Terrace Standard, June 09, 2010
BC HYDRO won’t reveal exactly how much it’s paying an Alberta company for the power to come from a large run-of-river project north of here, but says it’s within the range of what it’s paying companies elsewhere.
And corporation official Susan Danard said the price range – $120 to $130 a megawatt hour – is a good deal for the power to come from the Forrest Kerr project owned by AltaGas from Calgary.Forrest Kerr involves diverting water from the Iskut River and pushing it through turbines rated at 195 megawatts, enough power to supply approximately 70,000 homes.
“Ratepayers should be happy with that price,” said Danard of the amount BC Hydro will pay AltaGas.
That price range of $120 to $130 per megawatt hour is what BC Hydro is paying other independent power producers it has struck deals with since it intensified its search for clean power in 2008.
“It’s for 60 years. With what is going on, try getting that price in 10 or 20 or 30 years from now, I don’t think you will be able to,” she said of the AltaGas deal.
The 60-year deal, the longest signed so far by BC Hydro with an independent power producer, is inflation protected and tied to the consumer price index.
“For us, this is a very cost effective deal,” said Danard. “A long term agreement is actually pretty good because we know what the cost will be and that gives us certainty.”
AltaGas, through its Coast Mountain Hydro subsidiary, must build a line of about 35km in length to connect to the provincial government’s planned Northwest Transmission Line which is scheduled to end at Bob Quinn on Hwy37 North.
The Forrest Kerr project is going to cost $700 million and AltaGas is paying the provincial government $180 million to tie into the Northwest Transmission Line.
That $180 million is a little less than half of the expected $404 million cost for the transmission line which is to start off from the Skeena Substation near Terrace and reach 335km north to Bob Quinn.
Without the Northwest Transmission Line, AltaGas would have had to build its own line south to Meziadin Junction on Hwy37 North where the provincial electrical system now ends.
Danard said people need to realize that independent power producers must cover their own costs to tie into BC Hydro’s system.
“Transmission costs must be included within that,” said Danard of the amount BC Hydro pays independent producers.
AltaGas is now being called an anchor tenant for the Northwest Transmission Line, converting it from a line meant to stimulate the development of mines in the region by providing reliable power to a line that also encourages the development of independent power projects.
As it is, AltaGas by itself has two more potential run of river developments in the region.
AltaGas is the second company to base a business plan on the Northwest Transmission Line.
The other is Imperial Metals which needs power if it hopes to develop its Red Chris copper and gold property located north and then east of Bob Quinn.
It has approval to build its own line south to join up to the end of the Northwest Transmission Line and is now in technical and financial discussions with BC Hydro and other officials.
BC Hydro has been given orders by the province to come up with a tariff for other customers of the transmission line to help pay for the Northwest Transmission Line’s cost.
The $180 million from AltaGas and an already-announced $130 million from the federal government leaves $94 million to be covered by BC Hydro customers.
Although BC Hydro’s contract with AltaGas and its Coast Mountain Hydro subsidiary is worth billions of dollars over its 60-year length, it won’t be scrutinized by the BC Utilities Commission.
The commission at one time examined BC Hydro power agreements but the provincial government’s Clean Energy Act allows exemptions.
The Northwest Transmission Line is one of those exempt projects, making the AltaGas deal exempt as well, says a provincial energy ministry official.
“Because the cost sharing of the [Northwest Transmission Line] with industry was a critical piece of the .... project, and a part of that cost sharing arrangement with Coast Mountain Hydro is the Electricity Purchase Agreement with Coast Mountain Hydro, this is considered part of the ... project,” wrote Jake Jacobs in an email.
