BC Hydro Forced to Pay Exhorbitant Prices for IPPs, Passing Over Cheap Power as Reservoirs Overflow

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Read this story from Scott Simpson in the Vancouver Sun, reporting on the glut of cheap hydroelectric power in BC and Washington State due to overflowing reservoirs from a big Spring runoff; despite this, BC Hydro is forced to pay top dollar for private power, unable to avail itself of more affordable alternatives. (May 12, 2012)

After a bumper year for precipitation in the Pacific Northwest, BC Hydro stations around British Columbia are sitting idle while independent power producers run flat out.

There’s so much water available for hydroelectric power that a Washington-Oregon utility, which runs full-time to protect salmon and trout, is paying other utilities to take electricity off its hands.

That means bargain-priced import electricity is available to BC Hydro from the Bonneville Power Authority, but it’s a bittersweet opportunity.

It’s difficult for BC Hydro to tap into the cheap power because of contractual obligations to purchase power from about 75 independent power producers (IPPs). Hydro is forced to buy from IPP operators, including big industrial ones such as Rio Tinto Alcan and Teck Resources, even as its own generation stations wait on standby. For example, at Peace Canyon generating station downstream of W.A.C. Bennett Dam on the Peace River, the primary source of hydroelectricity for all of B.C., the turbines are sitting idle for the first time in a decade.

Prices paid to IPPs vary by season, from an average winter high of $100 to a springtime low of about $60. By contrast, the Bonneville price in recent weeks has averaged less than $20 US.

Overall, according to Hydro’s 2011-12 annual report, IPPs earned $676 million from Hydro in the 12-month period ending March 31 ­— at a price per megawatt of power that was more than twice the cost of imported electricity during the same period of time

The water is pouring in just as warmer spring temperatures push down electricity demand. Data this week from the U.S. Energy Information Agency shows Oregon with 172 per cent of its long-term average precipitation supply, and B.C. with 131 per cent.

Meanwhile, a continuing U.S. economic recession is curtailing industrial power requirements south of the border.

That means there’s no market for B.C. electricity exports to the U.S. Nor do B.C. residents need Hydro to crank up domestic production.

B.C.’s IPP community includes wind, large industrial hydro and gas-fired generation — but most operations are small-scale run of river hydroelectric installations.

The textbook case is the watershed of the Squamish River system.

Hydro is taking a pass on all the water running into its Daisy Lake reservoir near Whistler. Instead of diverting the water from Daisy via pipeline to a BC Hydro generating station on the Squamish, the Crown corporation is allowing the water to flow directly downstream into the Cheakamus River.

Meanwhile, on two other Squamish River tributaries, the Ashlu and the Mamquam, Hydro is paying IPPs to generate power for the British Columbia electricity grid.

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