Power Play: B.C.’s Electricity Dilemma

The screaming, the booing, the loud cheers from the 850-plus crowd at every insult: that wasn’t the worst of it for Jako Krushnisky, president and CEO of Run of River Power Inc. “What was particularly repugnant was to have some guy’s six-year-old daughter coaxed to come up to the table and provide some work of art,” he said.

The screaming, the booing, the loud cheers from the 850-plus crowd at every insult: that wasn’t the worst of it for Jako Krushnisky, president and CEO of Run of River Power Inc. “What was particularly repugnant was to have some guy’s six-year-old daughter coaxed to come up to the table and provide some work of art,” he said.

“That’s not fair.” It was late March and Krushnisky and his staff were at a public meeting in Pitt Meadows to explain why the crowd should support Run of River’s proposal to build seven power projects along tributaries of the Upper Pitt River. Specifically, Krushnisky was trying to justify the request to erect a power line across the northern end of Pinecone Burke Provincial Park. The raucous meeting, given extended media coverage, was attended by prominent broadcaster Rafe Mair, a who’s who of environmentalists, B.C. NDP leader Carole James, First Nations representatives and local citizens. All of them were determined to stop this project (or any similar venture) dead in its tracks before the provincial government could move it forward. Their wish was at least partially granted the next day when Minister of Environment Barry Penner pulled the plug on the application to run the power line through the park. Not the project itself, mind you, just the power line. Although technically still alive (at least at press time), the project has had its economic feasibility severely damaged. The rejected power line was by far the cheapest way to connect this privately owned venture to the provincially owned BC Hydro power grid, the alternative being an expensive line under Pitt Lake.

Not mentioned in any media coverage, nor apparently brought up at the meeting, was the fact that Pinecone Burke Provincial Park already has a very large – the largest in the BC Hydro transmission network – 500-kilovolt steel-towered transmission line running in plain view across the southern end of the park. Also not mentioned was the fact that the B.C. Transmission Corp. (the BCTC was created in 2003 after the provincial government split BC Hydro into a generation company and a transmission company) currently has an application before the B.C. Utilities Commission involving the same area. BCTC proposed twinning the 500-kilovolt line along a parallel right-of-way granted when the original line was constructed and before the park was created. It’s part of BCTC’s 10-year, $5.1-billion system expansion and upgrade, and the 240-kilometre twinning of the existing line outside Merritt to a substation in Coquitlam’s Westwood Plateau is one of the first pieces. Krushnisky’s plan included placing 22 wood poles through a high-elevation pass at or near the tree line, which he claims would have minimal impact on the environment, apart from the installation by helicopter. The 500-kilovolt line proposed by BCTC involves much bigger steel towers rather than wood poles. “Not only that, it goes over a golf course and private homes. We have none of that,” Krushnisky points out. He explains that his company had a camera in the park last year on the proposed right-of-way, and it recorded one hiker. He believes Penner’s decision was pure politics. “There was a lot of noise. Someone said make it stop.” He resents the fact that none of the environmental work done over a two-year period was reviewed, and he’s upset that a decision was made before the process had run its course. Welcome to the emotion-packed world of power generation and transmission in B.C. For decades it was BC Hydro alone that bore the brunt of widespread opposition to power dams and transmission lines. And for much of that time, the forecasts used to justify new power projects turned out to be somewhat exaggerated. Project after project was shelved – until now. With a significant increase in the province’s population and little in the way of new generating capacity constructed, a crunch is coming. California faced a similar crisis in 2001, handled it badly and suffered a combination of serious brownouts and outrageous price increases, largely because the state had to buy emergency power on the spot market at a time when everyone else also needed it. With the government’s new energy policy, the battle lines have shifted as Victoria combines a push toward “green” energy (for power generation, Victoria defines “clean and renewable” as no greenhouse gas emissions; flooding a valley isn’t off limits) with a determination to let the private sector play a bigger role in developing the power BC Hydro needs. BC Hydro has neither the capacity to meet projected demand, nor the political backing to build it on its own. Over the next two decades, the Crown corporation expects electricity demand will increase between 25 and 45 per cent, which is equivalent to the amount of power needed for between 1.4 million and 2.5 million new homes. The gap between what BC Hydro can generate with existing facilities and expected demand will be 30,000 gigawatt hours (this doesn’t include output from the Burrard thermal plant, as BC Hydro has yet to decide if it will be shut down in the near future). [pagebreak] An aggressive campaign aimed at residential and industrial users is, theoretically, going to reduce that increase in demand by half. Team PowerSmart television and print ads, featuring sporty B.C. celebrities like BC Lions football veteran Lui Passaglia and the Whitecaps’ Bob Lenarduzzi, are already exhorting British Columbians to turn off their bathroom lights, unplug their cellphone chargers and dim their computer screens. But what about the remaining 15,000-gigawatt-hour shortfall? How will private investors provide the necessary spark to keep B.C. out of the dark if every power project application turns into a public shouting match? When the B.C. Liberals first came to power in 2001, the province had 26 independent power projects of various types. They were a mix of natural-gas-fired, wood-fired and run-of-river projects, as well as some fairly large hydroelectric projects, including Rio Tinto Alcan’s Kemano plant in Kitimat, which has been selling surplus power to BC Hydro since the 1950s. According to the Independent Power Producers Association of B.C. (IPPBC), there are now 44 operating plants of all types, generating enough electricity to serve 500,000 homes; while most of these serve private industry, powering smelters and other industrial applications, any surplus is diverted to the public grid. The combined value of these privately owned projects is $2 billion. Together, they represent nearly 10 per cent of the province’s 11,000-megawatt total system capacity. For decades BC Hydro has been able to use that capacity to generate between 43,000 and 54,000 gigawatt hours of electricity, depending on water levels in the hydro reservoirs throughout the province. A fortuitous climate differential has allowed BC Hydro to use its capacity in the summer, when B.C. doesn’t need as much power, to sell excess power to the U.S. market, mostly to California to run air conditioners. In the winter, when demand is higher in B.C., the direction of the flow changes, and BC Hydro buys power from places such as Washington or Oregon. But because BC Hydro’s system capacity has not kept pace with B.C.’s growing population, BC Hydro has imported more electricity than it exported in each of the last five years: 2,000 gigawatt-hours more in 2001, 5,100 more in 2004 and 7,400 more in 2005. IPPBC head Steve Davis says BC Hydro’s ambitious PowerSmart energy savings plan includes “the most heroic conservation targets in North America,” but adds, “Even that will not fill the gap.” While Victoria’s energy policy mandates that half of the 30,000-gigawatt-hour shortfall between Hydro’s current capacity and projected demand must come from conservation by 2020, it also states that the province must be self-sufficient in electricity supply by 2016, that all new power generation have zero net greenhouse gas emissions, and that 90 per cent of all electricity in B.C. must come from clean, renewable sources. Effectively, that means no coal-fired plants, unless 100 per cent of emissions can be sequestered; no natural-gas-fired plants, unless they produce zero greenhouse gas emissions; and no nuclear plants. The policy also instructs BC Hydro to buy power from small- and medium-scale independent private-sector power producers. Beyond improvements and additions to the existing dams, BC Hydro must consider only large-scale power projects (such as the proposed Site C dam on the Peace River) for in-house production. The kinds of power-generating activities Victoria has in mind range from tidal flow, wind, solar and biomass (wood waste) projects to the run-of-river hydro projects that are now the subject of so much controversy. And that’s where the current backlash comes from. An ideological dispute is now playing out between groups that believe that private-sector power projects such as Run of River’s Upper Pitt River project should be banned outright (the NDP has called for a moratorium) and those who believe the private sector should play a larger role in power production.

A surveyor at Upper Pitt River

There’s an irony in all of this. Many of the private power ventures, such as Jako Krushnisky’s river-based hydro project, are considered “green” because – in simple terms – engineers stick a pipe in a flowing river (usually with a weir to provide a big enough pool), run the water through a turbine in a powerhouse and put the water back in the river again. Environmentalists raise the spectre of potential impacts on fisheries, the need for roads to access the sites, the obvious construction impacts – and, of course, the need to connect the power plant with the grid through a network of transmission lines through the forest. But in every other respect – self-sufficient, zero net emissions, a clean, renewable source – Krushnisky and his private counterparts are fulfilling the province’s green energy policy to a T. Pushing much of the opposition to private-sector involvement in power production is a volunteer organization called BC Citizens for Public Power. On the board of directors are Gwen Barlee, policy director with the Western Canada Wilderness Committee; SFU associate professor John Calvert, who writes extensively on energy policy issues; and three senior executives with the Canadian Office & Professional Employees Union, the Canadian Union of Public Employees and the International Brotherhood of Electrical Workers. While there is clearly some self-interest in this for the public-sector unions, board members genuinely believe that the province has been served very well by BC Hydro as a Crown corporation and that public ownership of our energy assets should continue. [pagebreak] But many of the province’s energy experts believe the debate has now been hijacked by that mindset. Power projects, they say, should be judged entirely on their merits and environmental impact – not on whether they are public or private. “[The public-private] argument is ludicrous to me,” says SFU’s Mark Jaccard, a professor in the School of Resource and Environmental Management. “It is totally ideologically bound and has no correspondence to the evidence.” Not that many years ago, he recalls, BC Hydro proposed building a natural-gas pipeline to Vancouver Island to fuel a gas-fired generating plant – with the very same environment groups and citizen groups and academics (including Jaccard) working in the B.C. Utilities Commission to defeat Hydro’s gas projects. “This,” he adds with a tinge of sarcasm, “was the wonderful Crown corporation people are talking about.” Jaccard is a member of the National Roundtable on the Environment and the Economy and lead author of a global energy report due to be released in 2010 by the Vienna-based International Institute for Applied Systems Analysis. He expresses amazement at the insistence that all power in the province be generated by a public utility, pointing out that if nothing else, the amount of money at risk in one of these projects would come out of the taxpayers’ pocket if it fails. “When Hydro gets it wrong – they spent $50 million to $100 million on that whole gas pipeline project – we all pay for that. Some [independent power producer] comes along and says ‘I’m going to get rich, do a run-of-river project, [build] a transmission line right through a park.’ When it blows up in his face, I as a taxpayer don’t lose any money. It’s all private risk. These guys who are all into this public power thing, they need to explain the tens of millions that have been blown on risky public projects that didn’t work.” Consider the sorry history of Ontario Hydro and its nuclear plants, which Toronto-based Energy Probe claims cost the province its triple-A credit rating and added billions in cost overruns. The Sierra Club of Canada charges that Ontario’s Pickering A reactors – just recently refurbished and brought back online – have been paid for three times over by taxpayers at a total cost of more than $5 billion. BC Hydro itself has spent millions on projects that went nowhere. Examples: a proposal for a thermal coal generating plant at Hat Creek in the ’80s, power dams on the Stikine and Liard Rivers and, ironically, the original Site C proposal itself, shelved in 1983. David Austin, a Vancouver lawyer who specializes in energy issues, says opponents of the private-sector power companies formulated a series of arguments explaining why privatization is a bad idea, none of which hold much water in his opinion. “Well, it is ideological,” he says. “[The Western Canada Wilderness Committee] and the NDP and the BC Hydro unions are all getting together to subvert a process that has been going on since the mid-’80s. [Independent power projects] have been part of the mix and will continue to be part of the mix in B.C.” He likes to explode what he calls the myths being perpetuated that B.C.’s rivers are being privatized along with electricity supply. The biggest misconception, he argues, is that additional electricity can be generated without any environmental impact. “The private sector has been demonized for any type of private generation development and transmission impacts. That’s the ideology. But if Hydro builds Site C, it will need another 1,100 kilometres of power lines with associated roads and environmental impacts. There is no environmental-impact-free electricity.” Marshalling the other side in this debate is John Horgan, NDP MLA and energy critic, who has been like a thorn in the side of Richard Neufeld, minister of energy, mines and petroleum resources, while the public-private battle rages. “There needs to be a balance,” he says. “It’s deceptive to say that these are mom-and-pop power companies just trying to compete against the big, bad government. And that’s how they characterize this debate.” Having said that, Horgan adds he isn’t wedded to an all-public system. “Were I the energy minister tomorrow, it wouldn’t be the end of independent power production. It would only mean they would be economic projects of high value to the Crown and to ratepayers.” Horgan argues that once the private contractor has built the project, it should be turned over to BC Hydro, an arrangement similar to the use of private contractors to build roads and highways in B.C. Donald McInnes, vice-chairman and CEO of Plutonic Power Corp., isn’t interested in that. Plutonic Power is now building its first run-of-river hydro project: a $660-million, 196-megawatt project on the East Toba River at the head of Toba Inlet, north of Powell River. The company has another 40 potential sites, 24 in what it calls a “green power corridor” in the same area as Toba River. “Hydro couldn’t possibly come up with all the different kinds of projects allowed under the energy plan,” McInnes points out. “They don’t have the people capacity in-house. There were 38 projects awarded contracts under the last tenure, and that means managing 38 concurrent permitting processes, 38 concurrent First Nations consultation processes, 38 concurrent construction processes, 38 different financing packages, and on and on.” Neufeld says his government will not be moved off its program, and BC Hydro will continue to issue calls for power from the private sector. He does not believe BC Hydro is capable of filling the entire 15,000-gigawatt-hour gap by building new, large-scale generating projects. The only project on BC Hydro’s planning horizon at the moment is the resurrected Site C project, which would provide only 900 megawatts of capacity or eight per cent of the system. “We need new generation,” Neufeld agrees. “We’re not changing our course at all. One project that got some debate because of a transmission line through a park – that won’t stop the process.” [pagebreak] In support of his argument, Neufeld cites details underlying the California brownouts as a cautionary tale. Ignoring growing demand, the state failed to build sufficient generating capacity and also stumbled in not creating enough transmission capacity to access power from elsewhere. On top of that, a badly botched deregulation scheme left the power utilities with their hands tied behind their backs, unable to pass on to their customers the ever-increasing costs of buying power on the spot market. Some utilities declared bankruptcy. The entire system collapsed, leading to the brownouts. Complicating California’s disaster was a market-based system of power-trading (Enron was involved) that artificially drove prices through the roof. The state demanded refunds and refused to pay its bills. (BC Hydro is still owed nearly $300 million for power it sold at the time.) “Maybe it takes a brownout or two here,” Neufeld admits. “But that’s part of the reason we are determined to regain self-sufficiency. Even with Site C, we still need 11,000 gigawatt hours and we want to build that in B.C., not buy it from the U.S.” No decision has been made on Site C: it’s currently in the “project definition and consultation” stage, with completed construction not expected for another 10 years. But Neufeld recognizes that it has its own set of environmental impacts and will likely spark another outburst of opposition. First proposed in the 1980s, BC Hydro’s estimated $6.5-billion Site C dam would, if built, be the third hydroelectric dam on the Peace River in the northeast sector of the province. The project was abandoned in late 1983 after the B.C. Utilities Commission conducted extensive hearings into its environmental impact and economic feasibility. It was ultimately decided the project was not needed. Current BC Hydro president and CEO Bob Elton declined BCBusiness’s request for an interview on this and other BC Hydro issues, and repeated phone calls to public affairs spokespersons seeking comment from other BC Hydro officials were not returned. Ruth Ann Darnall, on the other hand, is more than happy to talk about Site C. As an environmental activist with the Peace Valley Environment Association, she sees this project as a sword of Damocles hanging over the Peace and would like it removed permanently. Having put the association into hibernation after the 1983 victory, Darnall and her colleagues reactivated it about three years ago when rumours first started to spread that the project was back on BC Hydro’s drawing table. “I didn’t think I’d have to talk about this again in the 21st century,” she says. “It’s ludicrous that we’re still thinking of flooding a river valley for the capacity they say they are going to get.” In early spring, BC Hydro published the results of what it calls a “pre-consultation” phase, in which consultants were dispatched to Peace River communities to ask how upcoming public consultation should be structured. Darnall said the process was very frustrating to those who oppose the dam because “they are going from the basis that they want to build it, and they want to ask us how to do that. But the most important question is whether or not it should be built at all.” Darnall and her Peace River colleagues consider Site C as yet another example of how the environment in the north is seen as expendable in order to supply additional electric power needed in the south. “They should be generating their own energy,” she says. “When Neufeld talked up here about France burning trash to generate power, we thought, ‘Wow, that’s a good idea, and the trash is all down there.’ Where the demand is, that’s where the generation should be.” Neufeld concedes that – never mind the current skirmish over private versus public power – Site C is where the real environmental protest will be galvanized. As MLA for Peace River North, he’ll be right at home when the war gets underway. “We can put one more dam on the Peace,” he says, “but let me tell you, there’ll be lots of controversy.” Whether or not BC Hydro tries to forge ahead with Site C, and whether or not there’s any change in the province’s energy policy and the role of independent power producers, the protest last spring over the Run of River Power proposal for the Upper Pitt River signals there’ll be lots of bumps on the road to self-sufficiency. Says Plutonic’s Donald McInnes, “Those activists are now tasting and smelling victory again, and they’ve been re-empowered, been on talk shows, printed posters, got some buses going. . . . They are all fired up. This has seeded what will probably become a broader campaign.” Run of River’s Jako Krushnisky appreciates McInnes’s “buses” comment, noting that a sign-in sheet his company circulated at the Upper Pitt meeting in Pitt Meadows indicated only 37 per cent of the people actually lived in the area; the majority of attendees came from elsewhere in the Lower Mainland. The war over B.C.’s power supply will be a long and hard-fought campaign – and according to SFU’s Mark Jaccard, likely an unwinnable one for politicians. “It’s hard to get society to stop using electricity; we are going to produce more,” he says. “But I don’t think you’ll ever have a happy life doing electricity projects in this province – public, private or whatever.”