island

Andrew A. Duffy and Judith Lavoie
Times Colonist
Thursday, November 04, 2004


It may have a new name, new price tag and lower electrical output, but the Vancouver Island Generation Project appears to have risen from the dead.

B.C. Hydro announced Wednesday that Duke Point Power Ltd., a wholly owned subsidiary of Macquarie Essential Assets, Pristine Power and a group of private investors, is the successful bidder in the call for proposals to provide Vancouver Island with a new source of electricity.

The Duke Point Project, a 252 megawatt, gas-fired power plant to be built at Duke Point in Nanaimo at a cost of $280 million, replaces the supposedly dead-and-buried VIGP -- a 265-megawatt plant Hydro intended to build on the same site at a cost of $370 million.

That project was rejected by the B.C. Utilities Commission as a too large and costly way to make up the Island's energy shortfall, prompting the call for tenders.

"[This] is the best way to provide our customers with the reliable capacity required to meet Vancouver Island's anticipated supply shortfall in 2007," said Bev Van Ruyven, Hydro's vice-president of distribution, noting the undersea cables that run from the mainland and provide the Island with 80 per cent of its power are to be decommissioned that year.

"This is a private company and a less expensive option ... it was the most cost-effective means of getting the minimum required [electricity]. It could just as easily have been a number of smaller projects."

Reaction to the news ranged from relief at Nanaimo city hall to disappointment from some who opposed the original VIGP, and from the community of Gold River, which had pinned its hopes on a proposal for a thermal generating plant in the community's old pulp mill.

Nanaimo Mayor Gary Korpan called approval of Duke Point Power's proposal great news. "It ensures a stable, secure electrical supply for Vancouver Island," he said. "We've had brownouts twice in the last two winters and three years ago we had rolling blackouts -- our economic development plans aren't worth the paper they're printed on if we don't have power."

The economic impact on Nanaimo will be significant, with 200 jobs created during construction, not to mention services sold to the construction crews. The plant itself will provide 15-20 local jobs when it's running, along with more than $900,000 a year in municipal taxes.

Arthur Caldicott, director of the GSX Concerned Citizens Coalition, which has advocated replacement of the undersea cables as the top option, wasn't as enthused.

"Clearly VIGP wasn't [dead] and we didn't really expect it to be dead," Caldicott said. "Of course we're disappointed. We have been critical of the gas-fired strategy for Vancouver Island from the start."

Hydro maintains it's more cost-effective to build on-Island generation than to replace the decaying underwater cables.

Hydro has already invested $65 million in the VIGP on property, permits and turbines, but will recoup $50 million of that in the deal with Pristine.

The announcement that Duke Point Power was the successful bidder prompted accusations from furious Gold River residents that the tender process was skewed in favour of the company, because of the investment Hydro had already made on the Duke Point site. One of the rejected bids came from Green Island Energy Ltd., which planned a thermal generating plant at the former Bowater pulp mill in Gold River.

The village has asked for intervenor status at the utilities commission hearing into the decision and has invited Hydro and provincial government representatives to a public meeting in Gold River Nov. 15. The aim is to convince the commission that Duke Point Power got preferential treatment, and that Green Island can produce clean power more cheaply.

Green Island planned to produce power by burning "biomass": wood, construction waste and pelleted garbage barged in from California. Gold River council had expected the enterprise to be given the go-ahead in addition to the Duke Point project and was shocked to hear the project had been rejected.

"The heartlands of Vancouver Island are in cardiac arrest right now," said Mayor David Lewis. "This is not just a bad decision for Gold River -- it's horrendous for everyone on the Island."

The community has struggled to stay alive since the pulp mill closed six years ago, throwing 400 people out of work. Tax revenue from the mill site plummeted to $300,000 from $1.8 million and the population dropped to 1,400 from 2,000.

Hope appeared last year in the form of Green Island, a company partially owned by pop singer Jewel, which bought the mill site and came up with plans for the thermal generating plant. That spawned interest by other industries that wanted to utilize plant by-products.

Without Green Island, Gold River will have to look at closing facilities such as its pool or rink, Lewis said. "This is devastating. We're all in shock," said the mayor, vowing, however, not to let the community die.

"It may seem far-fetched, but B.C. Hydro has a monopoly and maybe we should look at forming our own Vancouver Island public utility."

Green Island vice-president Sean Ebnet said the company has not yet decided whether to take part in another province-wide B.C. Hydro call for proposals next May. "Right now we don't know whether we will participate in future calls or put up a for sale sign," he said. "We really geared everything to this proposal and we'd invested quite a bit. We were ready to start construction in 2005."

It's estimated Green Island has invested about $20 million in the site.

There was no official word Wednesday on how the gas-fired power plant at Duke Point would be fuelled, but Hydro says it's waiting to hear what happens during B.C. Utilities Commission hearings into Terasen Gas's plan to increase gas supply to the Island.

Van Ruyven says the Terasen project appears to be cheaper than Hydro's controversial $340-million Georgia Strait Crossing (GSX) pipeline.

"They are currently in the regulatory approval process but until such time as we have certainty, we have to keep GSX in the background," she said. "It wouldn't be prudent for us to approve a higher-cost project like that."

Hydro expects the commission's decision by the end of November, the same time the utility intends to file the outcome of the call-for-tender process with the commission.

The commission has said it would expedite its review of the Duke Point plan, meaning the go-ahead or start-over order could come in March.

"We expect mobilization in the spring," said Jeffry Myers, president of Pristine Power, though he said construction won't begin until next fall, with the facility to be operational by May 2007. "It's enough time, but we need to have the bulk of the construction done by late 2006 ... we have built plants of this size in 18 months."

© Times Colonist (Victoria) 2004

http://www.canada.com/victoria/timescolonist/index.html

Posted by Arthur Caldicott on November 04, 2004

November 03, 2004

BC Hydro picks gas-fired Duke Point Power; GSX remains undead

BC Hydro has announced its selection of "Duke Point Power LP", a 252 MW gas-fired electricity generation project for Nanaimo. Proposed by Pristine Power of Calgary, the project is the only one left standing following BC Hydro's year-long Call for Tenders (CFT) selection process.

Isn't this VIGP with a new name?
Yes. Duke Point Power is the Vancouver Island Generation Project (VIGP), this time privately owned and renamed. VIGP was originally sponsored by BC Hydro, and turned down by the BC Utilities Commission (BCUC) in September 2003 because BC Hydro had not demonstrated that VIGP was not the lowest-cost solution to meet an expected supply shortage in 2007.

If the Duke Point Power project is the same thing as VIGP, how can Pristine Power pitch it at a lower cost than BC Hydro was capable of doing?
Possible answers to that question are:


  • A $50 million credit given by BC Hydro to companies wishing to acquire the assets of VIGP and resubmit them into the CFT process, which is what Pristine Power has done.
  • $98 million "sunk" costs in VIGP were written down by BC Hydro earlier in 2004. Are these costs factored into the Pristine Power project costs? Or are they lost from view, but nevertheless borne by BC Hydro's ratepayers, or the taxpayers of BC?
  • The relative appreciation in the Canadian dollar compared to the US dollar results in an apparent reduction in borrowing costs, since the debt and repayment currency is $US. This is a cheap and temporary trick, since exchange rates will fluctuate many times in the decades during which the project costs are being repaid.

Will the Duke Point Power project have to undergo a review by the Environmental Assessment Office or by the BC Utilities Commission?
Probably not. Unless the location or technology changes, the EA permit remains valid. And because the project is privately owned now, it is not subject to a review by BCUC.

BCUC has to review something, though. What is that?
BC Hydro will apply to BCUC for a review of the Electricity Purchase Agreement between BC Hydro and Pristine Power or Duke Point Power LP. The EPA is a commercial agreement, subject to confidentiality considerations. In the past, details within EPAs have not been disclosed, and this has been upheld by the Office of Information and Privacy Commissioner (OIPC). We should expect details of this EPA to be unavailable, as well. This becomes a case of "trust the regulator.", since the Commissioners will be given access to the full agreements. BC Hydro states that they will file this application by November 19.

Who is Pristine Power?
Pristine Power is a group of ex-Westcoast Energy people who were working for Westcoast and Fletcher Challenge and built the Island Cogeneration Project. They claim to have built a number of combined cycle generation plants in North Americal, although its website gives no indication as to what these are.

Is the GSX Pipeline still alive? Where will the Duke Point project get its fuel from?
Today's announcement deferred the GSX Pipeline decision until the BC Utilities Commission has completed its review of Terasen's Resource Plan. Indicators are that the GSX Pipeline is dead, although official statements won't go that far, leaving GSX among the "undead". Fuel supply to the new project remains undecided. Terasen filed evidence in the review of VIGP that it could provide the needed gas, at lower cost, with upgrades to its existing pipeline to Vancouver Island.

BC Hydro news release
BC Hydro Call for Tenders for more information
GSX Concerned Citizens Coalition media release

GSX Concerned Citizens Coalition
For Immediate Release: November 3, 2004

Energy “winner” makes Vancouver Island a loser

Nanaimo, BC – The Duke Point Power Limited Partnership project, winner of BC Hydro’s long-awaited Call For Tenders (CFT) for new energy generation, is not the least-cost option to meet Vancouver Island’s electricity needs, says the GSX Concerned Citizens Coalition (GSXCCC). The Coalition is calling on the BC Utilities Commission to ensure a full public review of the project.

“This result violates the terms of BC Hydro’s CFT and frustrates the Commission’s expectation of the lowest cost solution,” said Tom Hackney, GSXCCC president. “BC Hydro’s vision for Vancouver Island’s future energy is dirty, non-renewable and expensive. Vancouver Islanders must now insist on a thorough review of this inappropriate and costly project. All British Columbian ratepayers will pay for this wrong-headed energy plan.”

The CFT was issued to find the most cost-effective solution to an expected electricity shortfall on Vancouver Island resulting from the zero-rating of existing sub-sea transmission cables. “The real solution is to renew the sub-sea cables as soon as possible,” said Hackney.

In its 2003 review, the Commission found that BC Hydro had underestimated the risk of high gas prices, given the rapid depletion of conventional North American gas resources.

“Gas-generated electricity is no longer cheap,” said GSXCCC director Arthur Caldicott. “It’s time for the BC Transmission Corporation to renew the sub-sea cables, so that the Island will not be cut off from Mainland sources of electricity.”

The GSX Concerned Citizens Coalition has campaigned against BC Hydro’s Vancouver Island electricity strategy since 2000, bringing expert evidence to the National Energy Board review of the Georgia Strait Crossing (GSX) natural gas pipeline and to the BC Utilities Commission review of the Vancouver Island Generation Project, both in 2003. The Coalition has a hundred individual members and eight member groups, including the Sierra Club of Canada - BC Chapter, Georgia Strait Alliance; Council of Canadians – Victoria and Cowichan Chapters, Saturna Island Community Club, Pender Island Conservancy Association, Shawnigan Lake Watershed Watch and the Canadian Parks And Wilderness Society – BC.

- 30 -

For further information, contact:
Tom Hackney (250) 616-7895 cell or (250) 381-4463
Arthur Caldicott (250) 370-9930 x.22


Posted by Arthur Caldicott on November 03, 2004

November 02, 2004

Nov 2: 6.7 Quake off Vancouver Island

November 2 2:02 am PST: A series of earthquakes has occured west of Vancouver Island, B.C. The largest event at 02:02 PST (10:02 UTC) was a Mw=6.7 and was reported felt at Alert Bay, Port Alice and Bamfield, B.C. the largest aftershock in the series so far is a magnitude 5.0 earthquake at 09:23 am PST. Click here for a map. Click here to see the shaking.

Geological Survey of Canada
Recent Earthquake in Western Canada

United States Geological Service
Earthquake Hazards Program

Posted by Arthur Caldicott on November 02, 2004

Wind farm will sell power to B.C. Hydro

Times Colonist (Victoria)
Judith Lavoie
02-Nov-2004


The first wind-farm project in B.C. to be given a contract to sell power to B.C. Hydro has got the environmental go-ahead from the province.

The $100 million Holberg Wind Energy proposal, which envisages 37 to 45 wind turbines on the northern tip of Vancouver Island -- 60 kilometres west of Port Hardy -- could be providing power to B.C. Hydro by 2006, Dan Allard, president of Stothert Power Corp., said Monday.

Stothert, a Vancouver-based company, and Global Renewable Energy Partners Inc., a Danish-U.S. company, are partners in Holberg Wind Energy GP Inc.

Sea Breeze Energy Inc., was previously given environmental approval for a wind farm in the same area, but does not yet have a customer for the power or access to transmission lines.

Holberg has a 20-year contract with Hydro to take all the electricity it produces, which will probably be enough to power at least 17,000 households. The power will be transmitted over lines connecting to the grid at a Port Hardy substation.

"We hope to start construction after the wind studies are done in the spring and it will take between 12 and 18 months," Allard said.

The wind farm will mean about six permanent jobs for local residents and, during construction, there will be an estimated 100 person years of work, he said. "It's a big construction effort and then we'll be training people to operate the plant and do things like maintenance," he said. The turbines will be in an area which is not heavily populated and will not be visible from most of the water, Allard said.

The windmills are about 80 metres tall and blades are 40 metres wide and are more bird-friendly than the older lattice turbines, he said.

Both federal and provincial governments have concluded the project is not likely to cause significant adverse environmental effects.

Wind power remains more expensive to produce than hydro power, partly because the turbines are likely to be working for only about 35 per cent of the time. But Holberg will probably qualify for new federal money, amounting to one cent for every kilowatt hour, from the Wind Power Production Initiative.

"They cost a lot to build, but they don't cost much to operate and the fuel is free," Allard said.

The company has options on other land in the Holberg area and elsewhere in B.C., he said.

Energy and Mines Minister Richard Neufeld said there have been some teething problems as the province considered wind power projects.

"B.C. Hydro doesn't have experience with wind power and it's new for B.C. folks . . . They've all worked together very hard to make it work and we're pretty proud this is taking place," he said.

Hydro has another proposal call next May and it is likely other wind power proponents will step up to the plate, Neufeld said.

Sea Breeze was not selected to provide power for B.C. Hydro because it bid on the Vancouver Island proposal call, rather than the general proposal call, and Vancouver Island needs 24-hour capacity, which Sea Breeze could not provide, he said.

Paul Manson, Sea Breeze president, said the company is planning to go ahead with its project even though B.C. Hydro does not appear to be interested.

"There's a desperate need for this emission-free energy . . . We are about to see an explosive growth in the amount of wind energy being produced in Canada and B.C. is being left behind for reasons we don't understand," he said.

The company is looking at U.S. customers and, because of difficulty in gaining access to transmission lines, has applied for a cable to run from Victoria to Port Angeles, Manson said.

The province's energy plan says that 50 per cent of the province's new electricity should come from green projects such as wind power, small, run-of-the-river hydro projects or biomass energy, such as burning wood residue from sawmills.

Mark Jaccard, a Simon Fraser University ecological economist, said it is difficult for wind power to compete with other energy sources because most places in the province do not have a steady wind, but do have plentiful supplies of water running downhill.

However, there are locations where it would work, he said.

"I am not saying wind is uncompetitive, I am saying it has challenges," he said. "It appears as if the Holberg project has cleared many of the hurdles. It is extremely important that Hydro has accepted this."

jlavoie@tc.canwest.com

Posted by Arthur Caldicott on November 02, 2004

October 28, 2004

Council delays action on pipeline

John Stark
The Bellingham Herald

The Whatcom County Council decided Tuesday to take no action on the Georgia Strait Crossing natural gas pipeline project until pipeline backers submit a major project application.

David Grant, an assistant Whatcom County prosecuting attorney, told council members that under county land-use law, they could not act until the pipeline backers submit that application. Once that application is complete and is reviewed by county planners, it would then go to the Whatcom County hearing examiner for a recommendation and a final ruling by the County Council, Grant said.

The pipeline, known as GSX, is a project of Williams Pipeline Co. It would cross 33 miles of the county from Sumas to Cherry Point before moving under water to supply fuel for proposed generating plants on Vancouver Island. Backers say it could also eventually supply natural gas for industrial development at Cherry Point.

Steven Snarr, general counsel for Northwest Pipeline Corp., a Williams subsidiary, told the council that county planners advised his company more than two years ago that the major project application would not be required. The company did not hear otherwise until earlier this year, he added.

Grant said the misstatements from county planners did not change the law, which mandates the major project permit process for any project with a value in excess of $5 million. The county portion of the project will cost more than $90 million, he said.

Snarr noted that the major project permit process does not include any deadlines for the county to complete review of the permit application. He expressed concern that the process was being imposed in an effort to kill the project by delay.

Council member Laurie Caskey-Schreiber told Snarr that was not the council's intent, but added that the proposed pipeline has aroused widespread concern about potential impact on the environment. Snarr replied that his company had completed millions of dollars' worth of environmental studies indicating that impact will not be significant.

Snarr noted that the Federal Energy Regulatory Commission has already given GSX a green light. He said his company wants to work with the county on developing appropriate environmental safeguards for the project, but if it appears as though the county is trying to block it, the company could take the matter to federal court.

The Tenth Circuit Court of Appeals is already considering the question of whether Washington state and Whatcom County waived jurisdiction in the matter by missing deadlines for review of earlier applications from GSX.

Reach John Stark at 715-2274 or john.stark@bellinghamherald.com.

Posted by Arthur Caldicott on October 28, 2004

October 27, 2004

Whatcom County Council remands GSX back to Hearing Examiner

The Whatcom County Council has spoken (for now)--unanimously! In a nutshell, a 7-0 vote to remand GSX back to the Hearing Examiner, pending an application for a "major development permit" on the part of GSX.

A reporter at the meeting offers the following account:

I attended tonight’s Council Meeting covering the disposition of the GSX project following the recommendation by the Planning and Development Subcommitte to remand the project back to the Hearing Examiner. Their finding was that the project application and all ancillary permits require application as a major development.

This will go back to the Hearing Examiner and will be held until such an application is made. He will again review the application and provide a recommendation, but the County Council will again make the decision whether to approve or deny the permit.

There was a little grumbling about “fairness” to Williams by Sam Crawford who alleged that Williams had been told by none other than the Director of Planning (Roland Middleton) at some point in the past that a major development permit was not required.

Seth Fleetwood stated that the requirements had changed and somehow implied that Roland was off the hook. The Council voted to remand this back to the Hearing Examiner to await the additional information necessary to make application for a major development.

Steve Snarr, GSX's attorney, is reported to have looked like he had eaten a bad oyster.

---

Posted by Arthur Caldicott on October 27, 2004

Independent power producers hopeful

Vancouver Sun
Scott Simpson
October 27, 2004

sqwalk.com
COMMENT:With the Independent Power Producers, the Ministry of Energy and Mines, and BC Hydro all on side with opening up BC for IPP generation, watch out! IPP opportunities are just as attractive to the sharks, scam artists, stock promoters and general incompetents as are, well, classic mining as practiced for decades on the Vancouver Stock Exchange, or coalbed methane as it appears it is about to be practiced here in BC in places like Campbell River or Hudson's Hope.

We're not saying it's all bad. Small entrepreneurial companies have dollar-for-dollar, a gazillion times the creativity and entrepreneurial oomph of a Hydro technocrat or Ministerial bureaucrat. —Arthur Caldicott
sqwalk.com


Independent power producers are carrying high hopes for a surge in business opportunities into an annual conference that begins today in Vancouver.

Both Energy Minister Richard Neufeld and BC Hydro CEO Bob Elton have been making signals in recent days that indicate greater opportunities are looming for private-sector companies to join Hydro's grid.

Now, Independent Power Producers Association of B.C. president Steve Davis is hoping that those signals herald accelerated growth and a stable investment climate -- something that he said is lacking in the independent power sector.

Last Friday, Elton told the Vancouver Board of Trade that he wants B.C. to lessen its dependence on imported electricity -- with "more regular calls" to independent power producers (IPPs) to add new projects to the grid.

A day earlier, Neufeld said he wants to see opportunities open up that would build a strong IPP community in the province.

Davis said the IPP sector recently suggested that Hydro issue annual calls in the neighbourhood of 1,200 gigawatt hours.

In four years, he said, those annual calls would draw in enough new electricity generation to cover the amount of electricity that B.C. usually imports in a given year.

"Imports are pretty expensive and they're pretty comparable to the price of our power," Davis said. "When you net off the resource revenues and taxes that various levels of government collect from IPPs, we're significantly less expensive than imports."

Hydro officials address the conference on Thursday.

If they indicate that Hydro is prepared to commit to a regular call for tenders it will improve the ability of independent project developers to attract investment cash, Davis said.

Hydro has issued several calls for so-called green energy projects, but Davis said the sector is capable of providing far more energy than what Hydro has been seeking.

"By having an annual call that is quite likely and reliable, it allows all of the parties in the electricity industry to start to plan."

One prospective IPP project developer, Donald McInnes of Plutonic Power, said his company has an ambitious series of green energy projects -- but needs a signal from Hydro to take them to the next level.

"At this point our company doesn't have an energy purchase agreement in place," McInnes said. "We're waiting for Hydro to formally announce a call. And we're trying to influence Hydro directly, and through the MLAs and everybody else, on the size of the call."

Vancouver Sun

Posted by Arthur Caldicott on October 27, 2004

October 23, 2004

Weather, demand blamed for income dip at BC Hydro

Scott Simpson
Vancouver Sun
October 23, 2004

sqwalk.com
COMMENT:This is the same unoriginal refrain from BC Hydro - we're running out, we're a net importer, we need to build more generation capacity. Come on, Mr. Elton. Let's go over the basic arithmetic again. [1]

In BC, we presently use about 55,000 GWh per year according to BC Hydro. This will rise to about 58,000 GWh in 2013. With "heritage" hydro and thermal capacity, plus existing and new contracted capacity, plus conservation and efficiencies, our generation capacity will exceed consumption until 2013. This is pretty much as it is laid out in BC Hydro's 2004 Integrated Electricity Plan

The "net importer" story that Mr. Elton and Energy and Mines Minister Richard Neufeld never seem to tire of telling, is a different story. The government expects a revenue stream from BC Hydro. In the 2004/2005 budget, it budgeted for about $400 million to net back to provincial coffers. How Hydro does this is clever, it's good busines, and it usually ends up with BC being a net importer of electricity, but an overwhelmingly successful winner on the bottom line, year after year.

This is how it works. During the nght, generation continues in Alberta, Washington and elsewhere.[2] The power generated does not have much of a market, so BC Hydro buys it cheap, and at the same time reduces the water flowing over BC's dams, reducing hydro generation in BC. Big blocks of power are acquired at low rates. More power, often, than can be used. And BC's valuable reservoirs are saved, like giant batteries.

During the day, demand for power goes up, and BC Hydro then opens the floodgates, allowing the our pent-up reservoirs to generate electricity that will then fetch a premium in the market - particularly in California.

For example, in August 2004, Powerex exported 540 GWh at an average price of $61.17 per MWh. In the same month, Powerex imported 449 GWh at $44.05/MWh. In the screaming energy market of January 2001, Powerex exported 303 GWh at $597.89 and imported 647 GWh at $173.[2] (National Energy Board electricity import and export stats). This only tells part of the story - the US/BC import/export part. The interprovincial trades are not disclosed for public scrutiny. Overall, BC Hydro reports in their 2003 Annual Report that in fiscal 2003, Powerex paid an average $47/MWh and sold power for $62/MWh.

Powerex now trades upwards of $6 billion of "energy products" a year, and had revenues of $1.9 billion in fiscal 2003.

It is a management decision whether to use the reservoirs or to purchase and import power. Mr. Elton is pleading a dry year, and increased industrial demand, as part of his explanation as to why the 2004 figures are not as good as those from 2003. However, the report indicates that the reservoirs this year are sitting at 98% of their average storage capacity, compared to 94% a year ago. Hardly seems like there's a pressing need to hold back on the water.

Increased demand from industrial users is probably a positive thing, reflective of a healthy economy. On the other hand, there are two points: 1. industrial users get such a deal on power, at about $30/MWh, that those low rates encourage wasteful use. Jack those industrial rates up, and the industrial users will have all the incentive they need to invest in more efficient technologies and processes. 2. According to the BC Hydro 2nd quarter report, the cost of power purchases was about $60/MWh - twice what industrial users pay. What is wrong with this picture? If this discrepancy it to be fixed, be prepared for a large whine from the industrial lobby.

Mr. Elton and Mr. Neufeld and just about everyone in between keep telling the "net importer" story as if we need to import power to meet British Columbian demand. It's much like the story BC Hydro has told people on Vancouver Island for the last four years: "The lights will go out" unless GSX and VIGP are built. Mr. Neufeld delivered a similar message earlier this week.

These are gun-to-your-head messages, highly emotive, and come from authorities we should be able to trust. So, when BC Hydro moves from "net importer" to "need more capacity", the people of BC are inclined to defer, to aquiesce.

Not us. There were no weapons of mass destruction, the emperor was wearing no clothes, and BC does not need to rush into more big dams, big fossil fuel generation, or rapid expansion of contracts with independent power producers.

Long before we jump to more big box generation projects, we must ensure that industrial users are paying fair costs for the power they use. And we must have full public debate about the appropriate role of energy trading in public energy and fiscal policy. - Arthur Caldicott

NOTE1: BC Hydro's use of numbers has always been a minefield of qualifications, caveats, exceptions, footnotes, and sometimes stuff that's just plain wrong. In its demand/supply scenarios, a fudge factor called "line losses" is often deployed to tip the balance in favour of whatever Hydro is trying to prove. In its forecasts, exaggerated growth rates, unrealistic "reference cold days", and other factors combine to make Hydro's case. A rigorous examination of these numbers requires deconstruction of all their assumptions, data inputs, and methods. There's a guy in Cobble Hill, a farmer named Steve Miller. Nobody in British Columbia analyses BC Hydro's numbers better than Miller.

NOTE2:Some of this power is hydro power. But much of it is coal-fired generation, especially from Alberta. BC prides itself on having no coal-fired generation, but in fact we regularly use coal-fired power, and make money from it, continuously. It's just that the coal is not being burned in BC.

NOTE3:This export price of $61/MWh compares to about $58/MWh that residential customers in BC pay to BC Hydro (57 cents a kilowatt hour), or about $30/MWh that large industrial customers in BC pay, or about $24/MWh that Hydro estimates its cost to produce hydro-electric power. Or $89/MWh that Hydro calculated it would cost to produce electricity from the Vancouver Island Generation Project at Duke Point.
sqwalk.com


Depleted reservoirs and industry's growing appetite for electricity have cut an estimated $166 million from BC Hydro's projected net income for the current fiscal year, the Crown corporation announced Friday.

Hydro's second-quarter report forecasts net income for the 2004-05 fiscal year at $240 million, down from the $406 million expected in its 2004 annual report.

Hydro reported second-quarter net income of $11 million, compared to $39 million in the same period last year.

The shortfalls stem from an unanticipated increase in electricity demand due to higher consumption in resource industries.

This meant electricity imports -- which cost BC Hydro money -- tripled compared to the second quarter of last year.

Energy costs of $916 million were $119 million higher than the same period the previous year.

"A significant portion of this increased consumption is in the large industrial sector as activity levels have increased in certain resource-based sectors in the province," Hydro reported.

Hydro is preoccupied in summer months with storing water in its reservoirs, in anticipation of winter demand, and tends to rely on imported electricity to defer full use of reservoirs.

Aggravating the situation is a somewhat dry year with below-average snowpack that left reservoirs at less than full capacity.

The costs associated with increased imports were so great that they exceeded the additional revenue Hydro took in from a 7.23 per cent that took effect April 1, the crown corporation reported.

In a speech on Friday to the Vancouver Board of Trade, Hydro CEO Bob Elton emphasized that his belief that British Columbia should be self-sufficient when it comes to electricity supply.

Two decades ago, he said, Hydro was flush with surplus electricity after the construction of a series of large dams, and able to export a surplus

But he said the benefit of that legacy is winding down to the point that the province is now in what he called a "slight" deficit position.

"Over the years we've let that surplus erode to the point that we are more or less in balance. The question is, should we allow that slight deficit we have today to build?" Elton asked.

"I believe we should not. We should aim for self-sufficiency for domestic needs, because that will improve our ability to develop a variety of electric sources within the province and will also add to our sense of energy security.

"We will make the case to our regulator that we believe British Columbia will be self-sufficient in electricity to meet domestic needs."

In a subsequent interview, he said Hydro will work towards that objective by making "more regular calls" to independent power producers for private sector generation projects to contribute to the province's electricity grid.

"We will certainly increase our purchases from independent power producers. We will have more regular calls. I think doing them once a year at a reasonable size is a good way of doing it."

Hydro is committed to making 50 per cent of future private sector purchases from so-called clean energy sources such as run-of-river hydro and wind power, he said.

"About two years we started to have more calls [for tenders for private sector generation]. We will continue to do that. It's not going to get any more tilted towards imports."

Those sources tend to be intermittent providers of electricity, and Hydro's commitment to security of supply means also seeking large-scale generation projects.

Those could include major hydroelectric projects such as the proposed Site C dam on the Columbia River, or gas fired generation plants such as one that is still under consideration for Vancouver Island.

"In the past few years it has actually been cheaper for us to buy on the market but I think we recognize there is a risk to that strategy so we agree that long term, we want to see more made in B.C. generation."

He said it is difficult for Hydro to maintain consistent performance in its budget, quarter to quarter because of the corporation's dependence on t the weather.

But he said over time the situation evens out.

Mark Veerkamp, executive director of BC Citizens for Public Power, said that if British Columbia wants to continue to enjoy its legacy of low-cost power, Hydro's best option is public sector investment.

He said the cheapest electricity in North America comes from sectors where public investment in generation has dominated.

"Our focus isn't big or small, it's making sure we can capitalize on the efficiencies that public power can provide," Veerkamp said. "We've seen the benefit for future generations in the public investment that was made 20 or 30 years ago. I think we need to look at now as the tipping point where we need to invest again for the sake of future generations."

Meanwhile, a lawyer who acts for independent power producers said Hydro's second quarter results show that British Columbia is dependent on imports for "at least" 10 per cent of the province's energy needs.

"This dependence is the result of poor planning and decisions made in the 1990s," said David Austin.

"The problem wasn't created overnight and it can't be fixed overnight."

Earlier this week, independent producers released a study showing that the costs of green energy derived from private sector projects already operational in B.C. is the same as what Hydro is paying for import power.

The independents go on to say private power generation works out cheaper for B.C. than imports, once taxes and levies going back to government are removed.

"A significant portion of this increased consumption is in the large industrial sector as activity levels have increased in certain resource-based sectors in the province," Hydro reported.

Hydro is preoccupied in summer months with storing water in its reservoirs, in anticipation of winter demand, and tends to rely on imported electricity to defer full use of reservoirs.

Aggravating the situation is a somewhat dry year with below-average snowpack that left reservoirs at less than full capacity.

The costs associated with increased imports were so great that they exceeded the additional revenue Hydro took in from a 7.23 per cent increase that took effect April 1, the crown corporation reported.

In a speech on Friday to the Vancouver Board of Trade, Hydro CEO Bob Elton emphasized that his belief that British Columbia should be self-sufficient when it comes to electricity supply.

Two decades ago, he said, Hydro was flush with surplus electricity after the construction of a series of large dams, and able to export a surplus

But he said the benefit of that legacy is winding down to the point that the province is now in what he called a "slight" deficit position.

"Over the years we've let that surplus erode to the point that we are more or less in balance. The question is, should we allow that slight deficit we have today to build?" Elton asked.

"I believe we should not. We should aim for self-sufficiency for domestic needs, because that will improve our ability to develop a variety of electric sources within the province and will also add to our sense of energy security.

"We will make the case to our regulator that we believe British Columbia will be self-sufficient in electricity to meet domestic needs."

In a subsequent interview, he said Hydro will work towards that objective by making "more regular calls" to independent power producers for private sector generation projects to contribute to the province's electricity grid.

Hydro is committed to making half of future private sector purchases from so-called clean energy sources such as run-of-river hydro and wind power, he said.

© The Vancouver Sun 2004

Posted by Arthur Caldicott on October 23, 2004

October 22, 2004

Reliable power, at low cost, for generations

Bob Elton,
President and CEO, BC Hydro to the
Vancouver Board of Trade
October 22, 2004

Background

Before I begin my talk today, I want to acknowledge that there are a number of significant regulatory decisions pending that I will not comment on. The decision on our revenue requirements application and the outcome of our Vancouver Island Call for Tender process are perhaps the most significant ones. However, my remarks today will apply regardless of the outcome of these and other decisions.

BC Hydro is a public trust, and we employees of BC Hydro are stewards of it. That is not fashionable today – as a society we excel in being consumers more than we do in being stewards. But we owe it to our future, to build on our past.

Our purpose is to supply reliable power, at low cost, for generations. Today, our reliability is generally regarded by our customers as good; we have among the lowest costs in North America; and we have a proud environmental record.

So we have a great heritage. What will we leave to our children and grandchildren? That is what I want to talk about today. I want to explain some of the very high long term goals that we are setting for ourselves as a company, and then talk about what we, and you, must do to make sure that we achieve them.

Reliable Power

Reliability comes from having enough energy there when you need it; and then from getting it to you along the wires Many years ago, British Columbia built large hydro dams that meant we would be exporting a surplus. Gradually, we have let that surplus erode to the point where today, we are in a slight deficit. Should we allow that deficit to continue to build? I believe not. Aiming for self-sufficiency will improve our ability to develop a variety of electricity sources within the Province; and it will also add to our sense of energy security.

So we will make the case to our regulator that we believe BC should be self-sufficient in electricity to meet domestic needs.

We will still import through Powerex when the price is low, as that helps keep costs down for our customers. And Powerex will continue to export when the price is high to bring in additional revenue for the Province. But in net terms, we will be self sufficient.

As for getting the energy to you along the wires, we face several physical challenges– the mountainous terrain, the distances between our generation and our customers, the combination of trees, and winter weather. That puts limits on the reliability that you can expect. I think this is a balance that our customers are prepared to accept.

So we intend to ensure that we keep reliability at today’s levels; to preserve our heritage and not squander it. We will target our investments so that our maintenance and capital will be spent more on the places in the Province where reliability most needs to be improved.

And we will improve the way we talk to you about reliability, so that we will eventually tell you what outages you have had, how long they lasted, and how your reliability stacks up with others.

That will help you put pressure on us to do better.

At Low Cost

Let’s come to our low cost heritage. You have practically the lowest costs in North America – typically, we are tied with Quebec and Manitoba. We recently applied for a rate increase of 8.9% next year, and 0% the year after. If those increases are granted in full we will still be practically the lowest and in addition we return about $700 million a year to our shareholder, through profits and water rentals.

We are a very different enterprise than many in the public sector, in that labor is only about 20% of our costs. 40% of your bill is actually to pay for capital costs – depreciation, financing, and so on. That means that we must focus on the long term – ensure that we invest wisely, and that we make the right capital decisions in particular.

Our goal is to preserve our competitive advantage. Put another way, we want to continue having the lowest rates in North America relative to other jurisdictions, while at the same time providing a strong financial return to you through our shareholder. As long as we continue to look at our assets on a lifecycle basis, as long as we ensure that we buy energy using open, transparent, competitive processes, as long as we build Powerex within proper risk tolerances, and as long as we work constructively within our strong regulatory framework, then we will succeed.

For Generations

So – we intend to preserve our reliability, and to preserve our cost advantage. But not at the expense of the future.

Reliable power at low cost for generations – those generations are not an abstraction. They are real people. They are children who look up at me, and at you, with that look in their eyes that is full of hope, that says: “I trust you to look after my future.” Let me talk particularly about the environment. What right do we have to leave our children with an environment that is blighted, that is worse than the one we inherited? Some answer that we must create wealth. But if we reduce electricity rates today, or increase reliability, in a way that destroys the environment, that is not creating wealth. That is taking wealth from the future, so we can consume more in the present. Why should we do that? Some answer that technology will save us. That is irresponsible, because we are deciding to take the risk, but it is our children who will suffer the consequences if we are wrong.

Some answer that market forces will take care of environmental costs. But history shows us that market forces consistently underestimate environmental costs. In our industry they have done this repeatedly. When our own dams were built, we did not think about the future costs of water use planning, and the impacts of them on First Nations people.

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

Environmental Goal

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

I’ve become committed to this environmental goal relatively late in life. I’ve always been very focused on developing young people, in the belief that they would have time to change the world, and that they would start with a good base. In the past few years, a few things have changed me. My own children have grown into being very strong minded about right and wrong, and about our ability to change, urgently, what must be changed.

And when I visit BC Hydro facilities, I get a very clear picture both of the beauty of our Province, and of the scale of those facilities.

They leave me with a conflicting sense – on the one hand, pride in the massive effort needed to construct them. On the other, when you look beyond the dams to the size of what they hold back, or when you look at how tiny our wires are against the backdrop of the mountains they go through, you realize how dependent we are on nature.

We already have a proud environmental record and we want to build on it. Yes, our facilities have a massive environmental impact – wires, dams, power stations. At the same time, we have low greenhouse gas emissions, we work constructively with others on water use plans, we have many outstanding programs ranging from recycling poles, to protecting birds that want to perch near our wires.

Reliable Power at Low Cost for Generations

We are clear about our purpose – we will supply you with reliable power at low cost, in a way that takes care of the future.

Choices: Conservation

Now, let me talk about some of the choices that we must make to get there. First there are two choices that you must make as consumers, and as citizens.

As time goes on, as our population grows, people consume more electricity.

To get electricity in balance, we must either consume less, or generate more. That is a choice for the people of this Province.

Let’s examine that choice.

Can we consume less? That’s a question that each of us can answer for ourselves, but here are some facts. In British Columbia, the average person consumes 15,000 kilowatt hours in a year. We consume three times as much as the average German; two and a half times as much as the average Briton; and more than the average American.

We use electricity in a way that cries out for waste reduction. We use it when we are out of our homes, when we are in different rooms. We wouldn’t leave the taps on all over our homes, but we use electricity carelessly.

We can clearly consume less. For the past few years we at BC Hydro have run a world leading Power Smart program that has reduced the increase in electricity consumption by 3000 gigawatt hours annually – that’s enough electricity to meet the needs of 300,000 homes each year! Can we do better? Can we create, in this Province, a conservation culture? If we can reduce our consumption at home by 20% then that would change our need for new generation sources, and therefore protect the environment. And it would allow us to keep our costs lower.

How can we achieve that? What is our role at BC Hydro? It is our role to continue to provide leadership on energy efficiency and conservation. To build on the leadership shown by enterprises such as UBC, Vancouver International Airport, Colleges, the GVRD, the City of Vancouver, and so many others. To increase our efforts to see that people, especially young people, understand the choices they can make.

We will set goals for reducing electricity consumption in BC, and we will publicize those goals, and we will try to cajole you, inspire you, and if necessary embarrass you, into using less.

Choices: Energy Sources

The second choice we have to make is about the type of energy that we buy There is a debate raging in our industry about what will fuel our future. The public needs to be more involved in that. The world intends to double its generation of electricity in the next 30 years.

Using what? Natural gas is today’s popular source, but its cost and availability are under great pressure. Coal is more plentiful, but has higher environmental costs. There is research going on into cleaning up coal that very much needs to bear fruit. Large hydro projects are increasingly difficult to build in developed countries, because of their effects on communities, as well as conflicting demands on water. Nuclear power has unresolved long term storage issues.

Renewables such as wind, or small hydro, or solar, or tidal, or wave, or biomass, or geothermal are usually more expensive today, and there needs to be more technological development on many of them. For that to happen, there needs to be clear public support.

So what about British Columbia? Our commitment is to buy BC clean energy to meet half of our new needs, and we already have 90% of our power supplied from clean sources. In the past 2 years we have signed 17 contracts to buy enough renewable power to meet the needs of 190,000 homes. And the investment is in excess of one billion dollars, which is providing a very solid base for the developing IPP industry We will soon be going around the Province listening and talking with people as part of our Integrated Electricity Planning process.

We need to understand what people are prepared to do.

What facilities will you accept in your back yard? People have protested against Sumas 2 and Vancouver Island gas plants; Site C; run of the river hydro plants that affect other water users; wind farms that kill birds. What is it you want? What will you pay for? Remember, we have to either consume less, or generate more.

Which is it? And if we will not consume less, then how can we generate more in a way that protects the future? This is a debate about the future, about 10 and 20 and 50 years from now – but some of the choices must be made today.

We will provide leadership, express opinions, set out facts, and we will see what the regulatory process and the public policy process allow us to achieve. We will try to use competitive processes wherever we can. Ultimately, the choices we make about this will be made by society, by the BCUC, by you, and me, and others living in this Province.

Will you support an approach that sees us continuing to pay more for clean energy, that sees us buying off-sets where we buy from other sources, and that perhaps sees the money from off-sets used in British Columbia?

Our Employees Description

I now want to talk about the changes we must make within our company, so we can achieve our purpose. And to do that, I think it’s useful to begin with a description of our work-force – inevitably simplistic, of course.

I am very proud to be an employee of this company, and very proud of the company I keep – of the 4300 people who are very dedicated to serving you, and to keeping you safe. Of course they will challenge me about the way the company is run, about pay and conditions, about many things. But overwhelmingly they will aggressively speak out on behalf of our customers, suggest improvements, rail against bureaucracy.

They have being doing this for 40 years, and this is one thing that has never changed at BC Hydro. “Reliable power is the work of reliable people”.

In Prince Rupert, for example, we have precisely three people.

They respond to calls, often by helicopter, and work in storms and other conditions. They are independent minded people who are empowered to make decisions quickly, to communicate them properly, and to maintain the highest safety standards. If storms hit a particular place in the North, our crews move quickly to work together to restore power.

I am not being naive about this – of course there are things we need to do differently. But this work force is a key asset of this company.

Focus on Costs and on Commercial Decisions

Within our company, the focus on future generations is what can inspire our people, and also help us to attract some great new talent. We already have a great drive to do this, and just need to tap into it.

And the drive towards reliability, and great customer service, is very strong in our company.

But I also recognize that as a public sector monopoly, it is vital that we pay attention to our costs. If we see our costs rising relative to other utilities, if we start to erode that great competitive advantage that we have, then you as consumers will demand that we change our habits. We can be idealistic about the environment, but only if we are hard-headed about our costs. So how we will strike the balance?

Managing for Performance

There is no magic bullet that will achieve this – just the will to eliminate waste, a drive for more commercial decision making without sacrificing quality, and a focus on identifying and rewarding performance, and developing people to achieve great things.

Culture of Teamwork

The next area for change is to create a culture of real teamwork. Difficult. In our company, we have a management team that is generally quite new in their jobs. Many came from somewhere else. Many have a private sector background. In the field, we generally have the opposite.

We also face skill shortages and our work force is ageing, and many of you can relate to that. Our work-force in the future will need to have more women, more people from different ethnic groups, more First Nations people, partly because diversity of thinking will improve our company, and partly because we simply will not be able to keep finding enough people in the traditional mold. I know that it will be hard for us to welcome people who do not easily fit that mold. We have some learning to do, and we will do it.

It is easy to exaggerate our differences, but we cannot. People who come into our company, me included, have to learn how to celebrate our history, and our core of people doing great work serving customers. People who are long serving have to learn to accept that new people can bring creativity and help us to raise our sights.

This is not done by pretending that new ideas must always replace the old, or by pretending that new ideas will only come from people who just got off the bus.

This is done by recognizing that what we are building here is a company that will take the best people, the best thinking, the best visions, the best execution. What we are building is a company that will, as it always has, mirror our Province – become more vibrant, more diverse, more exciting, and ultimately more successful, because adding new people never has to result in merely replacing the old, but will make it stronger.

Stakeholder Engagement

The other area of change that we need is to learn to listen better.

We have very smart people- engineers, accountants, lawyers, economists, biologists, scientists; we have people who are world leaders in a variety of fields. Working at BC Hydro is like drinking knowledge through a fire hose.

But if BC Hydro were an animal, what would it look like? It would have a large forehead, to fit in the very large brain. It would have a large mouth, so we could talk a lot. It would have a big heart, because our people care a lot. But the ears? The ears would either be very small, or stapled shut. We have to open our ears.

When we listen, it works. The Power Smart program features great ideas from many of our customers; the water use planning process has helped us see how better to run our facilities. On Vancouver Island, the lengthy regulatory processes have brought forward excellent ideas from companies like Terasen and Norske, that can help us to achieve our goals.

One of the advantages of being in the public eye so much is that we get bombarded with advice. A lot of it is very good advice! It is so important that we listen to others because in the end we cannot achieve our goals without support. We will need to explain ourselves to the Regulator, to the Government, to you, if we are to gain permission to do what we believe needs to be done. We can only do that if we have first built strong support for our priorities – and that takes good listening.

This work of learning how to listen is underway, and it will not happen overnight.

Conclusion

Can we achieve our purpose of reliable power, at low cost, for generations? We can with your help. If you will join with us in learning to conserve, then we can keep our costs lower and also minimize our environmental impact.

If you will increasingly express a preference for us buying clean energy and for offsetting our environmental impacts then we can keep our long term costs low while again reducing environmental effects.

If you tell us your ideas to help us achieve our goal of no incremental net effects on the environment, then our joint creativity will preserve mountains, instead of moving them.

We will gradually eliminate waste in what we do, and manage our costs so that we keep for you the competitive advantage that we have all inherited.

Our 4300 people will work together, listening to you, serving you, and building for a future that we will be proud to bequeath to future generations.

Think again about the look of hope on the faces of our youth.

When they look up at each one of us and ask what kind of future we are building for them, what will we say? At BC Hydro, we have a clear path, a clear purpose. Reliable power, at low cost, for generations. We are excited about the chance to achieve that with you.

Posted by Arthur Caldicott on October 22, 2004

CFT announcement delayed

BC Hydro has delayed the announcement of the Call for Tenders result, at one time scheduled for Oct 8, then to Oct 26, and now postponed likely to the week of Nov 1 - 5.

Posted by Arthur Caldicott on October 22, 2004

B.C. calls for open electricity market

Independents could provide two per cent of annual power output, Neufeld says

Vancouver Sun
Scott Simpson

COMMENT: That BC Hydro will source new capacity in British Columbia from the private sector was a path decreed in the Liberal government's energy policy released in 2002. Nothing new there.

What might be new is the idea of one annual call for energy and capacity, instead of the smaller, localized, specialized calls that Hydro has undertaken so far - for capacity on Vancouver Island (the Call for Tenders) or the occasional "green" calls, for example.

BC Hydro's announcement to mitigate all environmental impacts sounds good. The devil there is in the details. Here's Hydro's news release —Arthur Caldicott]

B.C.'s energy minister said Thursday he wants to throw open British Columbia's electricity market to greater participation by the private sector.

Richard Neufeld said independent power producers have told him they can develop enough new projects each year to add about 1,000 gigawatt hours to the province's grid -- an amount roughly equivalent to two per cent of the electricity that's annually consumed in B.C.

A thousand gigawatts is also roughly equal to annual demand growth in a B.C. economy that's thriving on employment in the construction industry and worldwide demand for resources.

Neufeld says he wants independent power producers to have room to compete for all of the province's needs.

"[BC] Hydro is having a greater load growth than what they were expecting in their plans," Neufeld said. "That's understandable. They didn't expect British Columbia's economy to move ahead that fast, but it is moving quick and fast, and that's good for all of B.C."

At present, independents are hemmed in due to Hydro's practice of addressing the province's growing energy demand via a variety of specialized programs.

The independents have carved out a niche as experts in the development of green energy projects, and they've been beneficiaries of three annual tenders that Hydro has used to add several hundred gigawatt hours to the grid.

However, only six months ago, Hydro conservatively estimated that it would require just 40 gigawatts a year from green producers over the next decade.

That token amount drew angry criticism from proponents of wind, small hydro and other environmentally friendly methods of electricity generation -- particularly in light of the Crown corporation's 2002 estimate that green and alternative energy could provide B.C. with 18,000 gigawatts.

Hydro has several methods of coping with demand growth, with security of supply the crown corporation's stated priority.

It uses its PowerSmart program to reduce consumption, and has a program called customer-based generation in which it partners with industries to finance internal power generation projects such as steam-driven turbines powered by woodwaste.

It's also poised to announce its choice of projects to address a looming shortage of electricity on Vancouver Island -- a gas-fired turbine generator is expected to be selected -- maintaining continuity with a project that was originally begun by Hydro.

Neufeld said his main concern is making sure that Hydro's customers aren't jolted by a sudden surge in the price of electricity -- something that's possible only if higher-cost green sources such as wind power are carefully blended into B.C.'s low-cost hydroelectric system.

He wants independents to have the opportunity to bid on everything Hydro is seeking in a given year, instead of operating in just a niche market.

He thinks one annual call for electricity, with all sources welcome to bid, could give the independents more solid economic footing.

"What we have to do is open it up to all and then Hydro has to move from there to decide where they can buy the electricity from.

"We have to get a big enough call so that it actually builds a good IPP community in the province of British Columbia.

"I know the IPPs are a little impatient at times, but Hydro also has some responsibilities to the ratepayers ... because of course ratepayers want the lowest cost possible."

He made the comments at an announcement that Hydro is committing to a new environmental policy that promises to mitigate for 20 years all adverse impacts that Hydro operations have on the environment in British Columbia.

Hydro promises "no net incremental" impacts from its operations.

It could compensate for the impact of a dam, for example, with a fisheries enhancement project, or for air emissions from a gas-fired power plant with a tree-planting program or financial support for fleet purchases of hybrid automobiles.

The policy will be announced in detail today when Hydro chair Bob Elton addresses a Board of Trade luncheon in Vancouver.

- - -

POWER POINT

BC Hydro buys 3,500 gigawatt hours from B.C. independent power producers. Adding 1,000 gigawatts has the potential to power more than 54,000 additional homes.

3,500 gigawatt hours

190,000 homes at any given moment

1,000 gigawatt hours

54,000 homes at any given moment

© The Vancouver Sun 2004

Posted by Arthur Caldicott on October 22, 2004

October 16, 2004

Coal is the way to go for new power

With a potential boom looming for northeastern B.C., it's up to the government to dispel the old myths about coal

Editorial
Vancouver Sun

The idea of using coal as an energy source invokes an image of Dickensian England with black smoke billowing from smokestacks into an already blackened sky.

Whatever ambience that picture creates, it doesn't accurately depict how modern coal-fired power plants work. For the sake of rural British Columbia, which is in dire need of an economic upturn, it's incumbent upon the province to dispel those myths that have made coal the black sheep of the energy industry.

After all, while electricity generated by nuclear power is declining in Canada, and while the supply of hydro power remains flat, demand for electricity is expected to rise dramatically. And coal power could fill the gap.

But the primary demand for power in the next decade will come not from Canada or the United States, but from developing countries, particularly China and other Asian nations.

Thanks to boom in that country's economy, China is building 10 million new homes a year, which is equivalent to the total number of homes in Canada. Since the homes are reinforced with steel, and since coal is relatively cost-effective, there's an enormous demand for steelmaking coal.

And it's not just about homes: The Asian marketplace also has considerable demand for cars, refrigerators, stoves and other appliance that are manufactured with metallurgical or steelmaking coal. And there's no sign that such demand will decrease any time soon.

That's enormously good news to B.C., which has substantial coal deposits -- about 21 per cent of the global market for metallurgical coal -- and it exports an average of 26 million tonnes of coal a year.

Still, we're not operating at full capacity, and as demand increases, it's imperative that B.C. ratchet up its coal production.

That's where northeast B.C. comes in. The area is capable of producing tens of millions of tonnes of coal a year within the next few years, and that will provide up to a thousand new jobs in a region that desperately needs them.

In the 1980s, the province sunk $3 billion into coal development, including the construction of an electrified BC Rail line between Tumbler Ridge and Chetwynd, and a coal terminal in Prince Rupert. Yet the rail line was shut down 18 months ago, and it looked like the province's investment was yet another government boondoggle.

Now, thanks to increasing demand for coal, CN Rail, which took over BC Rail, plans to get the line operational. And changes to the Coal Act to streamline the application for new mines will also help. By facilitating what could be one of the biggest booms to the rural B.C. economy in many years, Victoria could ultimately recoup its investment.

Yet the entire project could falter unless the province informs the public that new technologies have made coal a relatively environmentally safe solution to the world's energy needs.

The combustion of coal does create many pollutants including carbon dioxide, carbon monoxide, sulphur dioxide and particulate matters. But new technologies have reduced markedly the environmentally unfriendly aspects of coal-fired power plants.

For example, the United States, which relies on coal for more than 50 per cent of its electricity, has invested more than $50 billion US in new technologies in the past three decades and has experienced impressive results:

According to the Environmental Protection Agency, sulphur dioxide emissions have decreased by 70 per cent, nitrous oxides by 48 per cent and particulate matters by 94 per cent in the past 30 years.

Further, new technologies actually allow us to generate electricity from coal with no combustion. And there now exists the potential to use coal-bed methane, of which Canada has estimated reserves of 2,500 trillion cubic feet, to generate energy without harming the environment.

Far from creating a Dickensian climate from coast to coast, coal can, therefore, be viewed as an environmentally friendly equivalent of wind power and solar energy.

And if the province gets that message out, it could also help turn the economy of rural B.C. around.

© The Vancouver Sun 2004

Posted by Arthur Caldicott on October 16, 2004

October 15, 2004

Williams intervenes in Terasen Resource Plan & LNG

Williams Gas Pipeline Company
P.O. Box 58900
Salt Lake City, UT 84158-0900
Phone: (801) 584-7094
FAX: (801) 584-7862

October 15, 2004

Mr. Robert J. Pellatt, Commission Secretary
British Columbia Utilities Commission
Sixth Floor, 900 Howe Street, Box 250
Vancouver, British Columbia V6Z 2N3
Via internet: http://www.bcuc.com

Dear Mr. Pellatt:

Re: Terasen Gas (Vancouver Island) Inc. (“TGVI”), 2004 Resource Plan for Vancouver Island and Sunshine Coast and Application for a Certificate of Public Convenience and Necessity for a Liquid Natural Gas (“LNG”) Storage Facility

Pursuant to British Columbia Utilities Commission (“Commission”) Order No. G-83-04, Williams Gas Pipeline Company (“Williams”) files this intervention in the above-referenced proceedings. Williams owns two major interstate natural gas pipeline companies in the United States and has participated in the construction and operation of many interstate natural gas pipelines as well as various other energy-related projects. Williams is a partner in the proposed Georgia Strait Crossing Pipeline (“GSX”) providing the engineering, design, operation and management of the proposed GSX project—both in the design and permitting stages of the project as well as the possible construction and operational phases of the GSX project.

Williams possesses knowledge and information relevant to issues relating to the construction, operation, and reliability of natural gas pipelines generally. Williams also possesses specific information about the proposed GSX project that may be viewed as a natural gas pipeline alternative that should be considered in the evaluation of TGVI’s Resource Plan as well as an alternative to the TGVI-proposed LNG production and storage facility to meet the demands of electric power generation and general gas demand growth on Vancouver Island.

Williams also believes that the outcome of the above-referenced proceedings could have a material impact on the proposed GSX project that has already been certificated by the Federal Energy Regulatory Commission and the National Energy Board of Canada.

Williams is prepared to provide relevant information to the Commission pertaining to GSX that may be required to facilitate a complete review of TGVI’s Resource Plan and the TGVI-proposed LNG production and storage facility. For these reasons, Williams believes that its intervention is both appropriate and necessary.

Please send all materials, information and correspondence relating to this matter to the undersigned, by fax at (801) 584-7862 or by electronic mail at steven.w.snarr@williams.com. I can also be contacted at (801) 584-7094.

Very truly yours,

/s/ Steven W. Snarr

Steven W. Snarr
Senior Counsel
Williams Gas Pipelines

See also BC Utilities Commission website for the Terasen Resource Plan and LNG storage facility (www.bcuc.com)

Posted by Arthur Caldicott on October 15, 2004

October 13, 2004

Examiner backs shoreline permit

NATURAL-GAS PIPELINE:
Whatcom County Council must give final approval.

John Stark
The Bellingham Herald

Whatcom County Hearing Examiner Michael Bobbink has recommended approval of a county shoreline permit for the $248 million Georgia Strait Crossing natural-gas pipeline, sending the project on to the Whatcom County Council for final approval.

But those familiar with the project say the county's regulatory process could wind up being irrelevant to the project's fate for two reasons:

• Federal courts may rule that Washington state and the county have no jurisdiction in the matter because they did not raise environmental objections within the time limit set by law.

• The natural gas-fired generating plant on Vancouver Island, which the pipeline would be built to serve, may not be built, or could be served by an existing pipeline if it is built.

The pipeline, known as GSX, is a project of Williams Pipeline Co. Steven Snarr, general counsel for Northwest Pipeline Corp., a Williams subsidiary, acknowledged that his company has no current timeline for starting or completing construction of the pipeline.

In his 20-page ruling, Bobbink said he saw no reason to believe the pipeline would have significant impacts on marine life or on the aesthetics of the Cherry Point area, where the pipeline would go under water to deliver natural gas to Vancouver Island. The pipeline is proposed to begin at Sumas and would cross 33 miles of the county between there and Cherry Point before entering the Strait of Georgia.

In making his ruling, Bobbink noted widespread citizen opposition, including 66 letters submitted by opponents. Whatcom County Planning and Development Services staff also opposed the project.

But Bobbink's opinion cites environmental reviews by state and federal agencies finding that any potential environmental impacts could be avoided with appropriate safeguards. He also said his review of the evidence indicated the project would not interfere with navigation or commercial fishing, and would not restrict future development of vacant heavy industrial land at Cherry Point.

Bobbink's opinion got poor reviews from representatives of environmental organizations.

Fred Felleman, president of Fuel Safe Washington, said he didn't think Bobbink's opinion gave enough weight to environmental concerns or to the possibility of providing gas to Vancouver Island via an existing pipeline.

But Felleman said he was encouraged that Bobbink chose not to approve the project's shoreline permit outright, ruling instead that it qualified for full County Council review under county zoning law.

Wendy Steffensen, water programs coordinator for ReSources, said she was disappointed that Bobbink chose to override the recommendations of the county planning staff. But she also expressed hope that the County Council would turn the project down.

Council Chairman Dan McShane said it was too soon to say when and how the Council will address the issue. He said the Council has three options: Refer the matter to the Planning Commission for further review, rule on the permit based on the evidence already collected by Bobbink, or schedule a new public hearing before reaching a decision.

Pipeline company counsel Snarr said his company will press ahead with the county regulatory process, even though the company believes that it already has the permission it needs from the Federal Energy Regulatory Commission. Snarr said the company wants to work out proper environmental safeguards with county and state officials, even though they contend the county no longer has the authority to block the project.

A ruling on the jurisdiction question is pending in the 10th Circuit Court of Appeals in Denver.

Reach John Stark at 715-2274 or john.stark@ bellinghamherald.com.

Posted by Arthur Caldicott on October 13, 2004

October 11, 2004

Whatcom Hearing Examiner recommends GSX approval

The Whatcom County Hearing Examiner refers the matter of a shoreline development permit for GSX-US at Cherry Point, to Whatcom County Council for a decision, because it is a "major project". He also recommends that the county council approve the application.

In his findings and conclusions, Michael Bobbink makes a number of important points, some potentially contentious:

- he appears to agree with FERC and the proponent that the project will not have significant environmental impacts

- he says that if the county wanted to stop the pipeline, the opportunity and legally correct place to do that was in the FERC review of GSX, not in a matter of a local permit.

- he concludes that $1.7 million in county taxes each year, plus additional school district taxes, are sufficient local benefits to accept the pipeline (p14)

Bobbink's two most troubling conclusions, however, have to do with jurisdiction and alternatives.

- bilateral agreements, he says, "forbid discrimination in this situation by either Country against the citizens of the other. In that case, the benefits to the citizens of Vancouver Island would have to be considered the same as the benefits to the citizens of Whatcom County or Washington State." (p16-17)
Speaking as a Canadian, this is bullshit. We've had enough of protecting the interests of corporations and other governments with these trade agreements. If the people of Whatcom County don't want the pipeline they must be able to refuse it.

- project alternatives, says Bobbink, don't need to be reviewed, because "none of the environmental documents conclude that there are other more environmentally desirable alternatives." and FERC has already examined the matter and issued a permit. (p18)
FERC refused to look into the alternatives, even when they realized that some existed. In the draft Environmental Impact Statement, FERC states "Direct transmission of electrical energy to Vancouver Island from the mainland would negate the need for the GSX Project, but no such project has been approved by potential sponsors." Subsequent to this, BC Hydro planning engineers acknowledged that a new cable system to Vancouver Island was their preferred option, but that the gas-fired strategy was forced on them by government. Also subsequent to the draft EIS, Terasen, which owns the existing gas pipeline to Vancouver Island filed evidence that they could deliver the required gas for less capital cost, with mere upgrades to their existing system. BC Hydro accepted Terasens' conclusion in its 2004 Integrated Electricity Plan. Alternatives clearly exist.

Bobbink concludes "the Hearing Examiner cannot find either a factual basis or a legal basis that would justify denial of the Shoreline Permits. Therefore, the Hearing Examiner is recommending that the Whatcom County Council grant the requested Shoreline Permits. This is not a recommendation that the project be finally approved or built."

This may be viewed as a lack of courage or creativity on Bobbink's part, but it is probably a legally correct, if conservative, conclusion.

Nevertheless, the "my hands were tied" legal findings that recur through the permitting processes for GSX on both sides of the border are not merely pathetic. They speak to a more fundamental or structural failing of the permitting structures to address issues in a meaningful way. Most egregious is the failure to represent and give voice to, the people.

Also problematical, but a matter that the people of Whatcom County and Washington State are concerned about, is this situation:

- both the Whatcom County Council, and the Washington State Department of Ecology have staff reports with recently recommended either against or strong concerns with the GSX project,

- yet both offices were interveners in the FERC review of GSX and both let dates and opportunties to intervene lapse

- and both subsequently have concluded, in slightly different ways, that their legal options now are limited because of these earlier oversights.

Are these evidence of bureaucratic carelessness? political spinelessness? Where is the accountability here? The people of Whatcom County and of Washington State have been failed either by their elected officials, their staff, or both.

Whatcom Hearing Examiner's report

Three excerpts from Bobbink's report:

A major point of opposition to the proposal is the claim that it will not provide any benefits to either local or State interests. The major benefit from the pipeline would be to electricity users on Vancouver Island. The proposal is not expected to create more than a couple of permanent jobs in Whatcom County. Some additional jobs may be created during the construction phase of the project; however, the record indicates that most of this work will go to large contractors outside the local area. GSX estimates that the construction phase will provide approximately eight million dollars in one-time sales tax revenue to State and local governments. GSX also estimates that upon completion of the pipeline and associated facilities, it will be paying approximately 1.7 million dollars yearly in property taxes to Whatcom County. All local school districts through which the pipeline passes will receive additional tax money without having to provide the additional educational services that would be required for a project that created a significant number of new jobs. (page 14)

As indicated in the findings, there are some local benefits, including tax revenue, and the potential source of natural gas for future industrial development within the Cherry Point Management Area. Additionally, the United States has entered into a treaty with Canada, which apparently forbids discrimination in this situation by either Country against the citizens of the other. In that case, the benefits to the citizens of Vancouver Island would have to be considered the same as the benefits to the citizens of Whatcom County or Washington State. In any case, there is no requirement for local or State benefit before a Shoreline Permit can be granted. (page 16,17)

Proponents of the proposal consistently reiterate that there are feasible alternatives available which would not require this pipeline to go through Whatcom County or Washington State. However, none of the environmental documents conclude that there are other more environmentally desirable alternatives. In addition, FERC has granted the project a Certificate of Public Convenience and Necessity, after evaluating the alternatives. In the context of this Shoreline Permit, taking into account the environmental documents and FERC’s ruling, the discussion of alternatives is out of place. (page 18)

WHATCOM COUNTY HEARING EXAMINER
RE: SHORELINE SUBSTANTIAL DEVELOPMENT, SHR02-0003
SHORELINE CONDITIONAL USE, SHC02-0003
Application for
Williams Pipeline
Georgia Strait Crossing
FINDINGS OF FACT,
CONCLUSIONS OF LAW,
AND RECOMMENDATION
TO THE WHATCOM COUNTY COUNCIL

Posted by Arthur Caldicott on October 11, 2004

October 06, 2004

Call for Tenders results delayed to October 26

BC Hydro ducked the October 8 deadline they've had set for most of a year to announce the results of their Call for Tenders. The date has been pushed back to October 26.

26 October 2004
Filing of Independent Reviewer’s Final Report
Announcement of preferred option/award of EPA(s)

16 November 2004
Execution of Final Form Agreements and delivery of Development Security

19 November 2004
Filing of EPA with BCUC under section 71 of the Utilities Commission Act

http://www.bchydro.com/rx_files/info/info16286.pdf

Posted by Arthur Caldicott on October 06, 2004

Hydro back on California hook

By Scott Simpson
Vancouver Sun
Page D01
06-Oct-2004

The saga of the GSX Pipeline has been closely paralleled by the saga of BC Hydro's opportunistic overcharging for power sold into the California market during the winter of 2000/2001. Both are stories of financial mismanagement, and both have darker undertones of unstated agendas, manipulation. BC Hydro's Powerex is accused of doing in energy markets exactly what Enron was guilty of, and these activities were driven by the same senior execs in Hydro and government who were ramming through the GSX Pipeline project - part of a set of gas-fired Vancouver Island generation projects that would displace mainland power, freeing it up for sale into the hot California market. Hydro thought it was off the hook with the California issue. Not so, as Scott Simpson reports: "Hydro could lose as much as $280 million US." "But it could see its losses run far higher, if California has its way." What was that about a budget surplus, Mr. Collins?

Powerex has been found guilty once already on these overcharges and in 2002 was ordered to pay back to California US$279 million. (link). This was overturned on appeal.

The questionable relationship between Enron and Powerex goes back a number of years. The Canadian federal Competition Bureau busted the offices of both companies in Calgary in 2000, but didn't find the evidence they were looking for to bring charges of electricity bid-rigging. (link)

B.C. Hydro has suffered a "major setback" in its long-running legal battle with California over the state's energy crisis, and could be back on the hook for more than $750 million US in refund payments to the state.

The setback came in a recent ruling by a United States appeal court that gives California substantial new clout to pursue roughly $5 billion in refunds from electricity suppliers and traders, including Hydro's Powerex power-trading subsidiary.

That's in addition to about $3 billion that's already on the table.

The U.S. 9th Circuit Court of Appeal ruled that U.S. federal regulators were not tough enough in their dealings with Powerex and other trading companies in the wake of the 2000-2001 crisis.

It said the U.S. Federal Energy Regulatory Authority (FERC) acted "improperly" when it decided to let about 60 power- trading companies off the hook despite allegations that they broke rules established to prevent price gouging.

Based on earlier calculations by the B.C. finance ministry, Hydro's potential liabilities in connection with the crisis amount to about 10 per cent of the amount California is seeking.

Two years ago the ministry suggested B.C.'s liability could be as much as $1.3 billion Cdn -- although California has since scaled back its demands, and the Canadian dollar is relatively stronger than it was in 2002.

Hydro maintains that Powerex is innocent of any wrongdoing, but a spokesperson acknowledged that the decision could spell trouble for the British Columbia Crown corporation.

"An early review of the decision indicates to us a major setback for suppliers and a big win for California parties who've been demanding substantial refunds," Hydro media relations manager Elisha Moreno said on Tuesday.

"We were already cleared. We stand by our claim that we participated by the rules of the market, and FERC has already cleared us.

"As far as we are concerned we thought that this was a dead issue. We thought we had been cleared and we were happy because it validated what we had said all along."

Eleven months ago Hydro was celebrating a deal it worked out with FERC, absolving Hydro of any guilt in association with the crisis in exchange for a nominal $1.3-million Cdn "settlement fee."

Many other companies made similar deals and, like Hydro, used them to assert their innocence with respect to charges of gouging during a spectacular rise in energy prices during the bungled 2000-2001 start-up of California's open market for electricity.

However, California Attorney- General Bill Lockyer wasn't happy with the deals.

Last year he filed an attack on FERC in the 9th Circuit Court of Appeal-- the equivalent of the B.C. Court of Appeal.

He argued that FERC failed to exercise its duty to police the California energy market, and failed to punish traders for widespread violations of rules requiring them to keep track of individual power trades.

"With FERC abdicating its regulatory responsibility, California consumers were subjected to a variety of market machinations", bearing names such as Fat Boy and Death Star, that falsely inflated the price of electricity in the state, the court said.

FERC had argued to the court that the lack of paperwork was a mere technicality and that the energy regulatory agency lacked the authority to get tough with alleged violators.

However, the court brushed aside that claim.

"FERC misapprehends its legal authority in this context. In fact, FERC possesses broad remedial authority to address anti-competitive behavior," the court said.

However, the court did not recommend any refund amounts and sent that issue back for FERC to consider.

According to Moreno, FERC officials are still studying the judgment and have not indicated how they will deal with it.

One option is an appeal to the U.S. Supreme Court, another is to pursue a new round of settlements as California requires.

The state is already going to get some money from Hydro and other traders.

That's because FERC earlier ruled that California was entitled to some refunds on the grounds that electricity prices were unreasonably high, even if no wrongdoing had occurred.

FERC is expected to announce refunds based on that premise sometime this fall.

Hydro could lose as much as $280 million US in connection with that event.

But it could see its losses run far higher, if California has its way.

The ruling clears the way for more punitive refund orders and may also double the time frame in which violations were alleged to occur.

"It puts back on the table $2.8 billion in refunds that the federal regulators had taken off the table," said California attorney-general's office spokesman Tom Dresslar. "We believe the ruling also means we should be eligible to collect refunds of another $2.5 billion-$3 billion that FERC has said we're not eligible to collect."

Copyright 2004 Vancouver Sun

Posted by Arthur Caldicott on October 06, 2004

September 29, 2004

WA Dept of Ecology sets conditions for GSX

FOR IMMEDIATE RELEASE - Sept. 29, 2004

04-182

Ecology Department sets conditions for Georgia Strait pipeline project

BELLEVUE - While not endorsing the project, the state Department of Ecology (Ecology) has set stringent conditions intended to protect water quality if a proposed pipeline project through Whatcom and San Juan counties advances to the construction phase.

The Georgia Strait Crossing Pipeline (GSX) project would pass through the two counties to deliver natural gas from Canada's mainland to Vancouver Island. Ecology's certification letter describes what project proponents would have to do to protect wetlands, streams, the Strait of Georgia and the bluff and eelgrass beds at Cherry Point during the construction and operation of the pipeline.

"We are not endorsing GSX," said Jeannie Summerhays, Ecology's regional shorelines manager. "This action ensures that the federal government will include state environmental standards and protections if this project does move forward. We're requiring significant protections for several sensitive areas."

Ecology's action is called a "water quality certification," which describes how a proposal can meet state water-quality standards. The GSX project requires a federal water-quality permit from the U.S. Army Corps of Engineers. If the Corps decides to issue the permit, it must incorporate the conditions in Ecology's certification.

The deadline for the state's action was today, one year after GSX filed its application.

The proposed pipeline would cross 33 miles on land between Sumas and Cherry Point and continue under water through the Strait of Georgia for 14 miles.

Its path would cross 87 rivers, streams and ditches. Construction would temporarily affect 59 acres of wetland, many of which are farmland, and permanently remove trees and shrubs from three-and-a-half acres of wetland habitat.

Ecology would require GSX to tunnel beneath 23 streams to avoid harming them. GSX also must restore and replant the wetlands along the route after trenching and placing the pipeline, and 16 acres of wetland must be improved to compensate for wetlands that would be damaged.

A one-mile tunnel would begin on land at Cherry Point to pass beneath the bluff, beach and offshore eelgrass beds. Cherry Point Eelgrass is a spawning ground for declining herring stocks, which are an important food for salmon, including threatened species.

The next five miles of underwater pipeline would have to be buried in a trench to reduce barriers to the movement of crabs. The rest of the line would rest on the bottom of the Georgia Strait and require a reinforced concrete coating for protection from trawling gear.

The certification can be appealed within 30 days to the state Pollution Control Hearings Board.

# # #

Contact: Larry Altose, public information officer, 425-649-7009; pager, 206-663-1785

Link to certification: www.ecy.wa.gov

Posted by Arthur Caldicott on September 29, 2004

Judge to rule on pipeline shoreline permit

Separate case to decide state, local authority goes before appeals court today

John Stark
The Bellingham Herald

Whatcom County Hearing Examiner Michael Bobbink said Tuesday that he would issue a ruling within 10 days on a shoreline permit for a $248 million natural gas pipeline that would cut across Whatcom County on its way to Vancouver Island.

Bobbink could choose to reject or accept the shoreline permit, or he could rule that the project needs to get a major development permit, which would require review by the Whatcom County Council. But Bobbink and attorneys on both sides of the issue agreed that the fate of the project could be settled in court.

Bobbink concluded the public hearing Tuesday on the shoreline permit after hearing attorneys' arguments. Steve Snarr, the attorney arguing the case for the Georgia Strait Crossing Project, said his clients believe they no longer need project permits from Whatcom County or the state of Washington. That's because the Federal Energy Regulatory Commission ruled last April that the Washington Department of Ecology had missed deadlines for reviewing the project, and thereby waived state and local authority.

The state and the county are now appealing FERC's ruling. Whatcom County Chief Civil Deputy Prosecutor Randy Watts said the 10th Circuit Court of Appeals in Denver will hear the matter today but is not expected to issue an immediate ruling.

During Tuesday's hearing, Watts debated the question of the pipeline's economic benefit to Whatcom County with Snarr and project manager Lynn Henrie.

Snarr and Henrie said the pipeline, which will cross 33 miles of the county from Sumas to Cherry Point before moving underwater, could eventually supply natural gas for industrial development at Cherry Point.

Watts argued that Williams Pipeline Co. and B.C. Hydro are proposing the project to fuel generating plants on Vancouver Island. Future benefits to Whatcom County are speculative, he said.

Henrie said that the pipeline would have to add a powerful compressor unit at Sumas to increase capacity to provide significant additional gas supplies for present or future Whatcom County industries.

Watts said doing that would mean changing the nature of the project and adding noise impacts in the Sumas area that have not yet undergone regulatory scrutiny.

The only certain benefit to the county, he added, would be tax revenue from the pipeline project, and he contended that was nowhere near enough to justify the negative environmental impacts to the shoreline and the rest of the county under state and local regulations.

During a brief question period, one audience member asked why Whatcom County should have to put up with a pipeline meant to get natural gas from one part of Canada to another. Henrie replied that nearly all of the natural gas used by Whatcom County comes from Canada, and pipelines cross Canadian territory to serve the United States.

Reach John Stark at 715-2274 or john.stark@bellinghamherald.com.

Posted by Arthur Caldicott on September 29, 2004

Knob Hill Wind Farm gets EA approval

The Knob Hill Wind Farm project has obtained an Environmental Assessment Certificate. Congratulations to the folks at Sea Breeze Power Corp. who have shepherded the project this far.

Now for the bigger challenges. Find a customer for the power. And find the capital to build it. No customer = no capital.

BC Hydro, the obvious customer, has been a consistent impediment to the development of BC's awesome wind potential. That attitude is unlikely to change, at least with the Neufeld/Campbell mindset that prevails in the provincial government.

And with the Call for Tenders (results expected October 9) for power generated on Vancouver Island, BC Hydro probably will have as much on-island power as it intends to purchase, at least until 2007.

The EA Certificate is a milestone. But a lot more wind will blow over Knob Hill before any power is generated at the site.

Environmental Assessment Office Knob Hill Project Site (link)
Environmental Assessment Certificate (link)
Sea Breeze Power website (link)

SeaBreezeKnobHill.jpg

Posted by Arthur Caldicott on September 29, 2004

September 28, 2004

Georgia Basin/Puget Sound Airshed

Characterization of the
Georgia Basin/Puget Sound Airshed

Executive Summary in Adobe Portable Document Format ( 297 kb)
Complete Report in Adobe Portable Document Format ( 2 897 kb)

Executive Summary

The Characterization of the Georgia Basin/Puget Sound Airshed study was undertaken to characterize the air quality within a rapidly growing, urbanized area of the Pacific Northwest, the Georgia Basin/Puget Sound air basin (the Basin). Growth within this region continues to put stress on the environment. Expansion of suburban development, increasing transportation demands and developments in the energy sector are just a few of the challenges faced in managing air quality in the area.

The Basin includes jurisdictions in both Canada and the United States, and both countries are currently implementing new air quality standards and guidelines. Thus, it was critical to characterize the nature of air pollution within the Georgia Basin/Puget Sound airshed at this time. The study will provide scientific information to assist in the development of an International Airshed Strategy and direction on specific policy issues related to particulate matter, ozone and visibility, the implementation of the Canada Wide Standards, the implementation of new US Environmental Protection Agency air quality standards for particulate matter and ozone, and the US Regional Haze Rule.

The goal of the study was to establish a common understanding of the current status of and trends in air quality in the Georgia Basin/Puget Sound airshed. Its specific objectives were to:

Determine the significance of the transboundary transport of air pollution within the Georgia Basin/Puget Sound airshed;

Identify and describe the key factors – natural and anthropogenic – affecting air quality in the region;

Establish a current benchmark against which changes in air quality over the next 10 years can be measured;

Identify the key gaps in our scientific understanding of air quality as it relates to particulate matter, ozone and visibility in the Basin, including gaps, if any, in monitoring, inventory and modeling approaches and systems;

Describe the anticipated consequences for air quality of specific air quality management actions; and

Provide the basis for the development of public education and communications materials designed to enhance citizen understanding of air quality in the region.

Although the area described and studied in this report is commonly known as the Georgia Basin/Puget Sound airshed, it is really two smaller airsheds: Georgia Basin and Puget Sound. The Georgia Basin airshed comprises the Canadian portion of the Basin, Whatcom County in Washington State and the southern coastline of the Strait of Juan de Fuca. It should be noted that the southern boundary of the Georgia Basin airshed extends to the higher terrain of the north Cascades. The Puget Sound air basin encompasses the counties to the south of Whatcom County.

The study focused on three air pollution issues: ground-level ozone (ozone), fine particulate matter (PM) and visibility. These issues are not only matters of public concern but are also significant factors in the development of international air quality standards and strategies.

The following sections outline the key areas of focus of the study, the major findings, and the implications for the development of strategies to improve air quality.

What Determines Air Quality?

In the Georgia Basin/Puget Sound, air quality is largely determined by the weather patterns that circulate air throughout the airshed, and these in turn are influenced by the topography of the region. The air moves and disperses airborne chemicals that are emitted from a variety of human and natural sources, both from within and outside the Basin.

Periods of stagnation occur primarily in the summer and winter. At these times, the windflow patterns do not allow air pollutants to flow between the two airsheds, effectively isolating them from one another and allowing air pollutants to build up within each airshed.

Not all pollutants that affect the Georgia Basin/Puget Sound air basin originate within the airshed. Airborne chemicals from Eurasia and California have been observed to add to the overall mixture of pollution within the Basin. Although these pollutants are usually well-dispersed by the time they arrive, they nevertheless add a small, but measurable, amount to the ozone and PM ambient concentrations. The most favourable time for air pollutants to enter the Basin from the Pacific Ocean is during the spring, particularly April and May. In addition, interactions between airborne pollutants can cause secondary air pollutants to form in the atmosphere.

Emissions

Emissions of air pollutants come from both natural and anthropogenic, or human-created, sources. These airborne pollutants may undergo chemical reactions in the atmosphere, creating new pollutants that can affect human and ecosystem health, and cause visibility problems. Emissions from anthropogenic sources can be controlled through regulation or the application of technology, but natural emissions are beyond human control.

Over the next decade, emissions of pollutants from the on-road vehicle sector are projected to decrease in both airsheds, but emissions from agricultural practices are projected to increase, as are emissions from the marine sector.

The table below summarizes predicted emission trends for several key air pollutants in the Georgia Basin and Puget Sound airsheds. Actual future emission levels will depend on population and economic growth as well as on policy decisions taken by Canada and the United States.

Table 4.2 Emission trends for the Puget Sound (Department of Ecology, 2001) and Georgia Basin (GVRD, 2003) airsheds

Pollutant Emission Trend
Puget Sound
1996-2018
Lower Fraser Valley
2000-2020
NOx -43% -25%
SO2 -61% +23%
VOC -11% -13%
NH3 +20% +31%
PM10
(Includes road dust)
+23% +16%
PM2.5
(Includes road dust)
+19% + 10%

Ambient Air Quality

Airborne chemicals and the associated meteorology are measured at a number of sites to quantify air quality both in time and space. The ambient measurements indicate how successful various air quality management strategies are. With relation to the three key air quality issues, the research found:

Ozone

The amount of ground-level ozone in the ambient air is primarily the result of photochemical reactions. Ozone and its precursors can be transported great distances. As a result, the highest ozone concentrations are often observed downwind of urban centres at high elevations in rural areas.

Rural areas are “NOx-limited” due to the relatively large amounts of naturally occurring VOC emissions and the small amounts of NOx emissions. Reducing ozone in rural areas may require large reductions in anthropogenic NOx emissions from urban areas.

Ozone concentrations of 40 to 50 ppb are often recorded at rural coastal locations during the spring and identified as “background” concentrations. These concentrations are caused by emissions from both natural and anthropogenic sources, including transport from outside the Basin. Thus, a portion of background ozone is anthropogenic and, therefore, controllable.

Particulate Matter

Fine particulate matter is dominated by carbonaceous material. In urban centres, nearly 50 per cent of the particle mass comes from combustion.

Natural emissions of volatile organic compounds represent from one-third to one-half of the total VOC emissions in the Basin. The magnitude of natural emissions poses limits on achievable reductions in total VOC emission levels and on the effectiveness of nitrogen oxide emissions controls in reducing ambient PM and ozone concentrations.

Visibility

SO2, organic carbon and NOx are the dominant pollutants responsible for degraded visibility in the Basin. SO2 and NOx are transformed in the atmosphere to sulphates and nitrates, which combine chemically with ammonia from agricultural sources and with sodium from natural marine emissions to form fine particulate matter.

Social and Economic Context

Air quality is integrally linked to all aspects of the sustainability of the Georgia Basin/Puget Sound region – a healthy environment, a vibrant economy and social well-being. However, air pollution is related to a number of social and economic trends in the region, including increases in population, transportation demands and energy consumption, and shifts in industry. This air pollution causes significant social, environmental and economic impacts. Examples include:

Health impacts from airborne pollutants range from eye, nose and throat irritation to decreased lung function and cancer.

Contaminants in the air can damage farm crops and vegetation, reducing yields of economically important crops. In the United States, agricultural losses due to ozone have been estimated to be between $1 billion and $3 billion annually.

The reduction in visibility caused by the buildup of airborne particles in the air can have detrimental effects on tourism. For a single extreme visibility event, computer models estimate losses in future tourist revenue to be $7.45 million in the Greater Vancouver area and $1.32 million in the Fraser Valley.

Increasing concentrations of heat-trapping gases are contributing to climate change, with far-reaching and unpredictable environmental, social and economic consequences.

State of Our Knowledge

Significant gaps still exist in our knowledge of how specific air pollutants react with each other and impact human and environmental health within the Basin. Methodologies used to compile emission inventories and to forecast emission trends rely on assumptions and computer modelling techniques that need further refinement. Air quality computer models applied to the Georgia Basin/Puget Sound airshed provide estimates of pollutant concentrations for days or weeks, but predictions of seasonal or annual concentrations are not available. The computer models being applied to the Basin need further evaluation, particularly for winter conditions. However, even with the gaps in knowledge and the shortcomings of different methodologies, the study confirmed that current levels of several air pollutants are reported to be causing impacts to human and environmental health, and must be addressed.

Significance of Transboundary Transport

The study found that there is sufficient transboundary airflow to transport airborne pollutants across the international boundary. In fact, windflow patterns move pollutants across the international border in both directions through all seasons of the year in the Georgia Basin airshed. Furthermore, the results of computer-modeled simulations confirm that there is a significant transboundary transport of air pollution in the southern portions of the Georgia Basin airshed. The main exchange of air and pollution between the Georgia Basin and Puget Sound airsheds is through the “portal” situated to the south of Haro Strait, extending from south of Bellingham westward to Port Angeles. Flow through the portal is strongest in the fall.

Implications

The study identified the following key implications for developing strategies to improve air quality in the Georgia Basin/Puget Sound air basin:

Because wind flow patterns move pollutants across the international border in both directions through all seasons of the year, the management of air pollution in the Georgia Basin/Puget Sound airshed will require coordinated attention by both Canada and the United States.

The stagnant weather associated with episodes of poor air quality usually impacts the Georgia Basin and Puget Sound airsheds simultaneously. During these episodic events, the movement of air pollutants between airsheds is extremely limited. However, strategies taken to address episodes of poor air quality will continue to require coordinated international action in the Georgia Basin airshed.

Interactions between airborne pollutants can cause secondary air pollutants to form in the atmosphere. Emission reduction strategies will be most effective when the synergistic effects of emission changes on air chemistry and subsequent air pollutants are considered.

The concentration of ambient air pollution is linked to social and economic trends including increasing population, transportation demands, energy consumption and shifts in industry. Although emissions of pollutants from the on-road vehicle sector are projected to decrease over the next decade in both airsheds, emissions from the marine sector are increasing, as are emissions from agricultural practices. Some of the programs and strategies to reduce emissions and improve air quality will also assist with strategies to reduce greenhouse gas emissions, and vice versa.

Ambient concentrations of air pollution, at present levels, have a negative impact on human health and the environment. These results support the need for continuous improvement of air quality while maintaining publicly acceptable concentrations in areas where air pollution levels are low.

Fine particulate matter is dominated by carbonaceous material. In urban centres, nearly 50 per cent of the particle mass is from combustion. The management of emissions from combustion sources should be a continuing priority to reduce fine particulate concentrations and related human health problems.

SO2, organic carbon and NOx are the dominant pollutants responsible for degraded visibility. SO2 and NOx emissions are transformed in the atmosphere to sulphates and nitrates, which combine chemically with ammonia from agricultural sources and with sodium from natural marine emissions to form fine particulate matter. Improving visibility will require attention to SO2, organic carbon, NOx and ammonia sources.

The amount of ground-level ozone in the ambient air is primarily the result of photochemical reactions. Ozone and its precursors can be transported great distances. As a result, the highest ambient ozone concentrations are often observed downwind of urban centers and at high elevations in rural areas. The effectiveness of ozone control strategies needs to be evaluated by taking ambient measurements of ozone at appropriate locations, often downwind of urban centres and at high elevations in rural areas.

Natural emissions of volatile organic compounds represent from one-third to one-half of the total VOC emissions in the Basin. The magnitude of natural emissions poses limits on achievable reductions in total VOC emissions in the Basin. Natural VOC emission levels also limit the effectiveness of NOx emission controls in reducing ambient PM and ozone concentrations.

Ozone concentrations of 40 to 50 ppb are often recorded at rural coastal locations in the spring and identified as “background” concentrations. These concentrations are caused by emissions from both natural and anthropogenic sources, including transport from outside the Basin. Thus, a portion of background ozone is anthropogenic and, therefore, controllable.

The impact of the long-range transport of pollutants from the Pacific is more often noted in the spring. Air pollutants from sources outside the Basin are usually well dispersed, although the impact on ambient air quality in the Basin is measurable. Ambient air quality strategies within the Basin need to consider the addition of pollutant concentrations from distant sources.


--------------------------------------------------------------------------------
URL of this page:
http://www.pyr.ec.gc.ca/air/gb_ps_airshed/summary_e.htm
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Posted by Arthur Caldicott on September 28, 2004

September 25, 2004

Environmental & neighborhood groups say "NO TO GSX"

Contacts:
RE Sources for Sustainable Communities; Wendy Steffensen, (360) 733-8307
Fuel Safe Washington; Fred Felleman, (206)595.3825
Neighbors for Birch Point; Jo Slivinski, (360) 371-0301
Smart Growth Birch Bay; Alan and Elie Friedlob, (360) 371-3441
Friends of the San Juans; Tina Whitman, (360) 378-2319
GSX Concerned Citizen Coalition of BC; Arthur Caldicott (250) 370-9930 x22
Norhwest Ecosystem Alliance; Lisa McShane
North Cascades Audubon Society; Paul Woodcock

FOR IMMEDIATE RELEASE
September 24, 2003

A broad coalition from Canada, Whatcom and San Juan Counties will reiterate their opposition to the GSX pipeline before the Whatcom County Hearing Examiner on September 28th at 1:30 P.M. at the Whatcom County Courthouse Annex, 1000 North Forest St. in Bellingham.The proposed GSX project, a major natural gas transmission pipeline slated to deliver natural gas from the BC mainland to Vancouver Island, by way of Whatcom and San Juan Counties has been going through the regulatory permitting process since 2001.

The Hearing Examiner will hear the remaining arguments on the County permits needed for the GSX project on Tuesday and will make his decision within ten days of the closing comments. The public is invited to attend the hearing.

Opponents of the project contend that the route through the US is not necessary because feasible all-Canada routes exist for the pipeline, and, additionally, there are other simpler means to generate electricity for Vancouver Island. They maintain that pipeline construction and operation could harm the declining Cherry Point herring, as well as the biologically rich Cherry Point reach. Herring are a key species in the Puget Sound food chain, are a primary food source for endangered salmon, which are critical to the recovery of our endangered resident orca population.

County staff in both Whatcom and San Juan Counties have recommended against the GSX pipeline based on the potential harm the GSX pipeline could cause to marine resources and because it is an unnecessary project. Staff in both counties found that the GSX project did not meet guidelines under the Shoreline Management Act.

In San Juan County, the Hearing Examiner overruled County staff and approved the GSX project. Friends of the San Juans (FSJ) appealed that decision to the San Juan County Council. Spokesperson Tina Whitman says, "Our appeal is focused on project inconsistency with county and state shoreline management policy and concerns over the legal precedent set by allowing a new utility corridor along a Shoreline of Statewide Significance. The public benefit has not been demonstrated, while the risks to human safety and ecological systems are many."

In Whatcom County, RE Sources for Sustainable Communities, Neighbors for Birch Point, Smart Growth Birch Bay, and North Cascades Audubon Society have been working to thwart the GSX pipeline. "The GSX pipeline offers no benefit to Whatcom County or to the state of Washington, and could come at a great environmental cost. Placement of pipelines need to be part of a comprehensive energy plan; the GSX project could engender other new energy projects, creating an unplanned utility corridor and potentially even more environmental problems," said Wendy Steffensen, North Sound Baykeeper with RE Sources.

Jo Slivinski, whose grassroots group Neighbors for Birch Point gathered more than 200 Whatcom County signatures in a few days on a petition against GSX, commented, "What's at stake are tremendously adverse environmental impacts on marine wildlife and vegetation in an area of known seismic activity and along a designated 'Shoreline of Statewide Significance.' The area's fisheries could be impacted--environmentally and economically. Add to that Williams' [one of the pipeline co-developers] extremely poor pipeline safety record. How can what Williams is calling 'benefits' (possible tax revenues) to our counties be in any way worth such abysmally terrible trade-offs on our environment, safety, and economy?"

The considerable dangers posed by this pipeline, especially in light of the Williams Company's pipeline safety record, concerns more than a few opposing groups. Arthur Caldicott of GSX Concerned Citizens Coalition of BC has written extensively on this issue. For example, the company's Northwest Pipeline, which runs from Canadian border to southern Oregon, ruptured twice in 2003, in one case releasing gas for 3 hours before it could be stopped. At least 8 other failures or safety incidents with Williams' various pipelines in the Pacific Northwest have been documented between 1992 and 1999. Following the 1999 Olympic Pipeline explosion (not one of Williams' pipelines) in Bellingham, the Washington State Utilities and Transportation
Commission launched an investigation into pipeline inspection and testing records of companies operating in the state. Williams came out at nearly the bottom of the list, having inspected only 17% of its system and tested a mere 11%.

Elie Friedlob, representing Smart Growth Birch Bay, a group interested in monitoring development in the Birch Bay area stated, "Should this pipeline be approved and built by overriding the known concerns of the County and Washington State, it will seriously weaken the ability of these governments to control and monitor the type and quality of development along our critical shorelines and our vulnerable farmlands."

The Federal Energy Regulatory Commission (FERC) has already given the GSX project conditional approval. FERC also maintains that the County and State do not have jurisdiction in the GSX case. The Department of Ecology is challenging FERC's contention that they do not have standing in the case. DOE has not decided whether to grant permits for this project or not, and at this point the question of their jurisdiction has not been resolved.

In another legal twist, the jurisdiction of FERC itself is being challenged by Fuel Safe Washington (FSW). "FSW is challenging FERC's jurisdictional authority since this is not an interstate pipeline. This proposed gas transmission line should be reviewed by the State's Energy Facility Site Evaluation Council (EFSEC), not an agent of the Bush Administration which supports anything that smells like oil and gas infrastructure. Furthermore, given the dire straits of our orca, salmon and herring populations they have done an incredibly poor job of assessing the environmental impacts of such an unnecessary project" said Fred Felleman, President of FSW. That hearing is scheduled for September 29th in Denver before the 10th
Circuit Court of Appeals.

In Canada, opposition to the GSX Pipeline project has been intense, resulting in one of the longest hearings in Canadian pipeline history. The pipeline cannot be built unless BC Hydro also builds a gas fired generation plant in Nanaimo, on Vancouver Island. Last September, however, the BC Utilities Commission denied BC Hydro's application for the Nanaimo plant. In any event, Terasen, the owner of the existing
all-Canadian pipeline to Vancouver Island, has demonstrated in evidence that they can provide all the gas needed on Vancouver Island with modest upgrades to their existing system.

The odds of this pipeline being built are very low", says Arthur Caldicott, a director of the GSX Concerned Citizens Coalition, "but if it does get built, it would be senseless for Americans to accept all the environmental impacts when they stand to get no benefit from it." Caldicott adds, "What was FERC thinking when they determined that GSX would be in the public interest and convenience of citizens of Whatcom and San Juan counties? It's an absurd conclusion." Caldicott's group wrote an amicus brief in support of the Fuel Safe case going to Court on Wednesday.

-30-

Posted by Arthur Caldicott on September 25, 2004

Panel OKs power plant at refinery

Generator will do double duty
John Stark, The Bellingham Herald
September 25, 2004

The 720-megawatt BP Cherry Point Cogeneration Project got a unanimous endorsement Friday from the Washington State Energy Facility Site Evaluation Council, sending the project to the desk of Gov. Gary Locke for final approval.

Assuming that the project clears that final step in 3 1/2 years of regulatory scrutiny, the two-year construction project could begin in the first half of 2005, company officials said.

COGENERATION POWER PLANT

What: Natural gas-fired electric-power plant

Where: BP Cherry Point Refinery

Maximum output: 720 megawatts, enough power for more than 700,000 average homes.

Jobs: 30 permanent positions, temporary jobs peaking at 706 during two-year construction; two-year construction payroll estimated at $30 million.

Tax impact: $4 million in one-time sales tax revenue to Whatcom County; annual property tax of $1.6 million to Blaine school district, $720,000 to Whatcom County.

Sources: BP; Whatcom County Assessor's Office


COMMENT: The business logic that underlies a project like this, in the face of evidence that North American natural gas production has peaked, must be underpinned by articles of faith that the empirical evidence can't be true and/or that other sources of supply, such as LNG, will come into play in time.

Note that at least one proposal for an LNG terminal at Cherry Point is being floated.

Although GSX tried to enjoin the BP project as a supporter of the GSX-US pipeline, the EFSEC approval is based on the understanding that the gas for the BP Cherry Point Co-generation facility will all come from an existing pipeline.

"The sole fuel source for the facility will be natural gas, except for diesel oil used in the emergency generator and the firewater pumps. The Project will be supplied by a connection to the existing 16- inch Ferndale pipeline that runs from the U.S.-Canada border near Sumas, Washington, to the BP Refinery." (link)


"It's a big relief," said Mike Torpey, BP's environmental manager for the project.

Steve Koch, president of the Northwest Washington Building and Construction Trades Council, was also pleased. He said he expected the construction of the generating plant to provide some good jobs for some of the 6,000 union members he represents.

BP has estimated peak construction employment on the project at 700, with a total construction payroll of about $30 million. Permanent employment at the generating plant will be about 30.

Site council members praised the project.

Council Chairman Jim Luce said it was consistent with the state policy goal of meeting the growing demand for electric power while causing minimal environmental impact. The BP project is more efficient than a stand-alone power plant because the fuel burned will do double duty, generating power while providing steam for refinery operations, Luce said.

Council member Tony Ifie, representing the state Department of Natural Resources, said he had studied the air-quality data provided by the company and was convinced that the plant would not hurt air quality in the region. Using the generator to provide steam for the refinery will result in the shutdown of older, dirtier steam boilers and result in the reduction of some emissions, Ifie said.

Hedia Adelsman, the council member representing the state Department of Ecology, said the project would eliminate about 30 acres of wetlands, but the company would compensate for that loss by restoring another 110 acres of wetlands.

Whatcom County Council member Dan McShane, also a site council member, said construction traffic will be significant in the area, but would be comparable to what nearby residents already experience when Cherry Point refineries are doing major maintenance work. He said the company has agreed to shoulder the cost of road improvements to help handle the traffic impact.

Reach John Stark at 715-2274 or john.stark@bellinghamherald.com.

The Bellingham Herald

EFSEC Project Site

Posted by Arthur Caldicott on September 25, 2004

September 17, 2004

Garbage in, garbage out

What do a folk singer and a potato farmer have in common? How about a dodgy investment scheme in power generation at Gold River that might actually see tons of Los Angelinos garbage pile up in Nootka Sound

The Republic
Vancouver's Opinionated Newspaper
September 2 to 15, 2004, No 96


A strange tale involving an alleged American stock fraudster, a popular Alaskan folk singer, a huge Japanese conglomerate, a dying mill town, and desperate government officials is unfolding in the northern Vancouver Island village of Gold River, population 1,400, and falling.

Five years ago, owners of the Bowater Pulp Mill at Gold River shut the plant down, permanently laying off all 400 employees. The employees were mostly residents of the village of Gold River, then bustling and prosperous with a population of 2,400 and growing. Gold River was originally planned and built by the owners of the mill in the 1960s. The abandoned mill continues to sit on land leased to it from the Muchalat Indian band. The village now continues to die a slow death as remaining residents grasp at whatever hope comes along.

As though by saving grace, one such hope has appeared on the horizon—but it may come with a high price. BC Hydro is a state-owned electric utility company. The current British Columbia provincial government is trying to privatize the utility. To tart up its prospectus for a future initial public offering on the stock markets, BC Hydro announced that it would shut down its under-water cables that supply electricity from generating plants on the BC mainland to Vancouver Island. To make up for the electricity shortfall on the island, the utility proposed to build a natural gas pipeline connecting to the North American gas grid, and to construct a natural gas-fired electricity generating plant near the Vancouver Island city of Nanaimo.

But last year, the government regulator, the BC Utilities Commission, turned down the bid and insisted instead that BC Hydro should first seek applications from potential private generators of electricity on Vancouver Island.

One of the more intriguing proposals that have come forth from the resulting tendering process the utility launched last year involves the moth-balled Bowater Pulp Mill at Gold River. The proposal comes from an unlikely duo: a potato farmer from Idaho by the name of David O Kingston, and a folk singer from Alaska by the name of Jewel Kilcher. Kingston owns a set of companies that wholesales and distributes potatoes from Idaho, pineapples from Costa Rica, and other farm food from Peru, Florida and California, mostly by truck to huge California markets. Kilcher is better known by her stage name, Jewel, currently one of the world’s most popular singer-songwriters.

With proceeds from her successful entertainment career, Jewel funds a foundation called Clearwater Project that aims to provide potable water to third world villages. The chief corporate strategist at Clearwater is Lenedra Carroll, Jewel’s mother, herself once half of a formerly popular folk music duet in Alaska, the other member being Jewel’s father, Atz Kilcher. The two divorced when Jewel was eight years old. Her father continues to play and record music.

Carroll, on the other hand, authors self-help books and manages her daughter’s career. In a suit launched by Jewel’s original manager a few years ago, Inga Vainshtein alleged that Jewel was required to consult her mother’s supposedly channeled entity, known as “Z”, prior to making any decisions regarding Vainshtein’s business advice.

Kingston and members of his family own and operate the Kingston Companies LLC with headquarters in Idaho Falls, Idaho, and offices around the US, and also in San Jose, Costa Rica, Lima, Peru and, oddly enough for a fruit and vegetable-growing concern, Gold River, British Columbia, according to published corporate information. The company owns farms that grow and distribute potatoes, onions, broccoli, lettuce, and pineapple.

Kingston and Carroll, through the Clearwater Project, were named in the BC Legislature in Victoria by North Island MLA Rod Visser as chief investors in the new plan for the Bowater mill. Carroll, in her capacity as chief corporate strategist at Clearwater, launched a private company, in collaboration with Kingston and other investors, called Green Island Energy. Sean Ebnet, Executive Director of Jewel’s Clearwater Project foundation, has taken up part-time residence in Gold River to head up Green Island Energy. Kingston’s company began this year to list Gold River as a site of one of its far-flung global offices.

Green Island Energy has a proposal before BC Hydro and various BC government regulators to transform the abandoned Bowater mill into an electricity generating station that would produce and sell electricity to BC Hydro. The Green Island Energy proposal is to take advantage of existing transmission lines that connect the mill to the electrical grid at nearby Campbell River, lines formerly used to supply the mill with electricity. Existing boilers at the mill can be used, the proposal states, to burn waste wood particles from nearby mills in sufficient volume to create, with steam turbines, 49 megawatts of electricity—roughly the equivalent of what is used by 24,000 homes in one year. Ultimately, Green Island Energy proposes to generate 250 megawatts at the former Bowater plant.

According to companies that already burn waste wood to produce electricity, each megawatt produced requires about 20,000 tons of wood waste products. The initial phase at Green Island Energy would require one million tons of wood waste per year. The ultimate plan would require five million tons per year.

Of course, there isn’t nearly that much wood waste produced at mills throughout British Columbia, not anymore, anyway, since many, like Bowater, have shut down. The Green Island Energy proposal, however, does not specify that wood waste only would be burned at the old mill site in Gold River in future phases. Instead, the proposal is to burn “biomass.”

According the US National Renewable Energy Laboratory , biomass has this official definition, for the purposes of US regulators: "Biomass: Organic matter available on a renewable basis. Biomass includes forest and mill residues, agricultural crops and wastes, wood and wood wastes, animal wastes, livestock operation residues, aquatic plants, fast-growing trees and plants, and municipal and industrial wastes." With the right boilers, any of this material can be burned to produce steam for electricity.

Only one kind of biomass listed above is in great enough abundance and cheap enough to source for anyone to consider basing a 250 megawatt electricity generating plant on it: municipal and industrial solid waste. In fact, producers of municipal waste up and down the west coast of North America are anxious to pay anyone willing to take their biomass—human household waste, mostly—away because landfills are full, new ones are impossible to get permits for, and dumping waste in the ocean is no longer acceptable. City of Vancouver residents generate about 300,000 tons of household garbage and waste a year. The west coast of North America generates about 50 million tons—all of it with not much room left to stash it.

Biomass-burning electricity plants constructed recently in Pennsylvania and other eastern seaboard states at first proposed to burn “clean” wood chips, but nearby residents soon learned that the term “biomass” has a wider definition than they thought when municipal and state governments granted companies permits to burn it. They now see municipal waste from afar brought to their impoverished towns, where it is burned at their former “clean wood chip” fired electricity plants.

David O Kingston, one of the principles behind the Green Island Energy proposal, is currently in the courts in Idaho facing lawsuits stemming from fraud in an alleged stock market swindle with a company he headed up called Collabware. Collabware promised investors it had special access to certain Lougheed Martin Company inventions, but all came to naught and the company wound up operations soon after new capital stopped flowing in.

The company Green Island Energy proposes to sub-contract out the actual operation of the plant at Gold River is North American Energy Services, a wholly-owned subsidiary of Itochu Corp., a sprawling Japanese conglomerate with revenues from global operations totaling over $120 billion last year.

Other business ventures by Jewel and her mother have included a yet-to-be made film called Wave, co-produced by the two about a mother re-uniting 25 years later with her son in a remote west coast Canadian town. Jewel is to be cast as the son’s love interest. It is writer David Rothmiller’s first writing credit. Production has been stalled for two years.

Gold River is not Lenedra Carroll’s first foray into electricity entrepreneurship. Two years ago she led a consortium interested in taking over the mothballed Anyox hydroelectric dam and generating plant at Alice Arm, BC, located nearby Prince Rupert. The status of this project is unknown; the purchasing agreement with BC Hydro was expected a year ago, but has not yet materialized.

Earlier this year, the mayor of Gold River, the local MLA, and Gordon Campbell, premier of the province, were introduced to the principles of Green Island Energy, and also treated to a song or two by Jewel in person. Sources close to The Republic say Green Island Energy recently received government approval to begin shipping municipal waste to the Bowater mill site, but this could not be confirmed by press time.

****

Jewel meets with Premier to discuss plans for a new power generation facility

from the Premier's media gallery (link)


Posted by Arthur Caldicott on September 17, 2004

September 14, 2004

Clean Air Summit, Thur, Sept 16, Duncan

The Clean Air Summit goes this Thursday, Sept 16, at the Silver
Bridge Travelodge in Duncan, 140 Trans-Canada Highway, 9:30 to 3:30.

Speakers include:

June Yoo Rifkin, BC Lung Association
Dave Stevens, CHOKED
Delores Broten, Reach For Unbleached
Thomas Marek, Carbon Monoxide Information Network
Paul Hundal and Carole Christopher, SPEC - Society Promoting Environmental
Conservation
Karen Cooling, CEP -- Communications, Energy and Paperworkers Union of Canada
Peter Ronald, Georgia Strait Alliance & GSX Concerned Citizens Coalition
Chris Tollefson, University of Victoria Faculty of Law
Chris Rolfe, West Coast Environmental Law
Stuart Blundell, PPWC -- Pulp, Paper and Woodworkers Union of Canada Bernadette Wyton, Citizens Stewardship Coalition, Port Alberni

CACG - Clean Air Citizens Group

Posted by Arthur Caldicott on September 14, 2004

September 03, 2004

Terasen applies to BCUC for LNG facility on Vancouver Island

Pursuant to Section 45 of the Utilities Commission Act, TGVI hereby files with the British Columbia Utilities Commission ("Commission") twenty (20) copies of an Application for a CPCN to construct and subsequently operate a new LNG Storage Facility. This LNG facility is to be constructed at a location referred to as Mount Hayes, in the Cowichan Valley Regional District near Ladysmith. TGVI will post the Application on the TGVI website at www.terasengas.com under Publications, Vancouver Island, and then BCUC.

Application to BCUC for a CPCN

_________________________________________________

Terasen Gas (Vancouver Island) Inc. Application for Approval of the 2004 Resource Plan -- and -- Terasen Gas (Vancouver Island) Inc. Application for a Certificate of Public Convenience and Necessity for a Liquified Natural Gas facility

Timetable
Intervenor/Interested Party Registration - September 8, 2004
Pre-hearing Conference - September 13, 2004
Information Requests to TGVI - September 20, 2004
TGVI Responses to Information Requests - October 4, 2004

--------------------------------------------------------------------------------
Hearing Location
Pre-hearing Conference @ 1:00 pm September 13, 2004 1:00:00 PM
Fourth Floor Hearing Room
855 Homer Street
Vancouver BC

--------------------------------------------------------------------------------
Hearing Documents
Exhibit List Submitted: 11/08/2004 8:45:00 AM
Updated August 18, 2004

--------------------------------------------------------------------------------
Exhibits
"A" Exhibits - Commission Documents
A-1 Submitted: 18/08/2004 12:49:00 PM
Commission Order No. G-79-04 and Notice of Pre-Hearing Conference combining the reviews of the 2004 Resource Plan and the Certificate of Public Convenience and Necessity Application for a Liquefied Natural Gas (LNG) Storage Project

A-2 Submitted: 26/08/2004 9:31:00 AM
Commission letter dated August 23, 2004 regarding July 2004 Update Report dated August 16, 2004

"B" Exhibits - Applicant Documents
B-1 Submitted: 11/08/2004 8:35:00 AM
Terasen Gas (Vancouver Island) Inc. letter and Application dated June 18, 2004 for Approval of the 2004 Resource Plan

B-2 Submitted: 18/08/2004 12:45:00 PM
Terasen Gas (Vancouver Island) Inc. Application for a Certificate of Public Convenience and Necessity - LNG Storage Project

"C" Exhibits - Intervenor Documents
C1-1 Submitted: 11/08/2004 9:08:00 AM
WestPac Terminals - Notice of Intervention dated August 3, 2004

C2-1 Submitted: 24/08/2004 2:34:00 PM
Ministry of Energy and Mines - Notice of Intervention dated August 19, 2004

C3-1 Submitted: 26/08/2004 11:30:00 AM
Karl E. Gustafson, Lang Michener – Notice of Intervention dated August 24, 2004

"E" Exhibits - Letters of Comment
E-1 Submitted: 24/08/2004 3:37:00 PM
Ministry of Energy and Mines – Response to Commission Letter No. L-35-04 dated June 30, 2004 requesting comments on, and preference for, either a joint process or separate processes for reviewing the Resource Plan and the LNG CPCN Application

E-2 Submitted: 24/08/2004 3:38:00 PM
Vancouver Island Gas Joint Venture – Response to Commission Letter No. L-35-04 dated June 30, 2004 requesting comments on, and preference for, either a joint process or separate processes for reviewing the Resource Plan and the LNG CPCN Application

E-3 Submitted: 24/08/2004 3:39:00 PM
British Columbia Hydro and Power Authority – Response to Commission Letter No. L-35-04 dated June 30, 2004 requesting comments on, and preference for, either a joint process or separate processes for reviewing the Resource Plan and the LNG CPCN Application

E-4 Submitted: 24/08/2004 3:39:00 PM
Terasen Gas (Vancouver Island) Inc. – Response to Commission Letter No. L-35-04 and interested party letters providing comments on, and preference for, either a joint process or separate processes for reviewing the Resource Plan and the LNG CPCN Application


Copyright © BCUC, 2004.

http://www.bcuc.com/ApplicationView.aspx?ApplicationId=58


Posted by Arthur Caldicott on September 03, 2004

September 02, 2004

Norske Canada Demand Management Proposal

September 2, 2004

By E-mail and Courier
British Columbia Utilities Commission
Box 250
600-900 Howe Street
Vancouver, B.C. V6Z 2N3

Attention: Robert J. Pellatt,
Commission Secretary

Dear Sirs/Mesdames:

Re: Project No. 3698376
British Columbia Transmission Corporation
2004 Transmission System Capital Plan

NorskeCanada herewith submits its proposal for Demand Management in response to BCTC’s Capital Plan submission. We believe that this proposal will allow the most cost effective, reliable and flexible solution to be implemented for the capacity issues to and on Vancouver Island.

Our proposal is based on Demand Management at our Elk Falls Mill (Campbell River) with an option for DM at our Crofton Mill. We understand that the Crofton location will help resolve a North-South backbone constraint until the new 230 kV transmission system is in service.

The Demand Management Service that we are proposing is more reliable than generation and can be contracted for “bridging” or for longer terms to meet the needs of on-going single-contingency conditions. Once installed, generation will not offer “real” choices for variable capacity and contract duration, as the pricing structure will be mainly based on the capital cost. As explained further in the proposal, this package is not bound by capital cost recovery and therefore offers true flexibility in variable capacity and contract duration; a great advantage to suit the users’ needs.

With this submission, we specifically request that the Commission direct BCTC and BC Hydro to engage in discussions to review the NorskeCanada proposal and report back, either endorsing the proposal or not, by November 1, 2004.

We are supportive of the 230 kV transmission option outlined in BCTC’s application, as reliability of service is an important issue for all Vancouver Island residents. We encourage as fast a review and approval as possible as we also believe this project is the most cost effective solution.

We wish to thank BCTC for their assistance to date in developing this proposal and for the time and effort they made in helping us formulate a useful Demand Management package. We believe this proposal addresses their criteria. We would welcome the opportunity to talk to other parties such as BC Hydro about alternative conditions or configurations for our Demand Management that may provide benefit to their systems or plants.

Thank you for the opportunity to submit this proposal and for the opportunity to be involved with BCTC’s Transmission System Capital Plan review.

Yours truly,

NORSKE SKOG CANADA LIMITED
Jess M. Beaman
Sr. Vice-President, Operations

Copy:
BCTC
Interested Parties

Norske Canada Demand Management Proposal


Posted by Arthur Caldicott on September 02, 2004

August 31, 2004

State appeals ruling on Georgia Strait pipeline

Ericka Pizzillo
The Bellingham Herald
August 31, 2004

The state Attorney General's Office has appealed the Federal Energy Regulatory Commission ruling that prevents the state from issuing environmental permits for a proposed natural gas pipeline through Whatcom County.

The state Attorney General's Office filed the appeal Friday in the Tenth Circuit Court in Denver, saying FERC was incorrect when it ruled that the state had missed deadlines and "waived" certain state permits for the proposed $248 million Georgia Strait Crossing Project.

FERC's ruling means that most state and local permits needed for the project are considered approved, despite outstanding concerns by state and local officials about the project. The ruling also means that state regulators cannot write specific rules to minimize environmental damage during the pipeline's construction.

In its appeal, state attorneys argue that the state did not miss deadlines for the permit and that FERC issued an approval for the project before the environmental permits were given by the state - in contrast to federal law, which requires the state permits before federal approval.

The pipeline would start in Canada and cross 33 miles of Whatcom County from Sumas to Cherry Point. It would enter the water at Cherry Point, travel under water along the San Juan Islands and emerge on Vancouver Island, fueling power plants there. Williams Pipeline Co. and B.C. Hydro, British Columbia's electricity provider, propose the project jointly.

Earlier this month, Whatcom County planners urged county Hearing Examiner Michael Bobbink to deny a shoreline permit for Williams. County planners said the project doesn't meet the county's rules for industrial projects along shorelines and wouldn't provide any benefit to the county or state, if built.

The county permit is needed by the pipeline company before construction.

Williams officials have argued that the county also missed deadlines for giving the shoreline permit and said a ruling from Bobbink may be moot because of the FERC ruling. The hearing examiner's ruling is expected in mid-September.

Reach Ericka Pizzillo at ericka.pizzillo@bellinghamherald.com or call 715-2266.

The Bellingham Herald

Posted by Arthur Caldicott on August 31, 2004

August 27, 2004

Alberta firm buys Kyoto emission credits

Last Updated Wed, 25 Aug 2004 21:49:03 EDT
CBC News

CALGARY - An Alberta electricity producer has become the first Canadian company to buy foreign emission credits under the Kyoto environmental protocol.

TransAlta Corp. signed the deal Tuesday with a large Chilean food company called Agrosuper.

TransAlta says that under the 10-year deal, it will buy 1.75 million tonnes of greenhouse gas credits. The price was not revealed.

Under the Kyoto agreement, countries will have to meet targets for reducing their greenhouse gases. Companies with low pollution levels can earn credits that recognize their environmental efforts.

Businesses that have trouble meeting Kyoto targets can buy these credits, which allows them to put out more pollutants.

Owns coal-fired plants

TransAlta owns a large number of coal-burning generating plants and says it expects to face serious challenges under Kyoto.

The Kyoto protocol is meant to fight global warming by reducing carbon-dioxide emissions by eight per cent of their 1990 levels by the year 2010.

So far, 123 countries have signed the deal, including Canada and all 25 European Union members. However, it's not yet in effect because it must be signed by nations accounting for at least 55 per cent of the industrialized world's emissions.

The United States has refused to sign and Russia is still considering.

Written by CBC News Online staff
Copyright © CBC 2004

TransAlta's news release:
TransAlta completes first Canadian Certified Emission Reduction purchase under Kyoto

Comment
In part of their public relations effort to "green-up" their gas-fired strategy for Vancouver Island, BC Hydro committed to offset 50% of the carbon dioxide emissions from both the privately-owned Island Cogeneration Plant in Campbell River, and the Port Alberni Generation Project, later to be the Vancouver Island Generation Project.

The first attempt was to purchase carbon offsets in Canada. That drew a blank. Hydro then posted a request for submissions internationally. We believe that drew a blank as well.

Powerex, the energy trading subsidiary of BC Hydro, has an agreement to purchase the first three years' output from a new coal-fired generation plant in Hardin, Montana. We're not aware of any carbon offset arrangement there.

Good for TransAlta, insofar as there is as yet no regulatory requirement that they undertake this expense.

The question remains as to whether there is any real reduction in carbon emissions that comes from these agreements, or if it will end up as another busy new commodities market that keeps money moving and traders busy, but has very little net impact on global carbon emissions.

---END---

Posted by Arthur Caldicott on August 27, 2004

August 25, 2004

Gas plants are here to stay

Nanaimo News Bulletin
24 August 2004
Opinion

Many people probably breathed a sigh of relief when the B.C. Utilities Commission ordered B.C. Hydro to find alternatives to its natural gas-powered generation plant at Duke Point.

Advocates of greener solutions might have hoped that someone, somewhere might offer a more environmentally friendly option to another smoke-belching gas-powered plant.

Sadly, of the six projects that proceeded to tender, non-burning options are lacking, and natural gas is the fuel of choice for five of the six options.

The sixth option, put forward by Green Island Energy Ltd., is for a biomass facility at Gold River. B.C. Hydro isn't releasing details of the project to indicate just how green it might be.

The outcome should surprise no one. The utilities commission only ordered the review because it wasn't convinced B.C. Hydro had done due diligence in making sure the gas plant at Duke Point was the cheapest for ratepayers.

The outcome, however, has made a mockery of the goal of financial prudence. B.C. Hydro has been forced to write off considerable costs from the Duke Point project, including $50 million for environmental approval costs, $61 million for a gas and steam turbine and $9 million for the property at Duke Point. There is a chance the assets can be resold, but if they're not sold at cost it's another cash giveaway from B.C. Hydro stakeholders - us, in other words.

So it should be no surprise that the projects put forward look remarkably similar to the one shelved by B.C. Hydro, including EPCOR's proposal for a 255-megawatt gas plant at Duke Point. If there are savings from having a private business build the plant, it will be interesting to see how much will be a result of the decreased costs for environmental approval, given the groundwork laid by B.C. Hydro.

In other words, the savings are dubious, the overall costs are likely to be higher and the costs to be borne by B.C. Hydro clients. Welcome to the better way, courtesy of the B.C. Utilities Commission.

- News Bulletin editorial board

Nanaimo Bulletin

Posted by Arthur Caldicott on August 25, 2004

Six bids submitted for Island power plants

John Kimantas
The Nanaimo News Bulletin
24 August 2004

B.C. Hydro has received six bids by private industry to offer better value than the natural gas power plant at Duke Point.

Some of the alternatives, however, are looking remarkably familiar.

Five of the six proposals are for natural gas plants, with at least one project involving a 255-megawatt gas power plant for Duke Point.

The power plant is one of two proposals being put forward by Edmonton-based EPCOR Power Development Corp. in a partnership with Calpine Canada Power Ltd.

The project is similar in output and location to the project sidelined by the B.C. Utilities Commission last year. The commission halted the project when it said B.C. Hydro hadn't proved the 265-megawatt gas plant at Duke Point was the cheapest way to supply the Island's future energy needs.

The call for proposals followed. Of the original 23 bidders, 11 were prequalified for 22 projects, and six submitted bids before the Aug. 13 deadline for submitting tenders.

Calpine Island Cogeneration is proposing a natural gas plant for Campbell River and Green Island Energy is proposing a biomass project for Gold River.

Three of the other proposals involve plants in Nanaimo: the EPCOR-Calpine project, an ENCO Power Company natural gas plant for Nanaimo and a proposal for a natural gas plant by Duke Point Power LP.

EPCOR is also proposing a smaller, 45-47 megawatt "peaker" natural gas plant for Ladysmith to be used during peak periods of electrical consumption.

Jim Boston, the director of government relations for EPCOR, said the 255-megawatt plant would be identical to an EPCOR plant operating in Frederickson, Wash., just south of Tacoma.

"It's set up, we know how to build it, we know how to run it really well. We looked at that and thought it was a good plant for the project," Boston said.

B.C. Hydro will be reviewing the six submitted bids with projects expected to be operating by May 2007.

Nanaimo Bulletin

Comment
The Call for Tenders (CFT) has a $50 million built in incentive for companies to aquire the assets of BC Hydro's Vancouver Island Generation Project (VIGP), so it's no surprise that there's "remarkable familiarity" between that project and the CFT shortlist. The surprise would have been had a project emerged as dominant that didn't look like VIGP. The interesting question is whether GSX will be part of the winning configuration. At time of writing, August 2004, the prospects for GSX look dim in Canada, but not so in the US, where Williams is pushing it aggressively through a review process by Whatcom County Council.

Posted by Arthur Caldicott on August 25, 2004

Gas plant coming to Ladysmith?

ANDREW TOPF
The Ladysmith Chronicle
24 August 2004

Ladysmith could be part of a multi-million dollar strategy by BC Hydro to add new sources of electricity to Vancouver Island.

Among the six bidders who have submitted tenders to Hydro to provide a combined total of at least 150 megawatts of new power to the Island, is a 45-48 megawatt gas-generation plant slated for the Peerless Road Industrial Park just south of town.

The bid for Ladysmith was submitted by Epcor Power Development, a company headquartered in Edmonton that owns and operates power plants, electrical transmission and distribution networks, builds and operates water and wastewater treatment facilities and infrastructure, and provides power and water solutions to customers in Alberta, B.C. and the Pacific Northwest, according to the company's Web site.

Epcor spokesman Tim Boston said the project involves construction of a "peaker plant" to be utilized during peak electricity periods.

"It's fairly innocuous," Boston said in an interview last Thursday.

"It'd be a small building, a turbine, and a small stack." Responding to a question about possible noise and emissions, Boston downplayed the plant's impact on the environment, saying it would not be run very often, and is being designed as a backup for the Island's power grid.

He also noted such concerns will be addressed when the project undergoes a required environmental impact assessment and comes before the B.C. Utilities Commission.

Boston refused to give financial details of the project, citing concerns about such information leaking to the company's competitors.

Ladysmith Mayor Rob Hutchins was reluctant to comment on Epcor's proposal until he learns more about its size and scope, but he said the Town will certainly be asking questions about its possible environmental impacts.

"The key here is to ensure if something like this is coming to the area, that we have the least impact on the environment as possible," said Hutchins.

Peter Ronald of the Georgia Strait Alliance, a non-profit organization seeking to prevent environmental degradation of the Georgia Basin, was similarly cautious on voicing an opinion on the project until learning further details. However, Ronald said his group's position on BC Hydro's invitation for more fossil-fuel-driven energy is clear.

"It is outrageous with the emerging problems of climate change, that we are not looking with a lot more enthusiasm at saving energy rather than finding new ways to burn fossil energy," he said.

Epcor's proposal for Ladysmith is part of a tender process that began last fall after BC Hydro's Vancouver Island Generation Project - a 265-megawatt plant to be built at Duke Point at a cost of $370 million - was rejected as too large and costly by the B.C. Utilities Commission.

Now it appears the dead-and-buried Duke Point project has been revived, with Epcor and Calpine Canada 50-50 partners in a bid for a 255-megawatt Duke Point plant, to be up and running by November, 2007.

The four other bids, made public by BC Hydro last Monday, include a Calpine gas co-generation project at its existing plant in Campbell River, Duke Point Power's natural gas bid for Nanaimo, Enco Power's bid for Nanaimo, and Green Island Energy's biomass bid for Gold River.

Conspicuous for its absence on the list was Norske-Canada, which had already been pre-qualified for seven power generation proposals it submitted last year. Company spokesperson Lyn Brown said Norske dropped out of the competition in May after learning of some of the other players involved, and has decided to focus on demand management solutions - such as shifting operations from peak to non-peak hours - rather than stepping up to the plate as an energy producer.

Norske is Vancouver Island's biggest electricity consumer, pulling about one quarter of the total load.

One or more 25-year electricity purchase agreements is expected to awarded by BC Hydro by the end of October.

Ladysmith Chronicle

Comment
The Peerless Road site was one of a handful selected by BC Hydro after their Port Alberni Generation Project (PAGP) was rejected in Port Alberni. The economics of a "peaker plant" are quite different than those for a base generation plant that runs all the time. The dollar per megawatt cost of electricity is considerably higher for a number of reasons to do with economies of scale and spot market prices. Consider this: BC Hydro opens the dams at periods of peak California demand precisely to capture the high revenues paid at those moments. Would they then turn around and pay Epcor similarly high rates for power generated at Peerless Road?

Posted by Arthur Caldicott on August 25, 2004

August 24, 2004

GSX-US: Two Countries, One Pipeline

BC Hydro and Williams Pipeline Co. are jointly proposing a natural gas pipeline that would stretch 84.5 miles from Sumas to Vancouver Island, crossing Whatcom County streams and erosional bluffs. The project was initially routed through lower B.C., but was rejected by the Canadian government. Citing no apparent good for the county, both county staff and residents requested permits for the project be denied. So what’s next?

BY REBECCA SCHWARZ

About 25 people attended a public hearing held Wednesday afternoon before the
Whatcom County Hearing Examiner regarding shoreline permits for the proposed
Georgia Straight Crossing (GSX) Project, a joint pipeline effort between
Williams Pipeline Co. and B.C. Hydro.

The purpose of the hearing was to collect information from the proponents,
county staff and public regarding shoreline permits for the project; however,
what actual permits the hearing would focus on was unclear, as both sides
disagreed on protocol.

GSX counsel Steven Snarr said the project had already received necessary
shoreline permits from the county, because the county had not responded within
120 days of the filing of the GSX application. County officials, however, said
the 120-day timeframe does not apply to this project as it is a major
development, thus the project does not have the necessary permits.

“This is a major development permit,” said Randy Watts, the Chief Civil Deputy
Prosecutor. “They haven’t filed yet.”

Snarr said “We have not been of the view that a major development permit is
necessary.”

The county was willing to move forward with the scheduled hearing, Watts said,
because the project will require “several other permits.”

Despite the difference in opinion regarding permits, the hearing moved forward,
and more than 10 residents spoke about the project, all of them against it.

The project, according to GSX officials, will supply the fuel needed by new
natural gas-fired electricity generating plants on Vancouver Island. The
pipeline will also provide western Washington with an additional source of
natural gas to meet future industrial and residential needs.

But this provision of gas to Whatcom County was a point questioned by several
members of the public.

Birch Bay resident Patrick Alesse was the first to speak, stating this proposed
pipeline is between the United States and Canada, but really it’s a “Canadian
pipeline going through the U.S. and back to Canada. Yes, there’s some promise
of future use, but we really don’t know when.”

Alesse, who held up a map declaring his proposed route for the pipeline –
through Canada – said if problems were to occur with the pipeline, it would be
easier to have one agency deal with it, rather than multiple international
organizations. “Take GSX and X it,” he said. Others echoed his statements
concerning county use of the pipeline.

“GSX is not for our use, it’s for Canada’s use,” said Linda Franz, who lives
near Cherry Point. “I question the long term benefit versus the damage and
versus the depletion of Whatcom County.”

Questions concerning the actual route through Whatcom County also surfaced.

“I see no reason to approve of this project. There are alternatives - from
Canada to Canada,” said Wendy Steffensen, the North Bay Sound Keeper. “Why are
you coming through Cherry Point?”

So why isn’t the GSX project going through Canada, instead of the U.S.? Seeing
that Canada will benefit nearly 100 percent from the project, why go through
almost 85 miles of rural land and shoreline acreage for a Canadian pipeline?

The project, in the works for more than three years now, initially called for a
route through Lower B.C., leaving Surrey to go through the straight and ending
on Vancouver Island. However, the Canadian government rejected that plan. GSX
officials then reworked the plan and are now fighting for the route through
Whatcom County.

Steffensen commented on the number of people attending the meeting, stating
“This is a relatively good turnout for a meeting at 1:30 on a Wednesday. This
has been an incredibly long process ... A majority of folks in Whatcom County
want this project denied.”

FERC, the Federal Energy Regulatory Commission, has granted the project certain
permits, a statement Snarr repeatedly made when making the GSX case. The
agency, he said, waived local and state authority permits regarding coastal
regulations because two deadlines were missed.

However FERC has decision decisionmaking power over inter-state projects, not
international projects. The pipeline project, some pointed out, is just that:
international. Carl Weimer, the Executive Director of the Pipeline Safety
Trust, said he agrees with the county’s findings that the project should not
move forward through Whatcom County, and said “look at the way the federal
government tweaks this whole process ... Does FERC have any jurisdiction?”

This pipeline, he said, is not interstate, it crosses an international
boundary, not a state. “I hope you turn down this permit,” he told the hearing
examiner. Some questioned the amount of employment that would be generated from
this pipeline - a key statement referred to by the proponents regarding the
benefits to Whatcom County. After all, some said, the employment would only be
temporary, as the pipeline’s $250 million construction would be complete at
some point.

Residents and county staff agreed that the main beneficiary would be Canada.
Whatcom County would see little or no economic benefit from the county,
declared County shorelines planner Jim Thompson.

County staff stated a number of reasons as to why this project would not
benefit the county, including: the pipeline did not comply with shorelines
rules, alternatives have not been fully explored, it would overall not benefit
the county, and it could harm county land and wildlife. However, Snarr stated
that Whatcom County would see $8 million in sales and use taxes during
construction and $1.7 million in property taxes annually.

But residents did not care about the money, just the environment. Eliana
Steele-Friedlob, who resides in Point Whitehorn and has lead stream restoration
efforts within the community, said she agrees there will be some money coming
in, but there will be a huge deficiency to the county. “I would like recommend
the council deny such a permit,” she said, noting environmental affects,
including eelgrass, heron and the bluffs.

“I don’t care what kind of monetary benefit it brings,” said Point Whitehorn
resident Kay Schumacher. “It is our duty to protect this ... place. Listen to
the citizens of Whatcom County who oppose this. It is a very strong no.”

Another hearing has been scheduled for Tuesday, September 28 at 1:30 p.m.

The public is welcome to submit written materials to the Hearing Examiner’s office over the next two weeks. Materials can be sent to: Hearing Examiner, 311 Grand Avenue, Bellingham, WA 98226.



Stay tuned: Next week we’ll bring you a full history of the GSX project.


Whatcom Independent, Issue 39, August 20, 2004 (link)

Posted by Arthur Caldicott on August 24, 2004

August 23, 2004

GSX-US: County pipeline hearing extended

ENVIRONMENT: Pipeline officials say they may not need permits for Sumas-Cherry Point line.

Aubrey Cohen
The Bellingham Herald
August 19, 2004

Whatcom County officials and representatives of a proposed natural gas pipeline disagreed Wednesday over possible impacts of the line and over whether the county had already granted it permits.

The proposed Georgia-Strait Crossing Project, a partnership of Williams Pipeline Co. and B.C. Hydro, would run from Sumas to Cherry Point, then to Vancouver Island to supply power plants.

Whatcom County Hearing Examiner Michael Bobbink held a hearing Wednesday on shoreline permits for the plan. Bobbink scheduled a continuation of the hearing for 1:30 p.m. on Sept. 28 to get more information, and said he will accept written public comment until Sept. 1.

Steve Snarr, senior counsel for the project, said the county automatically issued shoreline permits for the project, by code, because it did not make a decision within a prescribed time limit. County planner Jeff Chalfant disagreed, saying the time period does not apply because the pipeline is a major development.

Pipeline officials also have argued they may not need state or county permits because the Federal Energy Regulatory Commission ruled in April that the state Department of Ecology waived state and local authority over permits regarding coastal regulations because it missed two deadlines.

Chief Civil Deputy Prosecutor Randy Watts said the state's decision about whether to appeal the FERC ruling is somewhat contingent on the county's view of the proposal's compliance with shoreline rules.

County shorelines planner Jim Thompson argued Wednesday that the pipeline does not comply with shoreline rules because, among other things, alternatives have not been fully explored, it would not benefit Whatcom County, it would conflict with other uses, and it could harm sensitive shorelines, plants and animals.

Allowing a pipeline through Cherry Point would effectively open up the entire county to pipelines, Chalfant said, "because there is no more sensitive area in Whatcom County."

A dozen county residents also spoke against the plan, largely because of damage they fear it would cause to Cherry Point.

"It is our duty to protect this kind of unique place, not just for the county or Washington state, but for this entire nation and for future generations," said Kay Schuhmacher of Point Whitehorn.

Eliana Steele-Friedlob, also of Point Whitehorn, pointed to a 1997 Williams Northwest natural gas pipeline explosion that caused thousands of dollars in property damage east of Everson.

"We all know Williams has a history here," she said.

Snarr said FERC and the state Department of Ecology thoroughly reviewed environmental issues, and also found all reasonable alternatives to the pipeline had been explored.

He said the pipeline would benefit the county and state by providing natural gas to Cherry Point industry and San Juan County, paying $8 million in sales and use taxes during construction and $1.7 million a year in property taxes, employing local construction workers, supplying useful environmental data and cutting pollution from dirtier sources of power on Vancouver Island.

Reach Aubrey Cohen at aubrey.cohen@bellinghamherald.com or 715-2289.

The Bellingham Herald

Comments
Please write to Michael Bobbink, and copy Whatcom County Council
Michael Bobbink, Hearing Examiner, 311 Grand Ave., Bellingham, WA 98227 HearingExaminer@co.whatcom.wa.us
Whatcom County Council, 311 Grand Ave., Bellingham, WA 98227
council@co.whatcom.wa.us (include GSX in the subject line)

Whatcom County Staff Report recommending rejection of GSX shoreline permit application (Word doc)

Posted by Arthur Caldicott on August 23, 2004

GSX-US: GSX Sunrise

Bellingham Weekly
The Skinny
April 29, 2004

GSX SUNRISE: Last week we reported on the Washington State Department of Transportation’s plan to ram a ten lane freeway through the heart of rural Whatcom County north to south. The proposed freeway corridor—privately owned and which includes pipeline and power line rights-of-way—is designed in part to accommodate the growth of Vancouver and British Columbia.

This week we report on the Georgia Straits Crossing Pipeline (GSX), a privately owned natural gas pipeline planned to ram 33 miles across Whatcom’s norther tier east to west before plunging into coastal waters to service the growth of Vancouver Island.

Does anyone see a pattern forming here?

Whatcom County absorbs the impact of these projects but derives no benefit from them. Heigh ho, the tables get turned with the proposed Sumas Energy 2 power plant (which requires both pipelines and power lines), where B.C. absorbs the impacts… and Whatcom County… still receives little benefit!

In an age of globalization, when borders are becoming transparent, the only thing becoming transparent at the local international boundary is local control. The so-called “Cascade Gateway” is fast becoming a frontier no man’s land where privatization schemes are called out by dueling federal and provincial interests. What they intend to privatize already happens to be public or privately held assets ready to be gunned down by governments’ power to seize and condemn.

In less sophisticated times, this power was intended to create public benefit; today, it is mostly a taxpayer-funded servicing mechanism to transfer community wealth into private hands.

The proximity of international involvement at the international boundary means the feds can trump local jurisdiction at whim. Or at least try. With the current Administration, this generally means smashing open public assets and portioning out the goods to corporate pals. With anything involving petroleum or energy interests, this Texas-style barbecue roasts most fiercely.

Case in point, the Federal Energy Regulatory Commission ruled last week that the state Department of Ecology missed two key deadlines. DOE’s failure, they say, waives the state’s authority to control two permits necessary for construction of GSX. But Ecology officials say they didn’t miss those deadlines. They say that FERC approved the project before the state permits were completed, in opposition to federal law.

FERC says their claim trumps the state’s regulatory authority.

What claim? The commissioners pre-emptively declared jurisdiction over the pipeline, which crosses no state boundary; by extension the FERC also claims state and county governments have no jurisdiction. That leaves the environmental permit process as the only influence state and local governments might have over the project. Naturally then, FERC is eager to kick that inconvenient influence to pieces in the worst way, even to the point of ignoring written agreements and court rulings to the contrary.

The pipeline is a joint venture of BC Hydro and Williams Pipeline Company. Williams is the American company that will take the pipeline across U.S. soil. The pipeline serves no U.S. customers. The primary reason it crosses into Whatcom and San Juan counties is because rights-of-way could not be secured through B.C.’s dense population centers. In other words, a natural gas pipeline designed to serve Canadians might also kill Canadians. Lucky for Canada, the agencies responsible for pipeline regulation and safety in this country share no similar concerns for Americans.

Taken at face value, FERC’s ruling could remove all obstacles to GSX (‘obstacles’ being a euphemism for public involvement and democratic decision making), clearing the way for construction of the pipeline, which would carry natural gas from Canada’s mainland to Vancouver Island to fuel power plants there.

There’s more going on than at face value, however, which makes the FERC ruling a lie.

First of all, it is important to understand that there are no power plants on Vancouver Island requiring GSX fuel! The one plant on the drafting board needing GSX was axed by the Canadian energy board. In the co-dependent world of supply-&-demand, however, running GSX out to the island guarantees such plants will be built, to the tune of billions of dollars funneling into the pockets of the multinational energy cartel: Witness the siting of SE2 on the confluence of gas pipelines running from Canada into Sumas.

With the Big Lie firmly in mind, let’s take the little lies of the two missed deadlines one at a time.

The first slipped deadline involved Ecology’s efforts to get Williams to provide supplemental environmental impact statements within the timetable set by law.

Recognizing the time and costs involved in developing such supplemental statements, Williams resisted those requests. At the same time they changed the proposed route of the pipeline (which surely has environmental impacts) and meanwhile received scores of relevant public and official comment citing concerns about the design and impacts of GSX that needed revision.

The counties themselves have only had since January of this year to formally respond to these concerns as they negotiate with Williams. Both Whatcom and San Juan counties maintain that the pipeline is inconsistent with their shoreline plans, which regulate the effect of projects on local waterways and coastlines, San Juan more forcibly then Whatcom.

San Juan County planners have recommended that their county hearing examiner deny GSX a shoreline permit, arguing that their shoreline rules specify that pipelines are not a “water dependent use” and therefore are not eligible to travel through that county’s waters. A decision from the San Juan hearing examiner on the matter is expected this week.

San Juan commissioners also agreed with Whatcom County’s contention that the GSX route does not fall under federal regulation. In briefs filed with the FERC, the counties argued, “there is no interstate transportation involved. No U.S. domestic gas will flow through it.” Small concern to the commissioners, who’ve never met a pipeline they didn’t love.

While this activity continued, Williams reportedly failed in several key instances to return requested materials to Ecology in a timely manner; still the company petitioned FERC to apply to a tight timetable, making chutzpah that Ecology’s responses weren’t timely enough!

“Sometimes it’s hard to know where Williams ends and FERC begins,” one member of Ecology’s staff lamented, noting this cozy relationship between the company and its ostensible watchdog agency.

With all the slippage, Williams agreed in writing with Ecology to extend the deadline to from March 1 to May 28. That agreement was totally missed in the FERC ruling, according to Joan Marchioro, an assistant attorney general representing Ecology in the dispute.

Were the commissioners unaware of the agreement, or did they just ignore it?

“One conclusion is more charitable to FERC than the other,” an Ecology staffer observed dryly. A copy of the May 28 agreement was delivered to FERC and among the materials commissioners sifted through in making their ruling.

The other allegedly missed deadline involves marine permits issued by the Army Corps of Engineers.

Under the law and Corps regulations, the timetable clock for deadlines starts ticking the moment the Corps publishes its notice for such permits. The Corps maintains their deadline has not yet passed; FERC shrieks that it has and declares that the Corps also has no jurisdiction.

So rabid is the FERC’s support of this pipeline, they’re willing to go hammer-&-tong with another federal agency to deliver it. Ecology has 30 days to decide if they want to go hammer-&-tong with FERC through an appeal in federal court. They will.

Bellingham Weekly

Posted by Arthur Caldicott on August 23, 2004

Island Cogen ownership change won't affect plant

Ownership change won't affect cogen plant

Grant Warkentin
Campbell River Mirror
20 August 2004

The cogeneration plant north of town won't be affected by an $806
million deal between Calpine and PrimeWest.

"We're business as usual," said Susan Dowse, Calpine Canada's public
affairs manager. "Our core business - being a power generation
business in Canada - is unaffected."

On Monday, the Calgary-based PrimeWest Energy Trust announced it was
going to buy all of the petroleum and natural gas assets owned by the
California-based Calpine. Its Canadian operations are also based in
Calgary and, through the Calpine Power Income Fund, the company owns
the natural gas cogeneration plant north of Campbell River beside the
Elk Falls paper mill.

The deal, which will see PrimeWest take ownership of all of Calpine's
petroleum and natural gas revenues, is worth about $806 million.

However, Dowse said, nothing will change at the Campbell River
cogeneration plant.

The plant recently underwent a $20 million upgrade which allows it to
produce a total of about 250 megawatts of electricity. The plant is
also looking at another upgrade that could allow it to generate an
additional 49 megawatts of electricity. The project is on BC Hydro's
shortlist of power generation projects it is considering for Vancouver
Island.

The project proposes to build an additional, smaller natural gas-fired
turbine to the plant, which will be able to produce up to 49
additional megawatts of electricity. The plant's current total
capacity is 230 megawatts and is undergoing an upgrade to allow it to
produce 20 more. If the addition is approved by BC Hydro, the plant
will be able to produce about 300 megawatts of power in total, about
enough to power NorskeCanada's Elk Falls paper mill as well as the
rest of Campbell River.

The upgrade will also allow the plant to produce more steam, which it
provides to NorskeCanada's Elk Falls mill to use in its papermaking
process.

The new addition, if approved, would cost about $1 million per
megawatt to build, a total cost of about $49 million. Judging by how
many contractors a $20 million upgrade brought to Campbell River
earlier this year - about 150 per day - plant manager Curtis Mahoney
said the project would be good for the local economy.

"That will be a big project for here," he said.

However, he added, it wouldn't create any new jobs.

Campbell River Mirror

Posted by Arthur Caldicott on August 23, 2004

NorskeCanada bows out of Hydro bid process

Aaron Bichard
Duncan Cowichan News Leader
21 August 2004

NorskeCanada has pulled its bid from BC Hydro's Vancouver Island call
for tenders process, leaving six groups vying for a contract to
provide cost-efficient electricity.

The pulp-and-paper companys spokesperson Lyn Brown said the business
decision was made from a consumer perspective rather than as a
potential provider.

"We made the decision to step aside in the process early in the game
because weve seen who some of the other bidders are and are confident
there will be a successful proposal," Brown said. "We entered the
process because we were concerned as energy customers."

NorskeCanada is Vancouver Island's biggest electricity consumer,
pulling approximately one quarter of the total load. The company pays
more than $170 million per year in hydro fees.

Brown said although the company isn't pursuing energy generation
anymore, it's actively seeking ways to use less power.

"Were a big customer and a big energy user," Brown said. "Were also big
believers in energy efficiency. A key part of rebalancing the energy
supply requirements on the Island is coming up with energy efficient
ways to operate."

EPCOR Power Development Corporation was also batting around the idea
of a Duncan-based 45-megawatt peaking plant but decided to go with its
Ladysmith site proposal after the Tansor Road location was sold to
another developer.

BC Hydro opened the bidding process for private companies to generate
Vancouver Island energy after a B.C. Utilities Commission September
decision that the companys $370-million Duke Point power generation
plant wasnt the most economically efficient.

One or more 25-year electricity purchase agreements are expected to be
awarded by the end of October.

Cowichan News Leader

Posted by Arthur Caldicott on August 23, 2004

BC Hydro receives six tenders in the Vancouver Island Call for Tenders

August 16, 2004

BC Hydro receives six submissions from bidders in the Vancouver Island Call for Tenders process

Full evaluation of tenders underway, agreements to be awarded late October
VANCOUVER – Six bidders have chosen to submit tenders to BC Hydro under the Vancouver Island Call for Tenders (VI CFT) process. The tenders are in response to BC Hydro's requirement for dependable capacity and associated energy on Vancouver Island to help meet the Island's need for new electricity supply.

"We're reviewing the tenders submitted," said BC Hydro's Senior Vice-President, Distribution, Bev Van Ruyven. "We take very seriously our obligation to meet our customers' electricity needs on Vancouver Island and across the province. With six bidders making submissions, we are optimistic the VI CFT will produce an outcome that enables us to continue to meet our service obligations on Vancouver Island in a reliable, cost-effective manner."

The next milestone in the CFT process is the announcement of the successful projects and awarding of Electricity Purchase Agreements by late October. BC Hydro expects to award one or more 25-year Electricity Purchase Agreements, based on cost effectiveness, which will then be filed with the regulator, the BC Utilities Commission, for final review and determination of public interest.

BC Hydro began the VI CFT process in 2003 to address the anticipated supply shortfall on Vancouver Island. To ensure that the process is fair, open and transparent, three external parties have been involved. PricewaterhouseCoopers LLP (PwC) was retained in October 2003 as the independent reviewer for the process, responsible for monitoring and reporting on fairness and BC Hydro's adherence to the VI CFT. A final report will be issued by PwC at the time contracts are awarded. For the pre-qualification phase, KPMG Corporate Finance Inc. and R.W. Beck, Inc. were retained to provide third party reviews of the financial and technical criteria used to assess whether bidders and projects would meet the requirements for making reliable supply available by May 2007.

"BC Hydro will now review the tenders to ensure they meet the mandatory criteria and to assess their development risk and other issues, as set in the Call for Tenders," added Van Ruyven. "The tenders will be then be reviewed for cost-effectiveness and the final awards will also be examined by the BCUC, so that when the successful project or projects are announced, the people of Vancouver Island can have highest confidence in BC Hydro's decision."

BC Hydro expects the results of the CFT to complement its balanced portfolio of green energy and demand-side management. By 2012, BC Hydro expects to have acquired 3500 gigawatt hours from Power Smart and 1100 gigawatt hours from Resource Smart, as well as approximately 2500 gigawatt hours from new clean sources that are scheduled to be operational by September 2006.

Bidder NamePrimary FuelLocation
Calpine Island Cogeneration Limited PartnershipNatural GasCampbell River
Duke Point Power LPNatural GasNanaimo
ENCO Power CompanyNatural GasNanaimo
EPCOR Power Development CorporationNatural GasLadysmith
EPCOR Power Development Corporation and Calpine Canada Power Ltd.Natural GasNanaimo
Green Island Energy Ltd.BiomassGold River


Contact:
Elisha Moreno
Media Relations manager
Phone: (604) 623-4099
elisha.moreno@bchydro.com

www.bchydro.com

Comment
The 11 bidder shortlist released in April (link) was heavily loaded with natural gas projects in Nanaimo, as is this August list of projects that chose to submit a formal tender. Notably missing, is Norske Canada, who was proposing to develop generation facilities at some of their Vancouver Island mills. (link to related article)

Posted by Arthur Caldicott on August 23, 2004

BC Hydro project could rise from ashes

Six bidders submit tenders to supply Island electricity

Andrew A. Duffy
Times Colonist
August 17, 2004


B.C. Hydro's Vancouver Island Generation Project may be dead, but it's not beyond rising from the ashes.

Among the six bidders who have submitted tenders to Hydro to provide new sources of electricity for Vancouver Island, is a 255-megawatt gas-fired generation project slated for Duke Point in Nanaimo.

The bid is a 50-50 partnership between Edmonton-based Epcor Power Development and Calpine Canada, that would see the generation plant up, running and in service by November 2007.

The dead-and-buried VIGP by comparison was a 265-megawatt plant to be built by Hydro on the same Duke Point site at a cost of $370 million. It was rejected by the B.C. Utilities Commission as too large and costly a means to make up the Island's energy shortfall -- it's rejection last fall necessitated the call for tender process.

The Epcor-Calpine bid was on a list made public Monday of the six bidders who chose to submit tenders to provide a minimum of 150 megawatts of new electricity to the grid.

"We're pretty happy with the results actually," said Hydro's senior vice-president of distribution Bev Van Ruyven. "With six bidders making submissions, we are optimistic the (call for tenders) will produce an outcome that enables us to continue to meet our service obligations on Vancouver Island in a reliable, cost-effective manner."

Also on the list was a 42-47 megawatt Epcor natural gas-fired project for Ladysmith, that would be used during electricity peak times; A Calpine natural gas co-generation project at its existing co-gen plant in Campbell River; Duke Point Power's natural gas bid for Nanaimo, Enco Power Company's bid for Nanaimo and Green Island Energy's Biomass bid for Gold River.

Not on the list were any of the seven Norske Canada proposals that had been pre-qualified, despite the fact the company had floated the suite of projects for public consumption as early as last year.

Calls to Norske were not returned Monday.

"Norske chose not to submit," said Van Ruyven, who noted Hydro had a policy of not discussing the process with the bidders to ensure fairness in the process.

"I can't answer for them ... I am disappointed, because the more (bidders) in the process the more competitive it is."

Hydro will now review the tenders to ensure they meet the mandatory criteria and to assess their development risk and other issues, said Van Ruyven, noting they will then be reviewed for cost-effectiveness.

The Victoria Times-Colonist

Posted by Arthur Caldicott on August 23, 2004

August 22, 2004

Alarm raised over wood burner

Editorial comment: This project is not about electricity generation on Vancouver Island. Nevertheless, it is about burning one form of carbon sink (logs) to generate energy (heat for steam) - same as VIGP (gas to electricity) - and the public opposition to it is essentially the same.

By Darrell Bellaart
Nanaimo News Bulletin
19 August 2004

Coastland Industries' proposal for a wood-burning boiler is generating
opposition among its south Nanaimo neighbours.

Janet Irvine is organizing a letter-writing campaign on the grounds
the burner will create air pollution.

"We're trying to get citizens to write, to use their initiative," said
Irvine, whose Highview Terrace complex is just south of the Haliburton
Street wood mill.

She said she's been inundated with messages since she raised the alarm
about it last week.

"I found out about it simply by fluke, because a neighbour told me
about it."

The public has until Sept. 6 to comment on the proposal.

Coastland hopes to save more than $1 million a year in natural gas
costs by switching to hog fuel (chipped wood), to heat water in vats
used to loosen bark, so it can be stripped from logs.

Even though Coastland plans to use special scrubbers to treat the
burner's emissions, it will still release up to five kilograms of
particulate matter per hour - 660 times the 7.5-gram maximum allowed
by the U.S. Environmental Protection Agency for residential wood
stoves.

Health Canada considers particulate matter a cause of breathing
problems, lung damage and premature death.

Irvine said all Nanaimo residents are at risk.

"This type of pollution travels quite a distance - it doesn't stay in
the south end of Nanaimo," she said.

Jack Stephens, of Coastland, said a 20-metre smokestack would carry
the emissions much farther than a residential chimney, reducing its
harmful effects.

Nor would there be any of the odours associated with burning natural
gas, he said.

Coastland's public notice of the proposal gives emissions in
milligrams per second, but over the course of a year it works out to
more than 43 tonnes of particulate matter.

Stephens said: "I hadn't looked at it that way."

Karl Schirmer, another Highview resident wants city council to go on
record against the application.

"The city has banned backyard burning to keep the air clean, now why
would we allow someone in the city to burn wood," Schirmer said.

Council asked staff to study it, and is requesting an extension on the
30-day time limit, to research the issue.

Meanwhile, Irvine is encouraging residents to direct their concerns to
Environmental Protection regional manager, 2080A Labieux Rd. V9T 6J9.

Irvine questions the August timing of the application.

"In the month of August, both residents and government officials are
on vacation," she said. "It presents fewer opportunities for those
adversely affected to respond."

A spokesman for the provincial ministry could not be reached for
comment.

Nanaimo Bulletin

Posted by Arthur Caldicott on August 22, 2004

August 14, 2004

California EPA wants to spur solar-home development

Friday, August 06, 2004 By Don Thompson, Associated Press

SACRAMENTO, Calif. - California officials are proposing that half of all new
homes in the state be running on solar energy in 10 years, an effort spurred by
$100 million in annual incentives paid for by electricity consumers.

The move comes three years after the state suffered through an energy crisis
that left utility customers paying off billions in debts incurred when
wholesale electricity rates hit record-high levels.

The plan proposes that the state give rebates to home builders who install
solar panels on new homes, and incentives for installing panels on existing
homes, according to a copy of the California Environmental Protection Agency
draft.

The program would be paid for with a new monthly utility bill surcharge of
about 25 to 30 cents per household, projected to raise $1 billion before the
surcharge ends in 10 years. But homeowners would be free to sell excess solar
energy back to electricity companies, leaving them with no net cost.

"Each month, the homeowner would save more money in reduced electricity charges
than the homeowner would have to pay on the solar mortgage,"according to the
draft presented by EPA Undersecretary Drew Bohan.

Environmental groups said the proposal would once again make California a
national trendsetter while encouraging technical advances that would help make
solar power more affordable worldwide.

"This is so far ahead of any other state ... there's no comparison," said
Bernadette Del Chiaro of Environment California. The state already is the
world's third-largest market for solar technology, but would start to catch up
with leaders like Japan and Germany, she said.

The solar power installations would be the equivalent of 36 new, 75 megawatt
natural gas plants and would avoid pumping 50 million tons of carbon dioxide
into the air from the accompanying combustion, the EPA estimated.

The incentives should be enough to get solar panels on 40 percent of new homes
by 2010 and 50 percent by 2013, the EPA projects. If the incentives aren't
enough, the proposal would require panels on 5 percent of homes by 2010 and
half of new homes by 2020. Proponents estimate 1.2 million homes would be
producing solar energy by 2017, including 884,000 new and 313,000 older
houses.

Gov. Arnold Schwarzenegger, who ran on a pledge of getting California homes to
use solar power, has not endorsed the plan.

"My hope is he comes out even stronger" by increasing the incentives and
mandates, and applying the requirements to commercial buildings as well, said
Del Chiaro. "There's no guarantee the builders will take advantage of
incentives, even though the incentives are great."

Many environmentalists also are backing solar home incentives in pending
legislation.

A solar incentive bill, approved by the Senate and pending in an Assembly
committee, would require that 15 percent of new homes come with solar panels by
2006. The requirement would increase by 10 percentage points a year until it
would mandate that 55 percent of homes come solar-equipped by 2010.

The building industry opposes the legislative solar homes bill, but said the
incentives proposed by the energy commission are the way to encourage
technological and economic improvements that will make widespread use of solar
energy more realistic.

"It's a much more sensible approach than an outright mandate," said Tim Coyle,
senior vice president of the California Building Industry Association. He said
home solar systems can cost $17,000 to $20,000 and currently won't pay for
themselves since customers would typically pay $120 a month and receive about
$70 in benefits.

Source: Associated Press

Posted by Arthur Caldicott on August 14, 2004

August 03, 2004

Whatcom County staff recommend denial of permit to GSX

WHATCOM COUNTY PLANNING AND DEVELOPMENT SERVICES

STAFF REPORT

The application ofGeorgia Strait Crossing Pipeline, LLC for a Shoreline Substantial Development and Shoreline Conditional Use Permit

SHR2002-00003 & SHC2002-00002
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

I. SUMMARY OF APPLICATION AND RECOMMENDATIONS

Recommendation: Staff recommends denial of the requested Shoreline Substantial Development Permit & Shoreline Conditional Use Permit.

Read the full report and recommendation

A public hearing will be held in Bellingham on August 16 at 1:30 PM.

Posted by Arthur Caldicott on August 03, 2004

July 19, 2004

Natural gas crisis looms, study warns

Western Canadian reserves not enough to ease North American supply crunch

Peter Morton, Washington Bureau Chief
Financial Post
Monday, July 19, 2004

WASHINGTON - North America is heading toward an inevitable natural gas crisis that will not end until dozens of liquefied gas plants are built, according to a new study.

U.S.-based Cambridge Energy Research Associates says in the study released at the weekend that even the prospect of new finds in Western Canada will not be enough to head off the looming crunch.

"Western Canada has growth potential left, but it won't be enough to balance the North American market," Daniel Collins, CERA's associate director in Calgary, said in an interview.

He told the Financial Post the study was done to alert people to the expected gas crisis in which prices will hover between US$6 and US$7 per thousand British thermal unit at least until 2008 or 2009.

"We wanted to let everyone know its coming," he said, adding that prices could go even higher if there is unusual weather patterns. Current gas prices are between US$4 and US$5 per MMBtu.

The energy research institute based in Cambridge, Mass., found that despite near record levels of new onshore drilling in the United States, gas production in the country continues to fall. Even exports from Canada, the U.S.'s largest foreign supplier, cannot make up the difference.

Supplies of gas from Canada's Mackenzie Delta and eventually Alaska will not come into the U.S. market in time to head off the inevitable price crunch, said Mr. Collins.

"North America's natural gas supply shortfall -- the clear inability of domestic supply from available lands to keep pace with demand -- will challenge the North American natural gas market for the next several years," the study says.

"If no measures are taken to boost supply or dampen demand, North America is set to experience the highest sustained prices in the industry's history," it concludes.

Natural gas became more in demand several years ago when gas prices were relatively cheap, hovering about US$2 per MMBtu. Since no new nuclear plants were being built and coal-powered plants were considered polluting, many power generators built cheap gas-driven plants.

In fact, North America added 200,000 megawatts of new power capacity -- twice that of nuclear power -- in recent years with 94% of that gas driven, the study finds.

However, the run-up in gas prices over the past several years has prompted some electricity producers to consider shutting down those newer plants.

"Residential and commercial customers will see higher bills, impacting pocketbooks and the overall economy," CERA says.

The study warns that U.S. politicians should resist the temptation to accuse energy companies of price gouging and instead encourage the development of new sources of gas, especially liquefied gas.

"The finger-pointing and charged investigation that can be generated by an energy market suddenly out of balance will not result in an easing of high and volatile prices," it said.

CERA said there are some encouraging signs, including the moves recently in the United States toward building more LNG plants with more than 35 being proposed compared to 13 just a year ago. That could represent about 11 billion cubic feet a day compared to 1.4 billion cubic feet currently. North America uses about 68.3 billion cf a day.

Besides encouraging new LNG plants, CERA says the United States in particular should allow more exploration on lands considered taboo, such as offshore or in the Rockies.

As well, the United States should ease some of its restrictions on coal-fired capacity.

The CERA study, sponsored by the global consulting company Accenture, suggests there should be ways of discouraging the current trend toward short-term or spot gas buying among utilities since it tends to make gas prices more volatile.

Congress is struggling to push through a new energy bill that would, among other things, encourage the development of the Alaska gas pipeline through guarantees and other incentives.

"New North American frontier resources will become an important part of the supply mix if allowed or encouraged to proceed," CERA says.

© National Post 2004

Posted by Arthur Caldicott on July 19, 2004

July 16, 2004

South Meager Geothermal Project

On July 16, 2004, Western Geopower Corp filed a "pre-application" with the Environmental Assessment Office for the South Meager Geothermal Project. (link). The company hopes to be generating 100 megawatts by 2007 from their geothermal resource north of Whistler.

Western Geopower Corp
President: Kenneth McLeod
411 - 837 West Hastings St.,
Vancouver, BC, V6C 3N6
604-662-3338
Fax: 604-646-6603
info@geopower.com
www.geopower.ca
WGP on TSX-V

From the June 1, 2004 newsrelease

$14.5 million test drilling program in 2004
2 wells, 2500 feet deep

average temperature 220-240°C
max measured temp to date of 275°C
potential development capacity of 100 MW or more
"most likely capacity" of 192 MW.

From the company website:

The South Meager Geothermal Project is owned and operated by Meager Creek Development Corp. (MCDC), a wholly-owned subsidiary of Western GeoPower. The project is located 170 km north of Vancouver, British Columbia, and 70 km north of the town of Pemberton. The town of Whistler, located close to Pemberton, is the site of the 2010 Winter Olympic games. One of the underlying themes of the games is a commitment to preserving the environment, which geothermal energy symbolizes.

The South Meager Geothermal Project is held under lease from the Province of British Columbia and is valid until 2017, at which time it will be renewable for an additional 20 years. The area under lease is 4,267 ha and has been extensively explored for its geothermal energy potential.

Western GeoPower’s independent consultant, GeothermEx, Inc. of Richmond, California, recognized as the world’s foremost authority on geothermal energy, has concluded that the South Meager Geothermal Project has sufficient heat potential to produce a minimum of 110 Megawatts (MW) of electrical power, up to a maximum of 250 MW, with a probable capacity of 200 MW. A production capacity of 200 MW is equivalent to the consumption of 160,000 households.

Upon the successful completion of the feasibility study and receipt of governmental project approvals, Western GeoPower intends to raise the capital required to achieve 100MW of generation in mid 2007 and 200MW in 2009.

WGPMeagerMap.jpg

BC Ministry of Energy and Mines Geothermal Resources
information webpages
geothermal rights Q&A

Posted by Arthur Caldicott on July 16, 2004

July 15, 2004

Energy surplus predicted to last

Wind power, conservation keys to stability

James Hagengruber
The Spokesman-Review
July 15, 2004

Power from the wind and increased conservation will add stability to Northwest energy prices, according to a report presented Wednesday at a monthly meeting of the Northwest Power and Conservation Council in Spokane.

Because of a sluggish economy and the lack of production from aluminum smelters, the four-state region continues to experience a significant surplus in power – enough to supply three cities the size of Seattle – but a boost in conservation will offer insurance against dry years and the type of price spikes experienced in 2001, according to Tom Eckman, conservation resources manager for the agency.

Conserving power is needed, Eckman said, "not because it's green, it's because it's cheap."

The group, which was formerly known as the Northwest Power Planning Council, consists of two governor-appointed members from each state in the region. The council's decisions influence energy policy for utilities and local governments. The group is currently drafting a new long-term energy plan, which is expected to be released for public comment next month.

Analysts predict the region's current energy surplus will last for another decade. By conserving an additional 30 to 50 megawatts per year, the surplus will last even longer and give utilities more time to develop new sources of power, Eckman said. Wind is being considered as the most viable option for a stable energy supply, but new gas-fired power plants and potential new oil sources from Alberta are also being explored.

The conservation is expected to come from a variety of sources – everything from consumer incentives to purchase energy efficient appliances to improvements in farm irrigation pumps. One of the biggest opportunities is in residential lighting, Eckman said. If every home in the Northwest switched to fluorescent lighting the region would save about 530 megawatts per year, which amounts to about half the power used by Seattle.

"Little things add up to a lot," Eckman said.

The Spokesman-Review

Posted by Arthur Caldicott on July 15, 2004

First permit approved for local wind power development

By Gary Rusak
Tuesday, July 13, 2004
Peace River Block Daily News


PeaceEnergyWind.jpg


Land and Water British Columbia has finally approved the first permit for the Peace Energy Co-operative to begin working towards a wind farm on the Bear Mountain Ridge just southwest of Dawson Creek.

"It has been quite exciting," said Bill Studley, general manager of the co-op. "Basically our next step is to survey the area to find the best place to put the monitoring equipment."

The investigative use permit took the co-op almost a year of legal wrangling to secure. With help from South Peace MLA Blair Lekstrom, former manager David Kidd and more than a little patience, the group persevered.

"It has been quite a ride," said Studley. "This permit is the light at the end of what's been a long tunnel. We are ready to get things moving."

On the bureaucratic side of things the group must now file for a license of occupation and a final long-term development permit, but for the time being Studley is happy with the Peace Energy's progress.

"We are probably two years away from having the wind park permanently set up," he said. "We still have to do the monitoring and then the environmental assessment, but at this point things are looking really good."

Bear Mountain has been identified as a prime location for a wind power production by various studies including one released by BC Hydro late last year. The group believes that the site could hold up to 50 towers and possibly produce 50 megawatts, a significant amount of power.

"We will soon open negotiations with B.C. Hydro to get a test turbine hooked up to the grid," said Studley adding that Peace Energy would be the first to have a wind turbine in British Columbia feeding ?green power' into B.C.'s power grid.

As well, the co-op is looking to partner with a bigger firm to help them develop the wind power site.

"We are in negotiations with several companies," he said. "I would expect that we would have another announcement in the next couple weeks."

Maybe the biggest immediate spin-off for the group has been a marked increase in membership since the permit was awarded.

"It has been amazing," said Studley. "We are right now at about 125 members but if you call me back in an hour it will probably go up by two or three."

Peace River Block Daily News

See also:

Land and Water BC, May 19 2004

8013937 Peace Energy location map

8013937 Reasons for Decision

Blair Lekstrom, NLA, Hansard, March 1 2004, Page 34, line 1720 & following
I have a group of interested people in my area. Peace Energy is the name of the organization, and they're working on wind generation right now. There's a place in Peace River South not far from Dawson Creek called Bear Mountain. I have to smile when I say that. It's not a big mountain, but it's called Bear Mountain. It's one of the best locations for wind generation available in British Columbia today, and there's a lot of work and a lot of interest in that site right now. Again, I'm working with some groups, and hopefully, we'll see something transpire in the near future so that we can lead and possibly be world leaders again with opportunities that expand, for communities to be fully self-sufficient as far as power generation goes. You can just put your mind to it, and the thoughts are endless as to what we can achieve with that.

www.dawsoncreek.ca, Volume 1 2004
BEAR MOUNTAIN WIND FARM
Peace Energy has had their application to secure a lease for Bear Mountain Wind Farm welcomed by the Ministry of Land and Water BC. They should know shortly if the application is acceptable and then another 140 days to actually award the lease. Bear Mountain has been identified as a prime location for a wind power production by various studies including one recently released by BC Hydro. Peace Energy Group believes the site could hold up to 50 towers. If Peace Energy is awarded the lease, their next step would be to secure a partner who would help finance the project. Peace River Block Daily News

Wind to be monitored for power potential, Aug 9 2002

Peace Energy wants to be a player

Posted by Arthur Caldicott on July 15, 2004

Nootka Earthquake hits Vancouver Island

Nootka Earthquake M=5.5


Moderate quake hits Vancouver Island
WebPosted Jul 15 2004 06:28 PM PDT

VICTORIA - A moderate earthquake woke residents on north and central Vancouver Island just after five o'clock Thursday morning.

B.C. seismologists recorded a magnitude of 5.5 on the Richter scale while the U.S. Geological Survey had a reading of 5.7.

LINK: USGS quake report

Taimi Mulder, a seismologist with the Geological Survey of Canada, says the quake was felt as far away as Vancouver.

"People have felt their chairs rolling, someone in Comox reported tree swaying. Doors were swinging back and forth for about ten seconds maybe."

Mulder says there are unlikely to be aftershocks from the quake.

There have been nine quakes of similar magnitude in the region in the past 30 years. This quake was centered about 40 kilometers off Nootka Island.

INDEPTH: Earthquakes

CBC


See also:

Strong quake jolts coast, June 28 2004

Pacific Geoscience Earthquakes Canada - West

Posted by Arthur Caldicott on July 15, 2004

What's BC Hydro done lately? Not much!


By Ian Cass
Opinion
Saanich News
14 July 2004

In the early 1990s, BC Hydro alerted the NDP government of the day
about the future security of electric power to Vancouver Island. In
1996, a power producers panel was set up to review this matter. On
their recommendation, the government directed Hydro to participate in
the gas-fired generation plant proposed at Campbell River. This
project finally overcame start-up problems and went into production in
May 2002. In the meantime, the government directed Hydro to pursue a
second gas-fired plant at Port Alberni. That site proved unacceptable
and was moved to Duke Point near Nanaimo. The Nanaimo project, named
VIGP, required prior approval of the B.C. Utilities Commission and a
hearing on this matter was held July 21, 2003.

It should be understood that Hydro's preference was for installation
of new, high-voltage undersea cables to the Island to continue to
secure power from the Mainland.

A system that had served us well for half a century.

It should also be understood that both NDP and Liberal governments
favoured the introduction of gas-powered plants for reasons many
people found hard to understand. I have already written extensively on
this, and I think the public needs to understand that the output from
both the existing and proposed gas plants can only produce a small
fraction of the Island's needs. In the event of a submarine cable
failure, we would still face a major blackout much like the power
failure of Christmas 2002.

Back to the hearing by the utilities commission regarding the VIGP
project at Nanaimo. The present Liberal government has, in its energy
plan of 2002, dictated that future power-generating capacity shall be
provided by the private sector and not BC Hydro. The commission ruled
that, with the proposed VIGP gas-fired plant, the private sector had
not been given full opportunity for alternative proposals. On this
basis, the Hydro application for approval was denied and they were
directed to invite the private sector to submit alternative proposals
and bids. This would enable the commission to decide whether or not
the VIGP at Nanaimo was the "most cost-effective solution to the
problem at hand."

This decision was handed down in an 80-page report dated September 8,
2003, which said, among other things, "the future reliability concerns
remain and the Commission expects Hydro to reapply for approval by
Spring 2004 to resolve these concerns."

Current comment by Hydro is that they plan to have a resubmission
ready for November this year. This date seems optimistic to say the
least.

And now, gentle readers, let's see if we can summarize to this point.

We have gone 10 years since Hydro alerted government with concerns
about the reliability of electric power supply to the Island. For the
past 50 years we have enjoyed cheap, reliable and clean power from the
Mainland via submarine cable and generated by the infinite power of
evaporation and condensation - our rivers system. During this time,
although much has been said about our decaying undersea cables,
nothing has been done to apply adequate replacement of the cables or
to expand the water generation capacity either here or on the
Mainland. In fact, the condition of the cables themselves does not
appear to have been given proper examination and appraisal. Instead,
the NDP gave their backing for gas-fired generation in supporting the
Campbell River unit, while their successors have done even worse.

It might be useful now, briefly and mercifully, to cover the actions
of the present government with respect to the matter of electric power
and the Liberals' contribution to its continued provision, by clean
hydro-generation in an economic and reliable fashion.

The fact is they have done nothing positive. We remain as vulnerable
now as when they were elected, even more so as the present system is
three years older and more prone to breakdown. Not one watt of
additional power has been produced nor one dollar spent in
refurbishing our cable system.

In fact Campbell's government - or more correctly, Campbell and a few
"advisors" - have totally emasculated what was BC Hydro in terms of it
being a fully, vertically-integrated and efficient power utility,
operating well in the interests of its public owners while also paying
tax revenue to the government. The dismemberment of BC Hydro and the
introduction of an outside agency, Accenture, and the separation of
other activities has left us with a real dog's breakfast in terms of
responsibilities and ownership. In addition, the Minister of Energy,
Richard Neufeld, has issued an official government Energy Plan that
belongs in Alice in Wonderland. Macbeth would have said the plan is
"full of sound and fury, signifying nothing," to paraphrase from that
well-read play.

It says nothing on the all-important subject of hydro-generation
expansion here or on the Mainland, although a major expansion on the
Peace River has already been designed.

It does say BC Hydro shall not be involved in building future
generation projects. That means our experts at Hydro are no longer
available to build generators, just as our ship builders are not
available to build new ferries.

Unfortunately, space does not permit a more detailed summary of the
current situation (pun intended) but I'll just leave you with a couple
of thoughts. Hydro generation is non-polluting, non-consuming and
comes at a low cost of about $23 per megawatt hour.

Gas-fired generation is polluting, consumes a finite resource with no
price control and costs about $70 per megawatt hour. The provision of
a significant volume of gas-fired generation on the Island is a
billion dollars away and 2010 is an optimistic time frame.

Whoever hopes to succeed this government had better come up with a
sensible plan to deal with this impending disaster before the next
election. The first price increase will be here shortly and the next
one just after the election. Of course we have to spend money but, as
we said years ago, fix the cables first. The gas will still be there
later if needed as a backup.

* Ian Cass is a former Saanich councillor and a long-term contributor
to the Saanich News.

Saanich News

Posted by Arthur Caldicott on July 15, 2004

July 08, 2004

A warm welcome to the attitude change on global climate change

By ERIC REGULY
Globe & Mail
Thursday, July 8, 2004 - Page B2

A couple of weeks ago, a speech on climate change was delivered at the Council on Foreign Relations, the New York think tank and publisher. "It would be too great a risk to stand by [and] do nothing," the speaker said. Fighting climate change later, when it becomes a serious problem, instead of now, while there's still some chance it can be controlled, could be "so disruptive as to cause serious damage to the world's economy."

Another alarmist eco-fanatic on the pulpit? The speaker in fact was John Browne, chief executive officer of BP, the world's second-largest oil company. Global warming is happening, burning hydrocarbons is responsible for it and measures can be taken to slow the rate of increase, he said, such as converting coal-burning electricity plants to natural gas, improving the fuel economy of cars, building nuclear generating plants and developing wind and solar power.

Lord Browne is no energy industry pariah. Last month, Ronald Oxburgh, chairman of Shell Transport and Trading, the British arm of the Royal Dutch/Shell Group of companies, said he sees "very little hope for the world" unless there is a reduction in the emissions of carbon dioxide, the main greenhouse gas. About the same time, John Rowe, CEO of Chicago's Exelon, a $22-billion (U.S.) electricity and natural gas company, told a global warming conference it is time for the U.S. government to limit carbon dioxide emissions. For some time, he has been saying "I think the climate change problem is real."

In Canada, Frank Dottori, CEO of Tembec, one of the largest forest product companies, argues that the Kyoto accord on climate change, of which Canada is, at best, a half-hearted supporter, should not be tossed onto the scrap heap (as the Americans have done, and the Conservative Party wants to do, but not the NDP or the Bloc Québécois). Greenhouse gas emissions have to come down for the sake of the planet, he says.

What is happening here? To read the mainstream press in recent years, you would think anyone who still believes global warming is man-made is crazy, misinformed, hopelessly biased or all three. Those who think global warming should not be ignored, a group that includes hundreds, perhaps thousands, of peer-reviewed scientists and climate change experts, get little attention. The smaller number of skeptics continues to get disproportionately large coverage.

Take BP's Lord Browne. When he outlined his plans for carbon dioxide reduction, the Competitive Enterprise Institute, the U.S. public policy group that thinks any form of environmental regulation is an attack on life, liberty and the pursuit of SUVs, called Lord Browne's agenda "misdirection and wasted effort." The institute's comments were widely reported.

When Exelon's Mr. Rowe had the nerve to say industry is spewing out too much carbon dioxide, Republican Senator James Inhofe pumped out a press release that dismissed his speech as "hypocritical." Why? Because Exelon, an owner of nuclear generating plants, would benefit if carbon dioxide restrictions put a few coal burners out of business. Mr. Inhofe, chairman of the Senate environment committee, dismisses global warming as "a hoax" (he has also voted against protecting drinking water and improving auto fuel economy standards).

It would be stretching it to say the executives who believe climate change is an environmental and economic disaster in the making are finally winning the publicity war. But more and more of them say something has to be done.

The European executives are at the forefront of effort. In Europe, saying global warming is a threat that has to be dealt with hardly makes you a freak. This is partly because the European Union has adopted Kyoto and will launch a mandatory greenhouse gas emissions trading scheme early next year. So fighting Kyoto has become somewhat of an exercise in futility. The EU, though, has won support among many industries because the trading system is designed to take some of the pain out of reducing emissions. If your company brings its emissions in below the target level, it can make money by selling surplus emissions credits to companies above the target. Industries also find that using less energy has the twin benefit of reducing costs and the output of greenhouse gases.

In North America, fewer executives in fewer industries will say climate change is a danger that has to be controlled. Their belief, apparently, is that energy use will soar, taking greenhouse gas emissions up with it. In other words, the emissions are a necessary and inevitable byproduct of economic growth, so don't fight it unless you want to put a lot of people out of work. Nonetheless, a few executives, such as Exelon's Mr. Rowe, think the fight is not futile.

This is what Lord Browne believes, and he says limiting greenhouse gas emissions can be done "without doing serious damage to the economy" through the use of market-based mechanisms such as an international emissions trading system. The Competitive Enterprise Institute and other skeptics will continue to argue the opposite, as if innovation has suddenly vanished from the American economy. But at least some credible executives are starting to argue that the naysayers may be wrong. If big oil companies say global warming can be controlled, why not urge them on?

ereguly@globeandmail.ca

The Globe and Mail

Posted by Arthur Caldicott on July 08, 2004

July 02, 2004

Water powers the future at Site C

By Scott Simpson
Vancouver Sun
Page H01
02-Jul-2004

Vancouver Sun business reporter Scott Simpson and photographer Ian Lindsay recently spent several days in the Peace River Valley area gathering opinions and images for a five-part series, which begins today, on the proposed Site C dam project. What they discovered was a complex and controversial undertaking that may become a central focus of the province's future energy policies.

- - -


CREDIT: Ian Lindsay, Vancouver Sun
GENERATING CONTROVERSY ON THE PEACE RIVER: The W.A.C. Bennett Dam is now one of two dams generating electricity on the Peace River near Hudson's Hope. BC Hydro is now considering building a third dam at what is known as Site C.

---
HUDSON'S HOPE - The phone started ringing in Mayor Lenore Horwood's office soon after the news broke about Site C Dam.

BC Hydro's oft-discussed $3-billion proposal to build a third dam on the Peace River near Fort St. John was back on the Crown corporation's agenda.

It had been more than a decade since Hydro last put the controversial project in limbo, but demand for electricity is expected to skyrocket by 40 per cent over the next 20 years and Hydro officials have to figure out a way to provide all that power.

Site C is one way to meet B.C.'s future energy needs, but the corporation is considering everything from coal-fired thermal generation to fledgling technology that seeks to harvest energy from the flow of ocean tides.

The first telephone calls about Site C came from reporters looking for a reaction from Horwood, whose quiet community already has two dams located at its outskirts -- the giant WAC Bennett and Peace Canyon dams.

Horwood told them she didn't want to see another dam in the Peace River Valley, even though her husband is one of a preponderance of Hudson's Hope citizens who work for BC Hydro at one of the existing dams.

After that pronouncement, the calls started coming from residents of communities as far from northeastern British Columbia as you can get.

The callers wondered why Horwood was opposed to a project that would provide what they considered -- and what Hydro considers -- to be clean, green energy.

"I've had so many people call me from Vancouver Island and say: 'We think that dam would be a great idea'," Horwood recalls.

Surely, they suggested, Site C was a better alternative than the natural-gas-fired thermal generating station that is still under consideration for construction at Duke Point on Vancouver Island?

"I said, 'But it's not in your backyard. It's in my backyard, because I live right on the river there.'

"They said: 'We don't want anything on Vancouver Island, a coal-fired plant, a gas-fired plant. We want you to build the power up there and ship it to us'."

Horwood does not appear to be the kind of mayor who raises her voice or pounds her desk.

But that kind of logic tends to raise a lot of hackles in a community, with a population of 1,100, that will celebrate its 200th birthday next year.

A lot of people in Hudson's Hope don't have telephone service, or natural gas, and although they live within a few minutes' drive of the biggest hydroelectric facility in the province, some don't even have electricity.

They think the notion that B.C.'s northeast should continue to make sacrifices in order to sustain the populous southwest and Vancouver Island is, to be polite about it, amusing.


CREDIT: Photo by Ian Lindsay, Vancouver Sun
The W.A.C. Bennett dam, named after the late Socred premier of B.C., is on the Peace River near Hudson's Hope.

- - -

"Some people have been relocated because of the first dam. They would have to be relocated again," Horwood said.

"We're living in a place where we contribute a third of the electricity created in the province, but we still have people who can't get phone lines, or electricity, or natural gas.

"Some who don't have electricity can see the W.A.C. Bennett Dam from where they live -- and they can see the lights from the dam at night."

If Hydro decides to go ahead with Site C, and if the provincial cabinet decides to approve the project, it would take nine years to build.

Hydro began accumulating the land for Site C in 1975, and estimates that an area of almost 6,000 hectares of Peace River Valley -- 15 times the area of Stanley Park -- would be flooded or developed for the creation of a new reservoir on the Peace.

The dam itself would be located about 90 kilometres downstream from the WAC Bennett and Peace Canyon Dams, seven kilometres southwest of Fort St. John.

It would annually produce about 5,000 gigawatt hours of electricity -- more than enough to supply two cities the size of Surrey. It would boost Hydro's total capacity to produce electricity by five per cent, or about five years' population growth in British Columbia.

The floodwaters of the reservoir would extend about 85 kilometres back upriver to Lynx Creek, a subdivision of Hudson's Hope.

The Crown corporation continues to be the largest landholder along the river, employing a property management company in Fort St. John to lease its property to local farmers and ranchers.

Public display boards at Peace Canyon Dam, which opened in 1980, have always referred to Site C as part of Hydro's plans for the Peace.

In a submission earlier this year to the B.C. Utilities Commission, Hydro included Site C on a list of four potential dams that could be built over the next decade -- at a total cost of at least $5.2 billion.

Others on the list include two additional dams on the Columbia River, and one in the Lower Mainland on the Elaho River, which is the main source of water for the Squamish River.

Hydro warns that the Elaho project, a 145-metre high earthfill dam, is likely to meet strong opposition from the Squamish First Nation, and the actual unit-cost to produce electricity there would be about double the expected cost to produce electricity at Site C.

Hydro says the Border Dam and Murphy Creek Dam on the Columbia in southeast B.C. carry similar liabilities, with environmental, social and economic issues making their development highly uncertain.

As with the Elaho, they would produce less than a third of the electricity Hydro would gain from Site C -- and only about one tenth of what the W.A.C. Bennett dam produces.

Murphy Creek would flood some populated areas, including a wastewater treatment plant in north Castlegar and a "significant amount" of low-lying properties.

Border Dam would cause some flooding around Trail, and would threaten some local fish populations.

"There is little to no local support for these projects as this is one of the last undammed sections of the Columbia River. There is significant intrinsic value to keeping it in its natural state," Hydro states in its submission to the BCUC.


CREDIT: Photo by Ian Lindsay, Vancouver Sun
The Gates of the Peace River, formed where the river cuts through rock, will be covered up to two-thirds of its height if BC Hydro goes ahead with its Site C dam proposal. Biologist Brian Churchill looks out from one of the bluffs.

- - -

Hydro's submission estimates that electricity from Site C would cost about 5.4 cents a kilowatt-hour to produce, based on the $3-billion capital cost of the facility and other factors.

Electricity from the other projects would be substantially more expensive, running at between eight and 11 cents per kilowatt hour to produce.

That appears to make Site C cheaper than almost any other form of electricity production that could be brought on-line in British Columbia.

Hydro also calculates that it's as cheap or cheaper than any alternative technology including coal-fired thermal generation, which is the main source of electricity across North America.

However, strong doubts about Hydro's projected cost for Site C are surfacing at electricity rate hearings in front of the B.C. Utilities Commission.

By some estimates, the cost to produce electricity at Site C will be at least 50 per cent higher than Hydro's comparatively rosy prediction, pushing the cost of energy from Site C to about 8.1 cents.

Hydro's initial published estimate for the project was $2.1 billion, although that figure was enlarged to $3 billion in June during a series of hearings in front of the commission.

Hydro is using the $2.1-billion figure as the basis for its estimate of a production cost of 5.4 cents per kilowatt hour of electricity from Site C.

At $2.1 billion, Site C is the cheapest option in the province for new electricity supply, next to coal-fired thermal generation.

But when the extra $1 billion is added in, the cost to produce electricity from Site C jumps to about 8.1 cents a kilowatt hour.

At that price, Site C no longer stands out from the pack. It would be comparable in cost to electricity that could be produced from burning woodwaste, or natural gas, or from wind power, or even geothermal energy.

Hydro is preparing to spend $1.9 million on preliminary studies, and the corporation estimates that the final cost to complete all studies associated with Site C will be about $17.4 million.

"Before they spend a penny, why don't they give us the business case and the financial model showing whether or not this thing is even in the ballpark in terms of being an economic source of electricity?" Hydro critic David Austin asks.

"They should not spend even a dime before they do that."

Of the four hydroelectric projects on Hydro's list, Site C is the most advanced.

- - -

Given the controversy Hydro expects for the other three, it may be safe to say that Site C will be the last large hydro project to receive serious consideration in British Columbia.

Hydro is proposing a wide array of projects and scenarios to meet demand over the next 20 years -- including energy conservation programs, independent power projects, generation fired by gas and even coal, and additional supply from existing facilities.


CREDIT: Photo by Ian Lindsay, Vancouver Sun
Lenore Horwood, the mayor of Hudson's Hope, knows the history of BC Hydro's Site C proposal in detail.

- - -

In many scenarios, Site C isn't even a factor, with Hydro instead proposing state-of-the-art gas-fired generation plants at Kelly Lake near Clinton to meet the bulk of new demand.

Other scenarios show a mix of new supply from independent power producers, plus Site C, plus repowering of the Burrard thermal generating station.

Nearly all the plans call for significant contributions from the installation of additional generators at the existing Mica and Revelstoke facilities.

Reinvestment at Hydro's existing facilities, including generator system upgrades at W.A.C. Bennett/G.M. Shrum Generating Station, would provide modest gains, and the Power Smart electricity conservation program would add a bit more.

Hydro also continues to pursue a range of projects on Vancouver Island, including a 275-megawatt gas-fired thermal generating plant near Nanaimo.

Although Hydro and the provincial government are trumpeting all of these projects as potential solutions to B.C.'s dependence on electricity imports, there is nothing in the plan to suggest that Hydro is going to stop buying electricity from sources outside the province.

Imports from Alberta and the United States annually provide B.C. with roughly half the amount of electricity that Site C would produce.

In its submission to the BCUC, Hydro says it's going to continue to buy electricity elsewhere.

The corporation tends to import electricity when it's cheap, and sell it when it's expensive, so a continuation of that strategy is annually worth hundreds of millions to the B.C. provincial treasury.

The major snag in the entire system seems to be the distance between the biggest sources of electricity, such as W.A.C. Bennett, and the biggest groups of consumers, in the Lower Mainland and on Vancouver Island.

- - -

About seven per cent of the electricity travelling along transmission lines from major facilities in central and northern B.C. is lost en route as heat, so there's economic advantage to having local sources of power.

Hydro has already begun to suggest that Vancouver Island would have a more reliable electricity supply if it was generated on the island.

It also talks about a "regional disparity" that exists on the Lower Mainland as well, with the most populous part of the province consuming electricity that is delivered via long-distance transmission lines that are already close to capacity.

The proposal would have to be approved by the BCUC, and then given assent by provincial cabinet, before Hydro could take any action.

The utilities commission won't render a verdict until later this year, although B.C. Energy and Mines Minister Richard Neufeld is already talking about it.

Hydro CEO Bob Elton emphasized that there are still a lot of unanswered questions about Site C.

"We don't actually have a bias one way or the other," Elton said. "We know it's an option that might be attractive, but we don't know if it's the best option."

That's why, he said, Hydro wants to undertake a preliminary $1.9-million study that would seek to determine if there are any large obstacles, or advantages, to moving ahead with it.


CREDIT: Photo by Ian Lindsay, Vancouver Sun
The intakes for the ten generating units of the W.A.C. Bennett dam bring water from the Williston reservoir.

- - -

Elton agreed with a suggestion that, beyond Site C and the three other projects under consideration, the era of big hydroelectric developments in British Columbia is over.

"If you look around the world there aren't that many large hydro projects being built. There are some countries that are building them, but it's a hard thing to do."

He said the advantage of Site C is that it would be located on a river that's already host to two dams, rather than a pristine stream.

He said Hydro remains certain that B.C. requires large-scale electricity projects, whether it's hydro or some other form of production, in order to provide the province with a secure supply that's capable of delivering energy when demand hits its peak on cold winter evenings.

"I think initially the debate should be: 'Would you prefer a dam to be built on the Peace, or would you prefer a large gas plant, or a large coal plant, or would you prefer to rely on electricity imports?'

"We're trying to do two things. We're trying to provide all of British Columbia with enough energy so that when you turn on the lights, every day of the year, there's enough of it to satisfy everyone's requirements.

"Second, we're trying to provide you with capacity -- so that at 6 p.m. on a really cold Monday evening in January, the capacity is there to meet that peak demand.

"We cannot rely purely on a lot of smaller projects. We need some large ones to go with the small ones. Site C at this pint is jut one of the possibilities, and we don't know if it's the best one."

In 1981, the B.C. Utilities Commission accepted Hydro's contention that it was in the interest of its customers -- the residents of British Columbia -- to create a new source of electricity so long as demand continued to escalate.

The commission concluded that there were no "overriding impediments which would dictate the abandonment of the Site C project."

However, the commission noted that Hydro had not demonstrated that it was preferable to any of the alternatives that could be undertaken in order to keep up with demand load.

If the utilities commission expresses unqualified support this time around, Hydro would then have to consult with stakeholder groups including First Nations, undertake environmental studies, and nail down the financial costs.

Beyond that, the final decision would rest with provincial cabinet.

Hydro is currently proposing to spend $1.9 million on initial studies that could provide some direction to cabinet, and to the utilities commission, on whether more detailed work should proceed.

Meanwhile, the people in Hudson's Hope wonder what's going to happen.

Hydro has been holding onto land in the Peace Valley for 30 years, and Mayor Horwood is anxious for a decision, one way or the other.

"If Hydro hadn't put Site C in their plan, I would have been the first person to call and say: 'Then sell the land,' " Horwood said.

"The holding of the land is part of the municipality's concerns. It's holding up development for our community. There is land along the river that could be developed for recreation, for tourism -- all because of a project that has been on the books for 30 years.

"It might not happen for another 20 years, so it's a 50-year plan as far as I'm concerned.

"Should one level of government have the ability to hold the land for that period of time?"

TROUBLE ON THE PEACE:

Day 1:

BC Hydro's $3-billion dream

Day 2:

The Alberta impact

Day 3:

The massive W.A.C. Bennett Dam

Day 4:

Life in the floodplain

Day 5:

Native opposition

The Vancouver Sun

Posted by Arthur Caldicott on July 02, 2004

June 28, 2004

Strong quake jolts coast

Quake_20040628.jpg
VANCOUVER - A powerful earthquake shook and rattled homes in the Queen Charlotte Islands, parts of northwestern B.C. and the Alaska Panhandle early Monday.

The quake, with a magnitude of 6.7, was centred beneath the ocean about 112-kilometres northwest of Dixon Entrance – which is at the north end of the Charlottes.

LINK: Map showing quake location

Masset resident Linda Smerychynski says a low rumble woke her up just before 3 a.m. PDT. But the quake didn't frighten her.

"I've already lived through two six-point-plus earthquakes in the last six years that we've lived here. It seemed normal almost. It's basically what we live with."

"Normally the big ones you notice, but the little one's you don't notice because they happen so frequently," she says.

INDEPTH: Earthquakes

No significant damage was reported in the Queen Charlottes nor on the Alaska Panhandle, although some items fell from walls and shelves in Craig, Alaska.

Scientists say a quake with a magnitude of 6.7 could have caused significant damage if it had occurred closer to a built-up area on land.

CBC news

Posted by Arthur Caldicott on June 28, 2004

June 15, 2004

Hydro still wants rate hike


Michael Kane
CanWest News Service
Times Colonist
Tuesday, June 15, 2004

B.C. Hydro released much improved financial results Monday but said the stronger bottom line won't stop it asking for an 8.9 per cent rate increase despite protests from customers.

Nor has recent wet weather eased the Crown corporation's concerns about low reservoir levels forcing more electricity imports to meet domestic demand.

"We'd need a lot more rain throughout the summer to make a difference," said Elisha Moreno, Hydro's media relations manager.

British Columbia relies on electricity imports from Alberta and the U.S. to provide about 10 per cent of its annual needs.

Hydro reported a consolidated net income of $98 million for the year ended March 31 -- $146 million better than the $48 million loss originally projected but $320 million lower than net income of $418 million for the previous year.

"Here we have a profitable company asking for a rate increase and we have to wonder why," said Mark Veerkamp, executive director of B.C. Citizens for Public Power. "What I have seen recently is Hydro consistently under-budgeting their returns and that money is transferred to the province."

Jay Grewal, Hydro's acting chief financial officer, said the results are much improved from the original forecast due to wetter than normal conditions in the spring of 2003 and a decrease in the prices of electricity and natural gas purchases at the same time.

He said lower than normal water inflows later in the fiscal year, which reduced the availability of low-cost generation and increased import demand, contributed to the decline from last year's results. Another factor is a $120-million "provision" to reflect money spent on a gas pipeline and a Vancouver Island power plant that are unlikely to be built.

Veerkamp complains the B.C. government has directed B.C. Hydro to purchase power from private energy sources and is banning any new power plants.

In fiscal year 2003, private power purchases cost 10 times what it cost for B.C. Hydro to produce its own power. Over the past 10 years, private electricity prices have increased 77 per cent while B.C. Hydro prices have increased only a fraction of one per cent.

"They are paying a huge amount of money to purchase private energy," Veerkamp said. "As well there are millions being spent on one-time restructuring costs but there are no benefits from these deals booked anywhere in this fiscal year or in the future.

"The government is making bad decisions that are hurting consumer and the economy. It's time to take a step back before it is too late."

The year-end numbers were submitted to the B.C. Utilities Commission prior to the public release of the B.C. Hydro annual report at the end of June.

The commission is wrapping up hearings on the rate increase application and is expected to announce its decision in fall.

Hydro has not received a rate increase for 10 years and the 8.9-per-cent hike it is proposing will yield $480 million over two years.

While the increase would work out to about $5 a month for an average homeowner, Veerkamp says prices will rise across the board because electricity is used in everything produced and sold in B.C.

Moreno said the improved financial results would not affect Hydro's request for more money but "may bode well for any future rate increases we have after this one."

Hydro's largest customers have told the commission a rate increase would be unnecessary if the Crown corporation kept a closer grip on costs, including bonuses to senior managers.

A preliminary examination of Hydro's books identified 13 initial ways in which reduced costs and other measures could save more than Hydro is seeking in its rate increase, says Dan Potts, executive director of the Joint Industry Electrical Steering Committee.

The financial results highlight the need for Hydro to buy more domestic electricity from independent producers, said David Austin, counsel for the Independent Power Producers Association of B.C.

"Over the long term they could make more money doing it, but their appetite for independent power is very, very low compared to the size of the import tab," Austin said.

Hydro also restated its third quarter income Monday to $102 million, down from $117 million, after finding that revenues were overstated by $15 million due to misinterpretation of weather data used in residential revenue calculations.

© Times Colonist (Victoria) 2004

Posted by Arthur Caldicott on June 15, 2004

BC Sustainable Energy Association launches June 21!


New Association Launches a Sustainable Energy Vision for BC

Currently when the wind blows in British Columbia, no wind turbines collect its energy. When the sun shines on homes and buildings, few solar panels or water heaters collect its heat. When the tides roll through B.C.'s coastal inlets, no tidal turbines capture their awesome power.

All this is about to change. The British Columbia Sustainable Energy Association (BC SEA) is being launched this week in Victoria, promoting much greater use of renewable energy in B.C.

"We see many jobs and business opportunities in renewable energy," said BC SEA President Guy Dauncey. "We want to help the province become a world leader in the generation and use of sustainable energy, and to promote its use for electricity, transport, industry, and hydrogen."

The BC SEA has hit the ground running, with nearly 100 members signed up. To become a member, click here.

PUBLIC LAUNCH: On Monday, June 21st, the BC SEA will be holding its Public Launch in Victoria. Click here for details!

Click here for more of this introductory message.

BC-SEA website www.bcsea.org

The GSX Concerned Citizens Coalition is proud to be a founding member of the BC-SEA.

Posted by Arthur Caldicott on June 15, 2004

June 11, 2004

Bellingham says "Never again"

MaryKing_Bellingham_193527-65443.jpg
HEALING SMILES: Peggy Lohse (left) shares a laugh with longtime friend Mary King at Bellingham City Hall on Thursday afternoon. King, whose son died in the 1999 Whatcom Falls Park disaster, said support from the community helped bring joy back into her life. PETE KENDALL HERALD PHOTO


Ericka Pizzillo
The Bellingham Herald

Officials praised Bellingham residents Thursday for being the catalyst for better oversight of the nation's pipelines in the aftermath of the Olympic pipeline explosion five years ago.

"Your involvement makes it far less likely that this event will ever be repeated," said Alan Rathburn, pipeline safety director at the state Utilities and Transportation Commission.

Rathburn and others came to Bellingham City Hall for a public remembrance of the deadly June 10, 1999, disaster when the underground line operated by Olympic Pipe Line Co. ruptured in Whatcom Falls Park, spilling 237,000 gallons of gasoline.

The rupture and resulting explosion killed Wade King and Stephen Tsiorvas, both 10, and Liam Wood, 18, and charred 1Ţ miles along Whatcom Creek.

After the explosion, people simply could have trusted Olympic and the federal government to make repairs and restart the line, said Carl Weimer, director of the Pipeline Safety Trust, a Bellingham-based group created to lobby for pipeline safety across the country. But the community and the families of the three victims didn't sit back.

"We said 'no,' " Weimer said.

People demanded to know not only why the line burst, but how similar disasters could be prevented in other parts of the country, Weimer said. As a result of the public pressure, a 37-mile section of Olympic's pipeline was closed for inspections and repairs for 1Ţ years, longer than any other pipeline in the country after a rupture.

Communities throughout the country, including many in Washington, are now aware of the pipeline companies that operate around them, Weimer said.

And changes in federal laws have increased public safety, U.S. Sen. Patty Murray, D-Wash. said at the event.

"Children in every corner of America are safer today because this community stood up and said 'We can't ever let this happen again,'" she said.

Murray sponsored federal legislation that increased inspections, required new safety plans for pipelines and raised penalties for safety violations and fuel spills. After three years of effort, the bill was signed into law in December 2002.

Murray said the new law and other federal changes have improved safety several ways, including:

• Pipeline inspections are tougher and more frequent. Before the new law, one federal employee would spend about 20 hours inspecting a single pipeline. Now, six inspectors spend about 240 hours on each line.

• Pipeline defects are being repaired at twice the rate as before the law.

• Fewer pipeline incidents, including spills, are occurring. The average number of incidents for every one million miles of pipeline has dropped from 12 to seven since the new law.

The Bellingham disaster emphasized how laws and the federal government failed to protect the public, said Chris Hoidal, western regional director for the federal Office of Pipeline Safety.

"There isn't a day that goes by that I don't think about what happened on June 10, 1999," he said.

Mary King, whose son Wade died in the disaster, said the people of Bellingham helped her through the five longest years of her life.

"There isn't a day that someone doesn't smile at me," she said. "It lets me know we're all in this together."

Although King said people often see her crying at events connected to the disaster, she wanted to let people know that "I do have joy again. I thank all of you for giving me my joy back."

Murray said her sister, Peggy Zehnder, a teacher at Kulshan Middle School, recently asked her eighth-grade class to write about their remembrances. Many noted the day the pipeline exploded.

"For me, this five-year anniversary is a reminder of a very dark day for our state, a day of pain and a day that we must never forget," Murray said. "And it's also a reminder that we can't just assume someone else is taking care of things."


PIPELINE TRUST

The Bellingham pipeline memorial event was sponsored by the Pipeline Safety Trust, created by the families of pipeline explosion victims Liam Wood and Stephen Tsiorvas to increase awareness and safety on pipelines throughout the country. The trust was created with $4 million in criminal fines paid by Shell Oil Co. last year in connection with the 1999 Bellingham disaster. To reach the trust, call 676-4600.

Reach Ericka Pizzillo at ericka.pizzillo@bellinghamherald.com or call 715-2266.

Posted by Arthur Caldicott on June 11, 2004

June 10, 2004

Lessons from Bellingham

On June 10, 1999, a gas pipeline in Bellingham's Whatcom Falls Park exploded, killing three young people. The legacy of that event is shared grief and sense of loss in the community that the city feels to this day, five years later. (See Bellingham says "Never again" and Whatcom Falls pipeline disaster)

The explosion and deaths also launched a series of lawsuits, and resulted in a pipeline safety trust being set up, in memory of the deceased, funded by $4 million in criminal fines paid by Shell. (See Weimer takes pipeline trust helm

The Bellingham tragedy happened only a short drive from Vancouver, and could be seen from the ferry sailing from Tsawassen to Swartz Bay. It received almost no attention in British Columbia, however.

We should ask why. If a pipeline killed three kids in Squamish or Abbotsford, Vancouver media would howl. Why, when three kids are killed in Bellingham, will our media see no evil, hear no cries of woe, and remain silent? Shame.

There are a number of pipelines from British Columbia connecting to pipelines in the United States. Pipelines in BC are regulated by either the National Energy Board or the BC Oil and Gas Commission. Pipeline incident data is generally available in the US, nationally in Canada, and in Alberta. But obtaining incident data in British Columbia took a year, including formal requests under the Freedom Of Information Act, and an appeal to the Office of Information and Privacy Commissioner.
The GSX Concerned Citizens Coalition and supporting pipeline activists on Vancouver Island were aware of Bellingham, met with activists in Bellingham, and continue to be concerned with pipeline safety. Our website contains a number of postings and essays related to pipeline safety and Bellingham.

After the Bellingham explosion, the Office of Pipeline Safety (OPS) and Washington Utilities and Transportation Commission (WUTC) published results of an investigation into pipeline operators in the state, looking at inspection and testing records. One of the worst records belongs to Williams - BC Hydro's partner in the GSX Pipeline project.

The Bellingham Herald maintains a photo archive of the Bellingham tragedy.

Safe Bellingham is an organization created to work for improved pipeline regulation and oversight.

In British Columbia, we are farther today from a regulatory regime that can ensure pipelines that won't leak, explode, and kill, than we have been since the Bellingham incident. Recent legislation gutting environmental assessments, and implementing "streamlined" regulatory processes, puts the lives of British Columbians at risk.

Our politicians, our regulators, and our news media have been remiss. We in British Columbia have learned nothing from Bellingham.

Posted by Arthur Caldicott on June 10, 2004

Whatcom Falls pipeline disaster - 5 years later

A BELLINGHAM HERALD SPECIAL REPORT:
Deadly fire turned families into activists, and put national focus on pipeline safety
Ericka Pizzillo and John Stark
The Bellingham Herald
June 10, 2004



THEN AND NOW: Carl Weimer looks at a photograph of destruction in Whatcom Falls Park shot the day after the pipeline fire on June 10, 1999. He is standing in the same location where Hannah Creek enters Whatcom Creek. Weimer is the new executive director of the Pipeline Safety Trust, which was created with a $4 million endowment from criminal fines paid by Shell Oil Company. MAME BURNS HERALD PHOTO


The gasoline pipeline explosion in Whatcom Falls Park five years ago changed the way pipelines are regulated across the country, turned three families into safety advocates and created better emergency plans for city police and fire crews.

On June 10, 1999, a pipeline running underneath the park ruptured, spilling 277,000 gallons of gasoline into Whatcom Creek. The gas exploded into a fireball, incinerating 1 1/2 miles of the creek bed. Three youths who were in the park died.

"It was ugly," Bellingham Fire Chief Bill Boyd, then a captain, said at the time. "I've never seen anything like it. It was like Mount St. Helens," the Washington volcano that erupted in 1980.

Since the disaster, Olympic Pipe Line Co. has spent more than $15 million in environmental work to restore Whatcom Creek, and another $30 million on inspections and repairs aimed at heading off future problems, spokesman Mike Abendhoff said.

In March 2003, Olympic filed for bankruptcy, citing "damages sought from Olympic (and others) on criminal and civil claims totaled over $700 million," according to the court document.

The company has paid $79.3 million to settle 11 personal injury and property loss lawsuits, the court record shows.

The court could approve that bankruptcy settlement as soon as October, according to Department of Ecology spokeswoman Sheryl Hutchison.

Ecology Department officials met Tuesday with Olympic representatives to discuss when pipeline improvements and safety measures might be complete. The company has completed about one-third of the structures agreed to in earlier discussions.

City officials plan to meet with Olympic officials next week to discuss the bankruptcy proposal.

The industry

The interstate pipeline industry now faces tougher regulations and stiffer penalties because of the Bellingham disaster.

Since 1999, Congress has amended pipeline safety law, requiring more inspections, a reduction in the size of spills that must be reported to the federal government and whistleblower protections for employees who disclose problems within pipeline companies, among other changes.

BP Amoco took over operation of Olympic Pipe Line Co. in 2000 after becoming a majority shareholder in Equilon Enterprises, which was the majority shareholder in Olympic. Since then, Abendhoff said, 228 repairs have been made on the pipeline from Cherry Point to Portland.

"I really believe that all the work and time we're spending on this pipeline make it one of the safer pipelines in the country," Abendhoff said, adding that the company's safety program goes beyond what state and federal law requires.

As recently as May 23, however, a leak in an Olympic branch line in Renton spilled thousands of gallons of gasoline and touched off a fire in which nobody was hurt. Abendhoff said that incident demonstrated that no system is perfect.

"Unfortunately, it's the nature of the business," he said. "We can never say never ... but we're doing everything we can."

The nation's 2 million miles of pipelines are operated much differently than five years ago - before both the Bellingham disaster and a Carlsbad, N.M., accident in 2001, in which 12 people were killed when a natural gas pipeline exploded in a campground.

Industry representatives still talk about those accidents today, said Stacey Gerard, associate administrator for the federal Office of Pipeline Safety.

"The pipeline industry overall is more willing to come to the table," Gerard said. "It's easier for us to work with the industry today as a result of the public interest in pipelines."

National Transportation Safety Board officials were highly critical of the Office of Pipeline Safety before and after the Bellingham rupture. NTSB officials called the agency the least responsive of all agencies to which it issues recommendations.

Gerard said the Office of Pipeline Safety has made significant progress, responding not only to the NTSB's recommendations, but also to requirements from Congress. The Office of Pipeline Safety also has increased the use of orders against pipeline companies to compel action, including repairs, shutdowns or changes in their safety plans.

In the last two years, the agency has issued 30 orders against pipeline companies, compared to just five orders from 1995 to 1999.

In addition, the numbers and amounts of pipeline fines collected by the agency have steadily increased during the past five years - from zero dollars in 1999 to $831,400 last year. But many initial fines are lowered by the agency through negotiations and appeals by companies.

Federal Inspector General and General Accounting Office reports evaluating the agency's rulemaking and fine collections are due for release this summer.

The families

The families of the three youths who died in 1999 continue to lobby for tougher laws and penalties.

The families of Liam Wood and Stephen Tsiorvas now operate the Pipeline Safety Trust, created last year after a federal judge ordered that $4 million of the $15 million in criminal fines paid by Shell Oil Co. in connection with the disaster would go to the trust.

Frank and Mary King, meanwhile, have testified before Congress and at industry conferences, consistently lobbying for heavy fines, and have pledged money to build a student recreation center at Western Washington University and ballfields at Squalicum Parkway to honor their son, Wade, who died in the disaster.

Despite improvements in pipeline safety since 1999, there are still gaps in the law restricting the public's right to know about pipeline operations and safety plans, said outgoing trust director Greg Winter.

For example, a new law requires pipeline companies to identify "high-consequence areas" where large numbers of people could be in danger or creeks, lakes and drinking water sources could be threatened if a fuel spill occurred. Although the details are available to local emergency officials, the public can only find information by asking about specific locations, Gerard said.

In Whatcom County, the high-consequence areas for Olympic pipeline include the section of Bellingham and Ferndale where the pipeline runs, as well as where it crosses the Nooksack River, just south of Ferndale.

Members of the trust also want to put together report cards on pipeline companies so the public can have easy access to information about companies that might be operating in their back yard or neighborhood park.

The employees

Two former Olympic officials were sentenced to prison for their part in the disaster.

Frank Hopf, former vice president and manager of Olympic Pipe Line Co., was released from prison last February.

Hopf served six months in the minimum-security Bastrop Federal Correctional Institution in central Texas, northeast of San Antonio, according to the U.S. Bureau of Prisons. He received that sentence last year after pleading guilty to a felony violation of pipeline employee training laws in connection with the 1999 disaster in Whatcom Falls Park.

A second former employee of Olympic, Ron Brentson, has yet to serve his 30-day sentence.

Assistant U.S. Attorney Lawrence Lincoln said Brentson was seriously injured in a traffic accident after he was sentenced along with Hopf, after a guilty plea to the same charge. He will still be expected to serve the sentence after he recovers and completes physical therapy, and the court gets periodic updates on his progress, Lincoln said.

Kevin Dyvig, the employee at the controls of the pipeline when the blast occurred, pleaded guilty to a misdemeanor charge and was given a year's probation.

The city

Getting information to the public is now recognized as a critical task when disaster strikes, Bellingham Fire Chief Bill Boyd said. On June 10, 1999, the pipeline explosion took out a cell tower, land-based phone systems were overloaded and police and firefighters didn't have enough two-way radio frequencies to manage the crisis.

The city now has a dedicated radio channel to get emergency information to KGMI-AM, a Bellingham radio station, and the city's Web site and public access cable Channel 10 are also available in an emergency.

On Sept. 11, 2001, when the televised collapse of the stricken World Trade Center towers touched off a nationwide sense of danger, Bellingham's improved communications system was ready to provide reassurance to the public.

"We learned the lessons of 9-11 early," Boyd said.

The pipeline disaster also heightened awareness of the need for disaster planning among both the citizenry and public officials, said Neil Clement, Whatcom County's deputy director of emergency management.

Today, Clement said, local officials are more willing to provide funding for emergency response needs, and citizens pay more attention when they are given advice about what to do in an emergency. More people have signed up for classes in emergency response to prepare themselves to serve as volunteers in the next crisis, Clement added.

Carroll said being prepared means more than buying hardware and installing communications systems. Emergency personnel need to be trained and regularly drilled.

"There is no fail-safe system," he said. "We need to practice, practice, practice, and prepare, and be ready."

Reach Ericka Pizzillo at ericka.pizzillo@bellinghamherald.com or call 715-2266. Reach John Stark at 715-2274 or john.stark@bellinghamherald.com.

HOW IT HAPPENED

The Olympic Pipe Line Co. pipeline disaster on June 10, 1999 was created by a series of problems that began years earlier, according to the final report by the National Transportation Safety Board.


Here are its findings:


• In 1994, a contractor installing a new water line for the city of Bellingham in Whatcom Falls Park likely damaged the gasoline pipeline, which was located below the water line.


• In the five years after the water line project, Olympic failed to identify or repair any of the damage and failed to properly interpret results of internal tests on the gas pipeline.


• Olympic also failed to correct repeated, unintended valve closures in the line that originated at the pipeline's Bayview terminal in Skagit County. On June 10, 1999, a computerized monitoring system shut down a pump in Skagit County after a pressure surge burst the line in Bellingham. Olympic operators at a remote station in Renton restarted the system, allowing additional fuel to spill out of the pipeline.


• Download the complete NTSB report (PDF format, 1.1MB.)


• View photos of the pipeline disaster in the pipeline photo gallery.


MEMORIAL CEREMONY CHANGED

A public remembrance of Bellingham's 1999 pipeline disaster has been changed to 2 p.m. today on the steps of Bellingham City Hall, 210 Lottie St.

Organizers have added U.S. Sen. Patty Murray, D-Wash., to the slate of speakers.



Posted by Arthur Caldicott on June 10, 2004

World Oil Demand Growth at 21-Year High

Washington Post
Reuters
Thursday, June 10, 2004; 4:25 AM

LONDON (Reuters) - Economic expansion is fueling the biggest increase in world oil demand for 23 years, fired by accelerating growth in China, the International Energy Agency (IEA) said on Thursday.

In its monthly Oil Market Report, the agency raised its projection for incremental oil demand in 2004 by 360,000 barrels a day to 2.3 million, or 2.9 percent, on the 81.1 million bpd world market.

It said demand had proved stronger than expected in North America, Brazil and India, despite high oil prices.

The agency welcomed last week's decision by the Organization of the Petroleum Exporting Countries to raise oil output, saying that economic growth could not be sustained for the long term at high prices.

"While the pace of economic growth remains strong, it has been driven by a number of one-off factors," said the IEA, adviser on energy to 26 industrialized nations.

It cited low interest rate policies, tax cuts, major infrastructure projects in China, depleted industrial inventories and expenditures associated with the war on terror.

"In this respect, price effects have been overwhelmed by wealth effects," it said.

China continues to provide the lion's share of world oil demand growth.

The IEA said it expects year-on-year Chinese growth of 1.2 million bpd, 23 percent, in the second quarter, accelerating from growth of one million bpd or 19 percent in the first quarter.

But it is forecasting growth in China will slow to 8.2 percent in the second half of 2004.

It said China's imports of crude and petroleum products hit a record 3.391 million bpd in April, up 744,000 bpd from March and 1.438 million bpd higher than in April last year.

© 2004 Reuters

[Read and despair. We know global oil reserves, and production rates, are at a peak. We know the global warming consequences of continuing, not to mention accelerated, use of fossil fuels. We are in the middle of an ongoing saga of global oil politics, violence and tragedy in Afghanistan and Iraq. We have alternatives - conservation, efficiencies, and sustainable generation technologies - that we could move to. And we chose not to. Except, perhaps, at the local level, where the benefits to the environment, local economies, and people are immediate and meaningful. If the required energy pardigm shift is going to take place, it will happen at the local level, with global impact. If.]

Posted by Arthur Caldicott on June 10, 2004

June 02, 2004

Power plants top Canada-US air polluters

Reuters, 06.02.04, 12:00 AM ET

By Robert Melnbardis

MONTREAL, June 2 (Reuters) - Coal and oil-fired power plants are the top air polluters in the United States and Canada according to most recent data, the Commission for Environmental Cooperation said on Wednesday.

In its 8th annual survey, the Montreal-based agency, created 10 years ago under the North American Free Trade Agreement, said power plants accounted for almost half of all industrial air emissions in 2001.

In addition, 46 of the top 50 polluters were coal and oil-fired power plants. The survey did not include gas or hydro-electric power plants.

"A big part of it is simply the appetite for energy, but a big part of it is just fuel," William Kennedy, executive director of the commission, told Reuters.

"We need to do a better job of working with industry, government and the public for cleaner fuels, better conservation, more renewable energy than what we have now."

The survey of chemical pollution from industrial facilities shows that power plants burning coal and oil produced 45 percent of the 755,502 tonnes of toxic air releases in 2001. Hydrochloric and sulfuric acids were the most common chemicals released as coal and oil was burned to make electricity.

Power plants, mainly those using coal, were also responsible for 64 percent of all mercury air emissions. Mercury occurs naturally in coal and is released when the fossil fuel is burned to produce electricity.

Mercury can build up in a highly toxic form as it moves up the food chain. Those exposed, especially children, can suffer neurological and developmental damage.

Total releases of mercury fell 48 percent in 2001 from 2000.

"Even though you might be reducing it, it's still building up in lakes and streams and coming into the food chain," Kennedy said.

In the United States, three coal-fired power plants reported the largest toxic air releases.

They were: Progress Energy's (nyse: PGN - news - people) CP&L Roxboro in Semora, North Carolina; Reliant Energy's (nyse: RRI - news - people)' Keystone in Shelocta, Pennsylvania; and Georgia Power's Bowen in Cartersville, Georgia, the commission said.

In Canada, Ontario Power Generation's Nanticoke Generating Station was responsible for the 10 percent increase in air emission of all toxics in the country from 1998 to 2001, the commission said.

Nanticoke followed TransAlta Corp.'s Sundance Thermal Generating plant in Alberta in largest on-site air releases of mercury, the agency said.

Overall, Texas was the top polluter in 2001, followed by Ohio, Michigan and Ontario, the commission said. Together, the four reported 28 percent of total releases and transfers of toxic chemicals for the year.

Copyright 2004, Reuters News Service

Posted by Arthur Caldicott on June 02, 2004

Power plants top Canada-US air polluters

Reuters, 06.02.04, 12:00 AM ET

By Robert Melnbardis

MONTREAL, June 2 (Reuters) - Coal and oil-fired power plants are the top air polluters in the United States and Canada according to most recent data, the Commission for Environmental Cooperation said on Wednesday.

In its 8th annual survey, the Montreal-based agency, created 10 years ago under the North American Free Trade Agreement, said power plants accounted for almost half of all industrial air emissions in 2001.

In addition, 46 of the top 50 polluters were coal and oil-fired power plants. The survey did not include gas or hydro-electric power plants.

"A big part of it is simply the appetite for energy, but a big part of it is just fuel," William Kennedy, executive director of the commission, told Reuters.

"We need to do a better job of working with industry, government and the public for cleaner fuels, better conservation, more renewable energy than what we have now."

The survey of chemical pollution from industrial facilities shows that power plants burning coal and oil produced 45 percent of the 755,502 tonnes of toxic air releases in 2001. Hydrochloric and sulfuric acids were the most common chemicals released as coal and oil was burned to make electricity.

Power plants, mainly those using coal, were also responsible for 64 percent of all mercury air emissions. Mercury occurs naturally in coal and is released when the fossil fuel is burned to produce electricity.

Mercury can build up in a highly toxic form as it moves up the food chain. Those exposed, especially children, can suffer neurological and developmental damage.

Total releases of mercury fell 48 percent in 2001 from 2000.

"Even though you might be reducing it, it's still building up in lakes and streams and coming into the food chain," Kennedy said.

In the United States, three coal-fired power plants reported the largest toxic air releases.

They were: Progress Energy's (nyse: PGN - news - people) CP&L Roxboro in Semora, North Carolina; Reliant Energy's (nyse: RRI - news - people)' Keystone in Shelocta, Pennsylvania; and Georgia Power's Bowen in Cartersville, Georgia, the commission said.

In Canada, Ontario Power Generation's Nanticoke Generating Station was responsible for the 10 percent increase in air emission of all toxics in the country from 1998 to 2001, the commission said.

Nanticoke followed TransAlta Corp.'s Sundance Thermal Generating plant in Alberta in largest on-site air releases of mercury, the agency said.

Overall, Texas was the top polluter in 2001, followed by Ohio, Michigan and Ontario, the commission said. Together, the four reported 28 percent of total releases and transfers of toxic chemicals for the year.

Copyright 2004, Reuters News Service

Posted by Arthur Caldicott on June 02, 2004

May 31, 2004

IPPs request review of Integrated Electricity Plan

May 26, 2004

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

Dear Mr. Pellatt

Re: Request for Public Planning Review of BC Hydro Integrated Electricity
Plan

The Independent Power Producers association of BC (IPPBC) requests that the BCUC conduct public a written and oral review that would focus on BC Hydro's current Integrated Electricity Plan.

Background: The government has amended the BCUC act requiring the commission to implement a review process for utility planning activities. BC Hydro has filed an Integrated Electricity Plan with the BCUC in March 2004.

There is some uncertainty as to how this Plan will be reviewed by the BCUC, particularly as it was submitted to the BCUC at the same time as the BCUC is conducting a hearing on BC Hydro's current rate application.

During this current rate application it is not clear whether interested parties can get their issues addressed where they concern BC Hydro's planning activities.

Many planning issues are not appropriately addressed as part of this rate hearing.

Justifications: A BCUC public review is needed so that the following issues can be properly addressed.

. Long term planning based on a high probability of power imports versus planning profile based on a high probability of power exports
. Cost premium for BC Clean power purchases.
. Cost and risk of obtaining power from conservation versus alternatives.
. The use of the Burrard Thermal Plant.
. The appropriate method for dealing with Gas Price risk, for gas power
purchases.
. The risks between large long-term projects like Site C and large numbers
of small IPP projects.
. The choice between upgrading transmission systems to Lower Mainland and
Vancouver Island versus providing incentives for IPPs to locate in Lower Mainland and Vancouver Island.

Many of these issues touch directly on cornerstones or Action Plans from the governments Energy Plan. If they are not adequately addressed in a public process that gives them sufficient attention (rather than being swept under the rate application process), key elements of the Energy Plan will falter.

Yours truly,

Steve Davis
President,

cc Intervenor List - BC Hydro Rate Application Hearing

BC Hydro's 2004 Integrated Electricity Plan

Posted by Arthur Caldicott on May 31, 2004

Vancouver Island Electricity Supply Alternatives

Dr. Mark Jaccard, Rose Murphy and Nic Rivers of MK Jaccard and Associates have produced a report entitled Vancouver Island Electricity Supply Alternatives: Natural Gas South Island versus Low Emission North Island

The March 2004 report compares BC Hydro's preferred natural gas strategy for Vancouver Island with a portfolio of more environmentally benign alternatives, referred to as "Low Emission North Island".

From the Introduction:

"A decision is going to be made within the next six months that will determine whether or not a natural gas-based generation strategy is implemented to supply power needs on Vancouver Island starting in 2007. This decision is key because the natural gas strategy will likely preclude other, more environmentally benign alternatives for decades to come. It is expected that if this path is chosen, natural gas generation will dominate supply expansion in the province as a whole.

"The purpose of this study is to perform a MATA comparing natural gas-fired generation with an alternative portfolio of low emission independent power producer (IPP) projects located north of Nanaimo on Vancouver Island. These portfolios are referred to as Natural Gas South Island and Low Emission North Island. The MATA considers financial, environmental and social attributes: unit electricity costs, impact on rates, GHG emissions, other environmental impacts and socio-economic impacts. The impact of uncertainty on the financial aspect will also be estimated."

The authors conclude that Low Emission North Island:

- is lower cost
- has lower rates
- results in fewer GHG emissions
- exposes the taxpayers and electricity customers of BC to less risk from higher natural gas prices and GHG liabilities
- avoids large capital investments that could lock BC into an undesirable electricity future

The report demonstrates the need to perform a multi-attribute trade-off analysis before supply investments are made.

The Call for Tenders (CFT) process has already excluded most of the projects that comprise the Low Emission North Island portfolio. Given this, and the presumption that the CFT process has some degree of acceptability or pre-approval to the BC Utilities Commission, it is unlikely that the full MATA analysis called for in the Jaccard report will be carried out.

The Jaccard report is here

Posted by Arthur Caldicott on May 31, 2004

May 30, 2004

Industry group upset by coal plant rejection

See also:
No extra municipal measure placed on Quinsam Coal

By Grant Warkentin
Campbell River Mirror Staff
May 28, 2004

An industry group believes Quinsam Coal's power plant proposal was rejected because BC Hydro was concerned about public reaction to coal power.

"It is our view that BC Hydro is totally unwilling to consider this low-cost source of power because of their concern about their public approval rating," said Daniel Potts, executive director of the Joint Industry Electricity Steering Committee in a letter to the provincial minister of Energy and Mines and the BC Utilities Commission.

The steering committee is an industry group that represents 48 of BC Hydro's industrial customers. The committee believes Quinsam Coal's proposal to build a 150-megawatt power plant at its mine site was unfairly rejected by BC Hydro.

"It is our understanding that the coal plant was rejected because the proponent was unwilling to guarantee an availability of 97 per cent and further that BC Hydro had concluded the plant could not obtain the necessary environmental permits in time to meet the required in-service date," Potts said. "It would appear, consistent with BC Hydro's demonstrated lack of enthusiasm for coal, that the outcome was predetermined by establishing mandatory criteria regarding availability that no coal plant could meet."

However, BC Hydro treated all power proposals fairly, said Elisha Moreno, spokesperson for BC Hydro.

"All of them had to meet that criteria," she said. "We certainly didn't want to give the impression that we were biased against coal."

Moreno said the requirements for Quinsam Coal weren't any more restrictive than for other proposed power projects. She said Quinsam Coal wasn't selected because it couldn't meet the same requirements as the other proposals.

"One of the reasons why Quinsam didn't make it was because we required dependable capacity by a certain time and the criteria that we set up in the process required them to meet a certain timeline and required them to show us that we were able to rely on their resource, their source of energy," she said. "Obviously because they didn't make it to that next step, they didn't meet that criteria."

David Slater, president and CEO of Quinsam Coal, said earlier this month that he believed BC Hydro was biased against the project.

"Basically the cards were stacked against us from the start," he said. "The reasons that they gave for not qualifying us-they were searching for things to do to not qualify us."

Slater said by requiring the plant to provide power consistently 97 per cent of the time, it made it impossible for the plant to meet the necessary criteria to qualify.

However, Moreno said the 97 per cent availability requirement is not unusual and other power projects were required to meet the same percentage.

Campbell River Mirror


No extra municipal measure placed on Quinsam Coal

By Grant Warkentin
Campbell River Mirror Staff
May 28, 2004

Council trusts provincial authorities are doing a good enough job of keeping Quinsam Coal environmentally accountable.

However, that doesn't mean city hall won't keep pressuring the provincial environment ministry to work quickly to find out why pollution levels are increasing in lakes around the mine site.

"I guess my concern is that if you wait, the fish die," said Coun. Charlie Cornfield Tuesday night.

Quinsam Coal representatives at the meeting said they were ready and willing to co-operate and that the mine is already trying to keep to a minimum the effect it has on the environment.

"We're working very diligently at Quinsam Coal to ensure the environment is kept intact," said Paul Krivokuca, mine manager.

The main pollutants coming from the mine site are sulphates, which are a form of sulphuric acid. The Campbell River Environmental Council, a local environmental group, is concerned about the effects the compounds are having on nearby lakes such as Long Lake, especially since 1997, when sulphate levels in lakes around the mine started to increase significantly.

However, despite the group's concerns, council is confident the issue is in competent hands. Quinsam Coal's pollution levels are monitored by the Environmental Technical Review Committee, a group of provincial, federal, municipal and industry representatives who analyze environmental data collected from the lakes and lands around Quinsam Coal's mine site. Based on that data, the committee decides how the mine is doing in terms of its impact on the environment.

And despite some problems, such as an error published in the committee's last report that said sulphate levels in surrounding lakes were decreasing when they were actually increasing, council is confident the committee is doing a good job.
Councillors decided Tuesday night to keep the status quo - the technical review committee will continue to review data collected each year from stations around the mine site.

Council could have opted to hire an independent consultant to review all the data collected so far. The consultant would have cost about $20,000. However, council decided there was no need to spend the extra money. Coun. Bill Matthews, Roy Grant and Cornfield all said the technical review committee is doing a good job and council should be able to rely on the committee's judgment and decisions.

The environmental group would have rather seen council spend money on a third-party consultant. They said in an April report that information provided to the public on the issue in the past was too little, too late and too vague to be useful.

"The author sees the regional waste manager's report to the public this year as fitting the pattern of previous years, of being less than forthright," the environmental group's report says.

Campbell River Mirror

Posted by Arthur Caldicott on May 30, 2004

May 29, 2004

Hydro's $120-million Island power failure


Fri May 28 2004
08:37 AM
By Paul Willcocks
Vancouver Sun
Page C06
29-May-2004

VICTORIA - Thanks for the chance to come and talk to you about BC Hydro . . . and sorry about the $120 million we've probably lost on an ill-conceived power project and undersea pipeline.

Pity poor Bob Elton, barely six months into his job as Hydro CEO. That was the gist of his speech to a Nanaimo business crowd this week.

Mr. Elton spoke positively about BC Hydro's general direction. Then he revealed that the corporation's board had just approved a $120-million "provision" against earnings to reflect money spent on a gas pipeline and a Vancouver Island power plant that are unlikely to be built.

The term provision sounds benign. But it means the finance guys have decided that a big chunk of money is gone, and there is a high probability that it isn't coming back.

Mistakes happen. But a stumble that could cost the corporation's shareholders -- that's you -- $120 million seems remarkable, even by the corporate standards of the day.

Especially because the warning lights were flashing and the sirens were blaring as Hydro walked into this mess.

The appropriately termed "sunk costs" were spent on the Vancouver Island Generating Project and the Georgia Strait Crossing, two projects conceived by BC Hydro under the NDP.

The gas-powered generating plant was initially supposed to be built at Port Alberni, with a private partner. (It was linked to yet another NDP aluminum smelter dream.) The pipeline would be a partnership between BC Hydro and Williams Pipeline.

Hydro claimed a need for great haste, even warning that Vancouver Island could face brownouts by 2004. (No sign of them yet, despite some high demand during last winter's cold snap.)

So the Crown corporation started spending money on the projects, supported by an NDP government that had decided cabinet, not the B.C. Utilities Commission, should make decisions on whether new power projects delivered the best value to captive consumers.

But things kept going wrong. Atco was supposed to be a partner in the Alberni project, but was pushed out by Hydro. The city wouldn't rezone the site Hydro wanted, so the whole project was moved to Duke Point near Nanaimo.

A new private sector partner was found, and then dumped, convincing many that BC Hydro wanted to do this project by itself.

Caught up in its haste, Hydro went out and bought turbines just as prices spiked with the California energy crisis.

The turbines remain in storage. They're included in the $98 million that Hydro considers a potential writeoff. In addition, the Crown corporation estimates it may owe Williams $22 million if it backs out of the pipeline deal.

Hydro had been projecting earnings of $210 million for the year ending March 31, 2004. The provision will knock that down to $90 million. Down the road, it will result in higher rates for consumers.

Mr. Elton bravely defended the decisions. BC Hydro has to err on the side of caution in ensuring energy supply, he said, and the decisions all made sense at the time they were made.

That second assertion looks dubious. When the Liberals finally released their energy plan, 18 months after the election, they sent the whole project to the B.C. Utilities Commission for review. The commission found that the critics were likely right; it was probably not the most cost-effective way to meet Vancouver Island's power needs.

The commission ordered Hydro to call for proposals from other companies proposing to deliver the same power much more cheaply, a change that would benefit consumers. Eleven companies have successfully submitted proposals.

That process wraps up later this summer.

Who is to blame?

Mostly the former NDP government, for ending independent oversight of Hydro. Most of the money was spent on its watch.

But about $35 million was spent after the election. The Liberals could have -- and should have -- ordered an independent review at any time. What's clear is who will pay if this all unfolds as expected -- BC Hydro customers.

willcocks@ultranet.ca

Posted by Arthur Caldicott on May 29, 2004

May 28, 2004

Waiting costs Hydro $120m

By Brian Lewis
The Province,
Page A48
28-May-2004

Uncertainty over whether the proposed natural-gas pipeline under Georgia Strait and a large gas-fired electricity generation plant slated for Duke Point on Vancouver Island will ever be built has led B.C. Hydro to declare a $120 million writedown of planning costs already incurred, the Crown corporation disclosed yesterday.

And it's a cost that ratepayers may have to pay for down the road.

Speaking to a Nanaimo business audience yesterday, Hydro chief executive officer Bob Elton said the utility's board of directors approved the $120-million writedown provision against Hydro's fiscal 2004 financial statements on Wednesday in order to meet accounting rules.

The provision is directly related to the proposed $370-million Vancouver Island Generation Project (VIGP), a natural gas-fired plant that Hydro had planned to build at Duke Point near Nanaimo to meet the increased demand for electricity on Vancouver Island.

Natural gas slated to feed that plant would be delivered via the $340-million Georgia Strait Crossing (GSX) pipeline project that would run from Washington State to Vancouver Island via a 44-kilometre under-sea section.

Both projects were temporarily shelved last year after the B.C. Utilities Commission ordered Hydro to call for tenders from the private sector to build Vancouver Island's additional power generation.

That process is now underway and its success or failure will determine the future of the two Hydro-sponsored projects.

"As we are recording the provision against 2004 net income, this will not have any impact on our current proposal for an 8.9-per-cent rate increase that is before the BC Utilities Commission in our revenue requirements process," Elton said.

"We . . . will seek to recover those costs in future rates when the Vancouver Island Generation Project is brought into service or it is determined that the projects [VIGP and GSX] will not proceed."

Elton cautioned that Hydro has not made a final decision on the projects and won't be able to until the call for tenders from the private sector is completed this fall.

He termed the provision as "good business practice" in order to comply with Generally Accepted Accounting Principles (GAAP), the officially recognized standard for accounting in Canada.

The Hydro CEO also told his Nanaimo audience that the positive feedback Hydro has received from the private sector to build power generation on Vancouver Island "bodes well for the security of future supply" in the region.

blewis@png.canwest.com

Posted by Arthur Caldicott on May 28, 2004

May 27, 2004

Increased uncertainty for GSX and VIGP

In a speech in Nanaimo this morning, BC Hydro CEO Bob Elton announced that
Hydro has opted to write down $120 million in sunk costs for GSX and VIGP.
Elton cautioned that this does not prejudge the outcome of the Call for
Tenders process, nor that either GSX or VIGP is dead. But subtitles in the
news release included the phrase "increased uncertainty for GSX and VIGP".

From the news release:

Increasing energy certainty on Vancouver Island good news for customers

NANAIMO - In a speech [PDF, 36 Kb] to the Nanaimo business community this morning, BC Hydro President and CEO Bob Elton discussed developments related to Vancouver Island energy supply, including the progress of the current Call for Tender process and potential impacts of the proposed Vancouver Island Generation (VIGP) and Georgia Strait Crossing (GSX) projects.

BC Hydro news release

Bob Elton's speech

Posted by Arthur Caldicott on May 27, 2004

Aboriginal traditional knowledge in environmental assessments

Considering Aboriginal traditional knowledge in environmental assessments conducted under the Canadian Environmental Assessment Act -- Interim Principles

There is growing recognition--both in Canada and abroad--that Aboriginal peoples have a unique knowledge about the local environment, how it functions, and its characteristic ecological relationships. This Aboriginal traditional knowledge (ATK) is increasingly being recognized as an important part of project planning, resource management, and environmental assessment (EA).

Section 16.1 of the recently amended Canadian Environmental Assessment Act (CEAA), gives responsible authorities conducting an EA the discretion to consider Aboriginal traditional knowledge in any EA:

"Community knowledge and Aboriginal traditional knowledge may be considered in conducting an environmental assessment."

CEAA Guideline

Posted by Arthur Caldicott on May 27, 2004

May 25, 2004

BC Sustainable Energy Association


Do you want to see more use of wind, solar, biodiesel, and other kinds of sustainable energy in BC?

Do you hear alarm bells ringing with regard to the floods, forest fires, droughts and heat waves that are being caused by global climate change, which we know is caused primarily by our use of fossil fuels?

Do you want to see more use of sustainable energy in BC, as an alternative to the increasing use of oil, gas, coal?"

If your answers are ‘yes", then you are invited to join the BC Sustainable Energy Association (BC SEA). www.bcsea.org. They’re new, ambitious, and they'd love to have your support and participation.

Their vision is one in which all of BC’s energy comes from clean, renewable, efficient sources, respecting the integrity of nature, and the needs of humans and other species, and their habitat, both now and in future generations.

As the GSX Concerned Citizens Coalition has been committed to opposing unsound and unsustainable energy projects, BC SEA will be as committed to advocating for sustainable energy. In fact some of the founding members of GSXCCC (and our president) are founding directors of BC SEA.

For more information, and to join BC SEA, click here now


Posted by Arthur Caldicott on May 25, 2004

sqwalk.com gets blogs!

sqwalk.com has moved to a new hosting service at dreamhost.com. Much of the historical content is still intact, but some has been dropped (ie - big files that no-one had looked at in years), and blogs have been added.

Blogs (web logs) allow much faster addition of material to sqwalk.com. We are using the Movabletype system. It's powerful stuff.

sqwalk.com remains the website and voice of the GSX Concerned Citizens Coalition, concerned with BC Hydro's schemes to add natural gas-fired generation on Vancouver Island, as well as energy policy, projects and issues in British Columbia.

If you find sqwalk.com useful, please support the website and our work with a small donation. Contact

Thank-you.

Posted by Arthur Caldicott on May 25, 2004

March 23, 2004

“Working Together for a Secure Power Future”

Bob Elton
Speech to the Vancouver Board of Trade Breakfast
March 23, 2004

Introduction

Thank you for the kind introduction and for the invitation to be here this morning. In the next few minutes I am going to tell you about some of the issues BC Hydro is facing as we plan for the future, and how we are going to overcome them. Low cost, reliable electricity is vital to all of us. It is an essential service and my commitment to you is that there will be enough low cost, reliable electricity in the future.

First – a caution. We are going through a regulatory process that will see all of our ideas subject to appropriate challenges. I am not here today to anticipate or compromise that process. I am here to share ideas.

Context

I want to begin by setting a context – for our planning.

First, we have a long time horizon. We must look out 20 years, because developing and building a large project in particular, can take more than 10 years. So this is an industry where we have to practice sustainability – we have to think about what happens when we are no longer here.

Moreover, planning is not an exact science. Can any of you tell me what your business will look like in 20 years, or for that matter how you expect you will be living personally?

There are many variables, and they can change over time. One example in January of this year, we had a peak demand that was 440 megawatts higher than we would have expected, given the temperature. 440 MW is the equivalent capacity of our Bridge River operation.

So we can have all of the engineers and economists and accountants that you want, dancing on the head of a pin to make a forecast; but in the end, we have to accept that we are in a very uncertain world here.

The second key background issue is that there are many stakeholders involved, all with strong opinions. So working together in a positive way is vital. BC Hydro’s role is to provide leadership where we can, but not make unilateral decisions.

The process we are following is a regulatory process. Just to be clear, we at BC Hydro believe strongly that the regulatory process will not only help our customers, but also strengthen our decision-making and our company. Is it perfect? No. Is it hard sometimes ? Yes. Is there a better process, to ensure that many different stakeholders are heard in a situation where natural markets are hard to achieve? It’s not clear that there is.

A key to the regulatory process is that everyone works hard at it. At BC Hydro we are learning, slowly, how to do it. But the key is that we all work constructively and in the past 12 months or so since our regulatory appearances have started, we have experienced a very consistent, intelligent, balanced process.

The third key background issue is that we have to meet demand as defined in two ways.

First, there is the demand for energy – that means the amount that we all consume in a year. Second, we have to meet the demand for capacity – that means the amount you demand for one hour, in the highest demand time of the year. In BC, that’s the winter, as a result of cold weather and all those Christmas lights you put up.

As I’ll discuss a little today, energy and capacity demands may be met in different ways, and we must find solutions that deal with both.

So – the background is that we must plan for the long term; we must see the regulatory process as an opportunity to work together to find the best solutions; and we must plan for energy as well as capacity.

Now I’d like to turn to the external issues facing our industry, and our situation in B.C. In particular, what do we think are the main patterns that we can see 20 years from now?

Electricity supply and demand – becoming more scarce and more expensive.

I believe electricity will become a scarcer, and more expensive, resource 20 years from now.

Demand is rising, and expected to continue to grow. In some parts of the world – like China and India – this is happening very quickly. That rise in demand is putting pressure on the fossil fuels most used to generate electricity, especially in terms of finding more sources close to where they are needed. Natural gas, the fuel of choice for electricity generation in North America over the past few years, is under particular supply pressure, and we see it travelling increasing distances.

Coal is reasonably plentiful in the world, but more expensive. Nuclear power is not permitted in many jurisdictions, including our own.

Environment

When deciding on future demand and supply, what importance should we place on environmental values? 20 years from now, I think environmental values will be even higher than they are right now. Why? The generation that is now in its twenties may be the first one to realize that their future could be seriously affected by environmental degradation. Just in the electricity sector, we expect that in the next 30 years, the world will double its generation capacity of electricity.

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

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

Technology

The third issue I see relates to technology. Over the next twenty years, I am not convinced that I see clear, groundbreaking solutions that will change the supply paradigm. Take hydrogen as an example. It may well realise its potential. But right now and for the foreseeable future, it won’t replace conventional sources of supply. And today it still takes fossil fuels or nuclear power to produce it. What that means for us is that while we should definitely watch and support supply side options, demand side solutions may be a better focus over the next 20 years.

Cost

The final general issue for consideration is one that flows from the other three. And that is cost.

For if we agree:

• that demand for conventional sources of supply is going to increase while supplies grow scarcer
• that we have to focus on more environmentally friendly ways to meet this increasing demand, given society’s values; and
• that technology, at least in the near term, will not provide a panacea solution…

…then there will have to be increasing pressure on the cost of that electricity for our customers.

And yet I began my talk today saying that our goal was to maintain that competitive advantage we have here in B.C. with respect to low cost, reliable electricity. BC Hydro’s challenge, then, is to find a balance among all these issues that allows us to do that.

Action Plan

So if you take these four assumptions – increasing prices; increasing environmental values; technology on the demand side but not yet on the supply side; and the need to preserve our lowcost advantage – is there a future that works?

I believe there is a path that is open to us, that will get us to a place of long term, reliable power, building on our environmental strengths, through a combination of a strong BC Hydro and BCTC, and a strong private sector, in a way that will keep our customers electricity costs at a low level.

The cornerstones of this path are:

We set a goal of energy self sufficiency in this province, as it relates to electricity for domestic consumption.

This will be opposed by some, who would rather see reliance on imports. Again, some day we may have a more secure world, with better transmission links between us, with less political risks in terms of the United States and its likely need for more energy from us. But we can’t bank on that. We currently rely for imports to the tune of about 12% of our demand, in years when we have low water conditions in the Province. Faced with upwards price pressure, and scarcity, this puts a high value on security of supply. We have a legal obligation to serve our customers. “Not enough electricity” is not an option for us.

Going forward, then, I believe we should have a preference for long term supply security at a known cost. We should advance long term acquisitions instead of trying to “time the short term market right.”

Remember – if we are wrong and buy more than it turns out we need, we can usually store it and sell it in a reasonable time. If we are wrong and we buy less than it turns out we need, and if I’m right, then we will have increasing costs and scarcity, the cost of that would be considerable.

We build on our strengths in Demand Side management – Powersmart – through a combination of programs for customers, rate structures, and education, so that we tap the ingenuity of our customers and of the private sector to use new ideas and new technology to reduce our energy intensity in this Province.

Demand Side management will continue to grow in prominence. If we work together to use it, then we can achieve the result that our customers see their electricity bills shrink over time, even as economic activity in the Province grows.

We are already counting on it to offset 35% of incremental demand over the next ten years. And it is working. Two years into that plan, we have met or exceeded our goals to date.

And you, our customers, are seeing the benefits already. Large ones like UBC and YVR have already saved millions of dollars through energy efficiency investments. The same is happening for schools and hospitals. One school district in Prince George, for example, achieved annual savings of $150,000 beginning last year by reducing their consumption by ten percent. And they are on track to save more this year.

We need a combination of programs, rate options, and education, to allow the potential for demand side management to be unleashed. We still consume too much in our society – too much of so many things. We need to get everyone thinking about resources – like electricity and water – in the same way they have learned to think about recycling paper.

To meet the expected demand for energy, we maximise the contribution that can come from small and medium sized IPPs, focussing especially on renewable/green projects.

We combine that with cost-effective projects on the Peace and Columbia systems, which will provide capacity for the system that the green IPP projects typically lack.

This is an important two-step. We are confident we can meet the government’s policy of 50% of new supply coming from new, clean sources. We may even exceed it. But we need to meet demand for capacity as well as energy. Small green projects in particular tend to supply energy at a reasonable price, but they are not there all the year round, or when you most need them. Some of the capacity upgrades which we could do on the Peace or the Columbia, are the opposite – they add capacity, but you would not necessarily produce more energy all the year round from those places, because the water isn’t there. So by combining the two, you have a low environmental impact, low-cost solution for the Province. And of course such projects will go through a regulatory process to establish that they indeed are the right solutions.

We work with BCUC to support BCTC in its goal of planning for and executing the Transmission upgrades that will be needed to do the above.

Michael Costello will no doubt talk about BCTC’s role. Our role here is to explain our needs as we see them, and help the debate at BCUC to be as clear as possible.

We work with the private sector to ensure that we achieve the right balance of supply, and that there is a strong industry with solid roots, to ensure choices in the future.

I actually see the private sector involved in this in two ways – through IPPs delivering power, and through Demand Side management projects large and small. The IPP side is ably represented here today; as for the Demand side, they include our customers as well as a host of larger and small companies.

In terms of our customers, I’ve already given you some examples of the entities involved. I know that some members of the IPABC have been critical of our DSM programs, and I hope that they will see that a creative combination of both approaches is the way forward for all of us.

What we must do at BC Hydro is keep learning how to work constructively with IPPs. This is a tough industry to enter, and it is in all of our interests to work together with the IPPs, BCTC and the BCUC to ensure that the rules lead us to make the right economic decisions, and that the rules allow for enterprising companies to succeed. At BC Hydro we will keep working on our processes and on our attitudes and relationships, to see that this happens. We don’t want to drown IPPs in a reservoir of bureaucracy.

We keep ourselves aware of and involved with new technology ideas that could revolutionise our business, but we do not take the risk of assuming that such breakthroughs will occur within a short time.

New technology on the supply side would be great, and work will continue on it. We will keep ourselves abreast of trends, and take leadership roles where appropriate.

On the demand side, we believe that the industry has advanced to the point where if there are the right economic incentives – such as DSM programs, and rate structures – together with the right public support – achieved by education –then ideas will appear and be implemented.

Work together to build a superb regulatory structure This is a small enough Province, and we are small enough in number, that we challenge ourselves to work with Robert Hobbs and his Commissioners and Staff to build on the excellent foundation that we already have. That is up to us as much as it is up to them, because it is a function of the creativity and balance we can show in bringing ideas to the process.

On this, I know I and all of us at BC Hydro have a lot to learn – but I also believe that we can get there.

Centers of Excellence

If you put together everything that I’ve said, there is room for BC to become a Center of Excellence for that large space where environmental and electricity industries intersect – we can be leaders in green power, in trading green certificates, in hydro power, in demand side management and in new fuel sources like hydrogen. Growth could go well beyond our borders.

Costs

Can we do all this at a reasonable cost? I think we can. We are feeling our way here, but our initial work – which we will start to show in the IEP we file on March 31st – suggests that the real costs of this type of portfolio need not lead to large cost increases. It’s up to us, like any business, to learn to be more productive, year by year, so that we minimise overall cost increases.

Conclusion

So I’ve outlined some steps that, taken together, can be seen as the foundation of a coherent vision for the future of BC in terms of electricity – energy self sufficiency; build on Power Smart; combine Green IPPs with Hydro capacity additions; work constructively between BCH, BCTC and the Private sector; build the right Transmission support; follow technology closely but don’t rely on it; build a great regulatory structure; and build a center of excellence for electricity/environmental growth; and keep our cost advantage.

As I said near the beginning, these are not actions that BC Hydro can, or should, take unilaterally.

Our role is to help provide a vision, and to work with others to see that it is achieved.

There are, I know, many alternative paths.

I think the vision that I’ve just sketched out is an exciting one that is very achievable, and it can only be enriched with the ideas of others.

Building a plan together, and implementing it, is a great opportunity, and we at BC Hydro look forward to working with you on it in the next few years.

Thank you.

Posted by Arthur Caldicott on March 23, 2004