Tag Archives: ipp

Gwen Barlee Op-Ed: Lifting the ‘Green Cloak’ that Covers Private River Power Projects

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Read this op-ed in the Vancouver Sun by Gwen Barlee of the Wilderness Committee, pulling back the ‘green cloak’ that masks the economically and environmentally destructive nature of private river diversion projects in BC. (Sept. 17, 2012)

When I was growing up my mother used to warn me to look out for a wolf in sheep’s clothing. What she meant was to be cautious about people and situations that are not what they seem. This idiom aptly applies to the issue of independent power projects (IPPs) in British Columbia.

At first blush IPPs, notably river diversion projects, seem like a visionary and green solution to producing low carbon energy. Indeed, this is what the Wilderness Committee, a BC-based environmental organization, first thought when we were introduced to the concept a decade ago, and it is what the IPP industry vigorously advocates, as evidenced in Paul Kariya’s commentary to The Vancouver Sun on September 3rd.

Unfortunately, the reality is far different.

History shows that IPPs took root in BC when the provincial government introduced an energy policy in 2002 which forbade BC Hydro from producing new sources of hydroelectricity. This led to over 800 creeks, rivers and even lakes being “staked” by private power companies who were eager to capitalize on the rich electricity contracts BC Hydro was forced to issue. The move to stimulate IPPs in BC had nothing to do with tackling climate change, as the BC government at that time actively opposed the implementation of the Kyoto Protocol. Instead, it had to do with electricity privatization and deregulation – twin concepts sweeping North America at the time.

Today, because of a horribly misguided energy policy, BC Hydro is now on the hook for over $50 billion – yes, billion – in sweetheart energy purchase agreements to IPPs. It is important to remember that IPP electricity produced here was never meant for BC. It was slated for California, except California doesn’t consider river-diversion projects to be green and it won’t pay a premium for the power.

So here we sit, with a publicly-owned utility saddled with an enormous debt for power we don’t need. BC Hydro, once the envy of North America for providing our province with reliable low-carbon electricity, now hovers on the edge of bankruptcy unless it can pass on its considerable debt to ratepayers.

 

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BC Hydro’s $30 Billion Blind Gamble

Economics, Hydropower, WATER, , , ,
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I was astonished to read, “A new forecast by BC Hydro shows electricity demand in the province is expected to grow by 50 per cent over the next 20 years,” in a recent article from the Vancouver Sun. To understand why I use the term “astonished”, one must delve deeper to see that this statement is not supported by Hydro’s own data and other global economic data. Rather than taking everything at face value, I’ve learned it’s critically important to question the statements made by BC Hydro and the current provincial government. After watching a documentary on the collapse of Enron and how wild forecasting and lack of genuine oversight led to one of the largest financial failures in modern history, the resounding statement was, “ask why” – wise words to follow to avoid repeating history.

It will be of help to the reader to understand some of the financial implications of BC Hydro’s forecasting. Discussion should start with the understanding of the unit used to measure and report about electrical energy. It is the Gigawatt hour (GWhr) per year, as you can see in the chart that follows. Using the public values associated with the proposed Site C generation plant, it takes $2,000,000 of borrowed money to produce one GWhr/year of usable energy. Keep in mind as you read what follows, your Government and BC Hydro are apparently intent on borrowing and spending, in your name, $30,000,000,000 by 2017. If left to follow the path set out in the most recent BC Hydro forecast, the corporation’s total liabilities will explode to $80,000,000,000! As a shareholder, ratepayer and guarantor of the debt are you ready for this experience?

This is an evidence-based discussion, which means looking at actual domestic demand from BC Hydro’s annual financial reports in concert with various historical demand forecasts by BC Hydro. This data is shown in Graph 1, below.

It can be seen from this graph that the domestic demand had a significant downturn starting in 2008 and that we are currently at pre-2005 levels. Comparing BC Hydro’s forecasts with the actual demand clearly indicates how poorly they match up, even failing to predict any degree of decline.

What is arguably even more striking than BC Hydro’s apparently poor forecasting skills is the trend in their forecasting. According to their predictions, the rate of increase in demand is greater for each forecast, illustrated by a sharper rise for each subsequent forecast. This begs the questions as to why this would be the case and if there is any justification for it.

BC Hydro has previously stated that this increasing domestic demand is based on increasing population. However, population growth, plotted in Graph 2, can be seen to be fairly linear from 2003 onward. With the population increasing at a fairly steady rate, one would similarly expect domestic demand to increase at a constant rate, if modelled on population growth. Added to this is the growing recognition that per capita demand for electricity has been declining since 2008.  An increasing rate would result from accelerated population growth, which is not the case. This becomes most troublesome with the 2010/2011 forecast, which portrays a dramatic rise in the forecasted rate of increase without the associated population growth to warrant it. What is the justification? There is none – it is a deliberate exaggeration of provincial demand.

Graph 2 includes BC Hydro’s longer term forecast to 2030. In addition, it shows a projection by Erik Andersen that utilizes a per capita demand value for residential plus commercial customers coupled with an expectation of industrial demand. The latter is reflective of new industrial customers having to pay higher than the “legacy rates” that are available to some established large customers.

By presenting an exaggerated need for more domestic generation capacity BC Hydro is giving cover for its call for new Independent Power Producer contracts and for projects like Site C. This is a continuation of a corporate culture documented in the book White Gold by Karl Froschauer.

What BC Hydro and the current government are ignoring is the present state of the global economy.  Of the many global business indicators available one of the best is the Baltic Dry Cargo Index. This historical index combines dry cargo shipping charter rates with volumes. It is considered by professionals as the only uncontaminated global index because it is not subjected to speculative “gaming”. It is also considered one of the best leading economic indicators available to the public. Graph 3, below, adds the Baltic Dry Cargo Index to Graph 1 (above).

It is interesting to note how closely the BDCI matches the trend in domestic BC electricity demand. To ignore the current global economic climate, which domestic demand appears to parallel, is a seriously large financial gamble.

BC Hydro has a well-documented history of exaggerating demand to serve corporate interests and that pattern is repeating. There is no evidence to support their claim and BC citizens need to start asking “why?” to avoid the blunders of the past reoccurring. In terms of the current state of the global economy, there is trouble out there and you don’t go stepping out into new debt at a time like this.

A recent article in the New York Times has shown that Asia has been “falsifying economic statistics to disguise the true depth of the troubles”, which is why a global indicator such as the BDCI is so important.  Folks who aren’t making their “numbers” resort to “Enron-style” information flow. China’s sputtering economy is facing tumbling electricity demand, yet that is largely being hidden.

We must insist on evidence-based projections of demand that take into account the global economy as opposed to wishful thinking on BC Hydro’s part. The latter has the tendency to produce stranded assets at the expense of the citizens of BC.

Sandra Hoffmann is a Ph.D chemist specializing in water chemistry and is the former coordinator for the Peace Valley Environment Association. Erik Andersen is an independent economist and regular contributor to the Common Sense Canadian.

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Feds Scrap Bute Inlet Private Power Project’s Environmental Assessment

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The Canadian Environmental Assessment Agency announced earlier this week that it is terminating the environmental assessment of the massive proposed Bute Inlet private river diversion project.

The Agency explained the decision in a short media release:

Bute Hydro Inc. had proposed to construct 17 run-of-river hydroelectric facilities in the vicinity of Bute Inlet. The project was referred to a panel review in May 2009 and the Panel appointed in the summer of 2009. In March 2011, as Bute Hydro Inc. did not intend to move forward with the environmental assessment process, the Minister of the Environment disbanded the Panel and released the Panel members from their obligations under the Canadian Environmental Assessment Act.

Given that the proponent (currently Alterra Power Corp.) has indicated that it does not plan to proceed with the environmental assessment process in the near future, Fisheries and Oceans Canada, Transport Canada, and Aboriginal Affairs and Northern Development Canada, the responsible authorities, have confirmed that they will not exercise a power or perform a duty or function in relation to the project.

The proponent may apply to commence a new environmental assessment process if and when it determines that it wants to proceed with the project proposal.

The news is somewhat surprising, given the announcement by proponent Alterra Power earlier this month that it has signed a deal with the local Sliammon First Nation to build transmission lines for the project through its traditional territory.

It is not clear whether the withdrawal of the project from the environmental process is connected to a recent announcement by the Harper Government to eliminate thousands of environmental assessments and to “streamline” the assessment process via changes enacted through the government’s omnibus budget bill.

As the above statement from the Canadian Environmental Assessment Agency notes, “the proponent may apply to commence a new environmental assessment process if and when it determines that it wants to proceed with the project proposal.”

However, private power projects and BC Hydro’s accounting practices have come under considerable scrutiny over the past several years from the province’s Auditor General, a former Hydro CEO, and independent economists. Serious concerns have also been raised about the environmental impacts of these projects – with revelations of widespread fish kills from several projects in operation.

The Bute project proposal has lingered at the environmental assessment stage for 3 years, held up in part due questions about impacts on fish – concerns which are heightened in light of the above new evidence of fish kills from similar projects.

Given the size of the anticipated purchase contract the project would require – more than double Hydro’s current plan to purchase an additional 2,000 Gigawatt hours a year of private power – and the NDP’s repeated vow to put a moratorium on new projects, it is difficult to conceive how the project could be revived at this stage, even if the Harper Government were to waive its environmental assessment requirements.

 

 

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Rafe Mair interviewed Adrian Dix earlier this year on his party's positions on the environment and resources in BC

Dear Mr. Dix: A Letter From Rafe Mair to BC’s Future Premier

Canada, Energy and Resources, Oil&Gas, Pipelines and Supertankers, Politics, WATER, Western Canada, , , , , , , , ,
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Dear Adrian Dix,
 
The recent polls show that you and your party have a wide lead over the Liberals and Conservatives – something which gives many of us who care deeply about the environment encouragement, including thousands of us who are not usually supportive of the NDP. It is those people whom I have in mind today.
 
The political spectrum has altered substantially in recent years with a wide gap in centre, which your party is clearly occupying. To do this with success you must address concerns about the nineties when the NDP was in office. Apart from the fact – a big one – that the NDP had, ahem, leadership problems, in fact the NDP had a much better track record in fiscal matters than painted by the “right”, especially when one considers the sudden trauma of the “Asian ‘flu”, which all but ground our forest sector to a halt.
 
The Campbell/Clark Government has, with some success, painted the NDP as a government that bankrupted the province.
 
I believe that you should deal with those issues – though not at length, because voters want to know what you will do, not what you have done. The fact is, however, that the Liberals will present themselves as steady stewards of the public purse, which they clearly are not, and in my view you must be able to match allegations with facts.
 
Before I get to the environment, one other issue. When we sit around the fire relaxing with a toddy, we often muse that it would be wonderful if the federal and BC governments could just get along. The fact is that we are a federated state which sets out – not always with clarity – the powers, rights and obligations of each government. The system is built on tension, not ass-kicking, and the Premier and her party ought to know this.
 
Premier Clark is presently dealing with the Kitsilano Coast Guard issue with kid gloves. That may be a good policy in issues like this but in the larger sense, the people of BC, I believe, want the provincial government to stand up boldly to the Ottawa bully, especially in these days where the Harper government wishes to devastate BC’s environment.
 
This segues neatly into the environment issue. This issue does not lend itself to compromise. One of the “weasel” words from the developer is “mitigation”. You either protect the environment or you don’t, and three obvious issues come to mind: fish farms, private power and the pipeline/tanker debate.
 
On the first, you simply must force them to go on land. I believe it was a mistake to turn that power over to the Feds but that’s been done and we must deal with what we have. I suggest a protocol which requires farms to move on shore within a reasonable time or their licenses will not be renewed. The fish farmers have all denied they do to harm the environment for over a decade and they must be brought to heel. You cannot simply pawn the issue off to Fisheries and Oceans Canada – the people expect you to act.
 
Your position on private power (IPPs) is more than a bit hazy. You seem to be opposed to them but will, after you make the contracts public, still honour the contracts. I realize this is a tricky issue because if you go further, you will be painted as anti-business. Can you not declare that any licenses granted but not acted upon will be taken away? On other proposals, and I especially refer to the Klinaklini, surely you must say to them, “Proceed at your peril”.
 
And, of course, you must revive the British Columbia Utilities Commission – with teeth, as in days of yore.
 
This leads to BC Hydro which, if in the private sector, would be in bankruptcy protection. Much of that unhappy situation results from the IPPs from whom BC Hydro was forced to buy electricity at hugely inflated prices. Hydro has some $40 BILLION dollars in future payments for power it does not need. How can an NDP government deal with this without taking action on these contracts? Isn’t this analogous to the mayor elected on a reform ticket still honouring sweetheart deals between the former mayor and his brother-in-law? These IPP contracts are scandalous payments to the government and its political pals and cannot be protected by “sanctity of contract”
 
Your position on pipelines and tanker traffic is, in my view, pretty solid but must be restated at regular times. I understand that you have postponed your decision on the Kinder-Morgan line until you see what their new proposal is. That probably made sense in the Chilliwack by-election but otherwise makes no sense at all. It is a time bomb now – how can that situation be improved by increasing the line’s capacity?
 
The 2013 election will largely be fought on environmental issues – for the first time in my long life.

You must walk the tightrope of support of our environment and the rightwing allegations that you are anti-business. You must expect that, well before the election, the federal government, with a sweetly smiling Premier Clark, will announce big contributions to the province so that we, too, can get rich out of the Tar Sands and be prepared for that. The answer is like the joke where a man asks a woman to go to bed with him for $50,000. She muses about her obligations to her kids, etc. and blushingly agrees. The man then asks if she will go to bed with him for $50 to which the indignant woman exclaims, “What do you take me for, a common prostitute?” to which the man replies, “We’ve already established that, madam; now we’re dickering over the price.”
 
The lesson is our province is not for sale at any price.
 
Sincerely,
 
Rafe Mair

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The Profiligate BC Hydro

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Most of us, whether we live in Newfoundland, Ontario or on the North side of Burrard Inlet, are required to live in the world of financial reality and discipline; reality as to our incomes and debts.
In recent days, a number of articles have featured BC Hydro and its proposed increase in electricity rates. Perhaps it would be useful for readers to have additional context.

Prior to 2008, most citizens of our developed world participated in the biggest global credit bubble ever seen. In 2008, that financial fantasy ended.

One of the most dramatic indicators of that event, the collapse of international dry cargo shipping, was captured by the Baltic Dry Cargo Index.

The BDCI was designed to record international trade volumes in combination with shipping contract prices.

In June of 2008, the index showed a level of about 12,000 units. A mere six months later it was struggling at about 1,000 units and has not recovered since.

Prudent managers have known of this index for decades. They should also know it provides a leading indicator of international trade; not so at BC Hydro or in Victoria.

A corporate forecast can be considered the statement of investment intentions for its business and a credible forecast incorporates a sense of economic situational awareness.

In its 2003/04 forecast, BC Hydro managed to hit the forecast numbers for electricity sales in 2008; but the exaggeration of future demand included in its 2007/08 forecast showed corporate thinking was still contaminated by the bubble years.

As a result, despite the evidence of decreasing domestic demand for electricity from 2009 on, the 2010/11 forecast indicated that this bullish attitude continued to prevail. And despite the evidence of that shrinking demand, BC Hydro is planning for 14,000 units of new electricity by 2017 and for double that by 2031.

The amount of capital it takes to produce a unit of service or commodity is regarded as a good measure of operating efficiency. In the case of BC Hydro, the extent of its capital deployment is yet another indicator of trouble ahead for the corporation and for ratepayers.

Prior to 2008, Hydro managed to meet the electricity needs of its provincial customers with about $12 billion in deployed capital. The 2007 level of demand was about 53,000 units.
Since then, following directions from the provincial government, the corporation has increased its deployment to nearly $20 billion, to provide only 50,600 units.

In summary – BC Hydro used 67 per cent more capital to produce and deliver 5 per cent less electricity when it is normal to gain efficiencies from new investments, not lose them.
What have the bubble era and provincial policies produced in liabilities for BC Hydro? 

Since 2007, liabilities increased by $6 billion. Additional liabilities for ratepayers reached $2.2 billion in 2011 and, according to B.C. Auditor General John Doyle it will not be long before that amount doubles.
The present value of the secret contracts BC Hydro has with independent producers is estimated to be a further obligation of more than $40 billion.

Using the costs and productivity of the proposed Site C dam as a metaphor for new power generation, to get 14,000 units of new electricity means a further $30 billion of liabilities.

It seems pointless to ask the perpetrators why this disconnect with the real world exists but perhaps the answer can be found elsewhere.

In 2006, President Bush granted a group of undisclosed people dominion over all electricity production in North America. The North American Electricity Reliability Corporation (NERC) was launched and immediately recognized in Canada with a Memorandum of Understanding between it and the National Energy Board. Since then NERC has secured enforcement status in several provinces including Ontario. Enforcement means the legal right to fine electricity producers large amounts of money for non-compliance.

This may help the reader understand why our government has pushed aside the BC Utilities Commission. NERC is about serving private interests ahead of the public interest of B.C. citizens.

It is way past time for BC Hydro to throw out the anchor but maybe it never was the game plan to curb itself before it was beyond saving as a public asset.

I leave it to you to judge whether this period of exaggerated demand forecasting and Hydro’s attendant spending was, or is by accident or design.

Whichever is your answer there is no avoiding the certainty that you will be called upon to pay up big time.

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The Klinaklini River, which flows through BC's Great Bear Rainforest, is threatened by a massive private power project

BC Liberals Put Massive Great Bear Rainforest Private Power Project Back on Table

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Amid the flood of bills the BC Liberals recently pushed through the Legislature in the closing days of the spring session was a quiet amendment to the boundaries of the Great Bear Rainforest – labelled Bill 49. The legislation cleared the way for one of the largest proposed private river power projects in Canadian history, on the Klinaklini River.

Bill 49 reversed then-Liberal Environment Minister Barry Penner’s 2010 decision to reject the redrawing of the conservancy boundary. The recent flip-flop is related to a lawsuit launched in 2010 by project proponent Kleana Power Corporation and its partner, the Da’Naxda’xw First Nation – whose village lies 30 km east of Alert Bay – after their project was waylaid. But did the Liberal Government need to go so far as accommodating the project by changing their own law?

The Klinaklini River, which flows west from the Chilcotin plateau into Knight Inlet on the north end of the Sunshine Coast, is the proposed site of a private river power project of unprecedented proportions. With estimates ranging from 550 to 800 Megawatts (MW) of peak energy production, it would see the mighty river diverted for 17 km through a 10 meter wide tunnel and involve a 10 to 30 meter high dam (euphemistically referred to as a “weir” and “head pond” by the project’s proponents). The dam would flood part of the conservancy; transmission lines and other components of the project would also encroach on the protected lands.

Only Alterra Power’s proposed 17-river Bute Inlet project would cumulatively surpass Kleana Power’s $2.5 billion project in scale. The Kilanklini project even approaches the scale of Site C – a conventional dam proposed for the Peace River – with its 1,100 MW capacity.

The Official Opposition came out swinging last week against the Liberals’ “broken promise” to protect the Klinaklini: “Two years ago we were delighted when the environment minister effectively killed this project by refusing to change the conservancy boundaries,” said North Island MLA Claire Trevena. “So it was extremely disappointing to see the new Liberal environment minister reverse that decision.”

As NDP Deputy Environment Critic Michael Sather asserted to Liberal Environment Minister Terry Lake during the mere 30 minutes of debate allotted by the government for Bill 49, the government has clearly gone well beyond Madam Justice Barbara Fisher’s ruling, which stated it was “not appropriate” for the court to force the government to actually change the conservancy boundary:

…the First Nation asked for the 2010 order that Barry Penner made to be quashed. They got that. They asked for the minister to be directed to recommend to cabinet that the boundaries of the conservancy be changed. They did not get that…Yet Bill 49 changes the boundaries of the conservancy, something the court didn’t grant. Why is the government abandoning its previous attempt to protect the Klinaklini River and going beyond what the judge ordered? (emphasis added)

Sather is correct here – and the reason the court did not order this change to the Great Bear Rainforest boundaries is because courts do not have the power to mandate legislation, only to strike down that which is unconstitutional.

The minister defended the government’s decision, saying, “the court ordered that the Minister of Environment has a legal duty to consult with the First Nation, a proponent in this case, about their request for an amendment — and this is the important part — with a view to considering a reasonable accommodation.” But, as Sather noted, while the judge clearly directed the government properly consult and accommodate the First Nation, she did not go as far as to order it to change the law on the plaintiff’s behalf: “It is rare, however, for the court to become involved in directing a particular form of accommodation…I do not consider this an appropriate case to direct the minister to make the recommendation sought.”

The rekindling of the project is sure to be controversial, as it comes at a highly-charged moment for both private power projects and the Great Bear Rainforest, which has become a focal point for citizens, First Nations and environmental groups battling the proposed Enbridge Northern Gateway pipeline.

Private power projects have been the subject of intense criticism of late, both for revelations of widespread fish kills and weak environmental monitoring and enforcement – slammed by BC’s Auditor General – and for the economics of these deals, discredited by independent economists such as Dr. Marven Shaffer and Erik Andersen.

As The Common Sense Canadian has recently reported, BC Hydro’s new Draft Integrated Resources Plan (p.10) states the crown corporation is still intent on purchasing another 2,000 Gigawatt hours (GWhrs) a year of private power, despite losing hundreds of millions of dollars this year on the deals it already has in place. Yet the proposed Kilnaklini project would likely considerably exceed that 2,000 GWhr total.

That means Hydro’s plan would need to be revised upward to accommodate the project and would leave no room to purchase any other private power contracts – such as the even larger Bute Inlet project proposed by Alterra Power (unless it, say, quadrupled its next “Clean Power Call”). The equally controversial Bute project was also put back on the table last week as the proponent announced a deal with the local Sliammon First Nation to build transmission lines through its territory.

Scott Simpson summarized Kleana Power and the Da’Naxda’xw First Nation’s case in May, 2010, a month after Penner rejected the project:

Da’Naxda’xw First Nation and Kleana Power Corporation allege in a writ of summons filed this week in B.C. Supreme Court that the government failed to honor a 2007 commitment to exclude the project area from the bounds of the Upper Klinaklini conservancy, prior to the settling of the conservancy’s boundaries.

When the conservancy was announced in 2008, the project area was included within its boundaries — contrary to the expectations of the Da’Naxda’xw and Kleana.

The project includes a 10-metre-high weir that would cause water to back up about 5.5 kilometres into the conservancy.

Environment Minister Barry Penner has stated in the legislature that the government will not consider moving park and other protected area boundaries to accommodate electricity projects.

The plaintiffs are seeking a court declaration that would overturn the boundaries of the Upper Klinaklini conservancy, and order the B.C. environment minister to recommend to cabinet an amendment to the conservancy boundary in order to exclude the land and stream bed required to sustain the power project.

In the end, while Madam Justice Fisher’s decision, reached in May of last year, concluded that the nation had not been properly consulted, she stopped far short of telling the government to change the boundary.

The judge’s decision included another interesting conclusion.

Noting that one of the First Nation’s councillors, Fred Glendale, is also a director of Kleana Power Corp., the judge stressed that while the First Nation is entitled to be consulted and accommodated on the conservancy, the company is not: “While it may be obvious, it is important to emphasize that the Crown’s constitutional duty to consult is owed only to a First Nation. In this case, Mr. Glendale is both a councillor of the Da’naxda’xw and a director of Kleana. I have considered his evidence with this in mind, as it is not proper for a corporate entity with First Nation directors (or shareholders) to be the recipient of this constitutional duty.”

As an aside, Fred Glendale is the man who showed up to a 2008 townhall meeting in Campbell River on private power projects – hosted by Save Our Rivers Society and featuring Rafe Mair and myself – in an impressive new pearl-white Cadillac Escalade, before taking his seat next to one Dr. Alexandre Eunall. When Dr. Eunall spoke up against our criticism of the private power industry, Save Our Rivers’ founder Tom Rankin correctly identified him and Mr. Glendale as co-directors of Kleana Power. Dr. Eunall instantly clammed up at that point. Rankin also noted that Eunall has been behind a number of other private power deals where individual First Nations leaders have become personal partners in the corporation created to build the project. Another notable instance involved then-Haisla Chief Councillor Steve Wilson, who also turned up in 2008 as a director of two private power deals near his community of Kitaamat Village, unbeknownst to many of his constituents.

The Da’Naxda’xw First Nation fired back at the NDP this week for its criticism of the project. Spokesperson Dallas Smith told the Campbell River Courier-Islander, “If built, the Kleana project would be one of the most sustainable sources of clean energy in North America.”

By contrast, in a media advisory issued on June 7, Deputy Environment Critic Michael Sather had stated, “The environmental devastation from this project is unthinkable. Five species of wild salmon make the Klinaklini their home. This project would affect them, plus red and blue-listed species and a grizzly bear and moose corridor.” Smith countered, “There will be no net negative impact to eulachon, salmon or grizzly bear by the project…In fact, the project has the potential to deliver a net benefit to fish populations,” (emphais added), though he neglected to elaborate on this surprising contention.

According to the Globe an Mail’s Justine Hunter, reporting in 2010, even the Liberal minister acknowledged the project’s likely environmental impacts: “Kleana’s president said the project could be built with a fraction of the ecological footprint of Site C, but Mr. Penner said it threatened protected wetlands, fish-bearing streams, old-growth forest and grizzly-bear habitat.”

Smith also downplayed the size of the project to 550 MW, though its specs have varied wildly over the years and other private power projects in BC have wound up larger than their proposals initially suggest.

The Da’Naxda’xw may hold title to the territory affected by the project, but they and councillor/Kleana Power corporate director Glendale are asking the people of BC to purchase private power which has been roundly criticized as a sham for the public, driving up hydroelectric bills and contributing to the bankrupting of BC’s most prized crown corporation.

We are presently witnessing the travesty of BC Hydro spilling water (read: power) over its public dams while it’s stuck paying many times the market rate for private “run-of-river” power it doesn’t need. Electricity from our neighbours in Washington State is currently virtually free, as they are in the same situation with their dams (as of this publication, the price for firm, on-peak electricity on the local Mid-Columbia spot market is about $12 – whereas we’re paying up to ten times that much for IPP power in BC!) And yet, we can’t take advantage of this opportunity because of this sham private power we’ve been forced to buy.

The most important take-away here is that having title to a territory does not in any way give a First Nation or its partner corporation the right to hose the people of BC.

Moreover, with the recent exposure of serious environmental problems associated with these projects (and bear in mind this evidence has come from much smaller operations than the proposed Kilinaklini behemoth); and considering the passion demonstrated by many British Columbians in recent years for protecting the Great Bear Rainforest from other industrial impacts, this project is sure to provoke considerable outrage.

Finally, the BC Liberal Government can’t honestly contend Madam Justice Fisher forced their hand. She gave them a nudge; they took a giant leap towards making another of their precious private power projects a reality. The court did not mandate this or any other legislation – courts don’t have the power to do so. In our democracy that power is reserved for the legislature/parliament. So the Liberals should not be let off the hook for this decision to kowtow to private power interests. They’re only too eager to ignore aboriginal title and rights when First Nations oppose a favoured industrial project – i.e., Enbridge, Fish Lake – but if a nation supports a private power project, they apparently bend over backwards to accommodate it.

Whatever the case, the project’s revival would seem to be short-lived, as the NDP have made their position clear. If the Liberals and the project’s proponents can’t ram through environmental approval and a multi-billion dollar purchase contract for the power from the project by May 2013, future Premier Adrian Dix may well kill it once and for all.

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BC Liberals Still Stuck on Sham Private Power – Forcing Hydro to Buy More IPPs

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After more than a week of some ailment where solid foods were a problem (not liquids, however) I should be at my rest, book in hand to help me snooze…but I find myself so goddam angry I’m here spouting venom.

Why?
 
I’ve just read our economist Erik Andersen’s blog in the Common Sense Canadian and can’t believe my eyes…please take the time to read this blog.
 
The story is simple – which is what makes it so hard to understand. In short, under BC’s Vladimir Putin, Cop Supreme Rich Coleman, this government is about to ruin several more BC rivers to get more private power. Puzzle this one for a moment. As we sit and digest this, BC Hydro is spilling water over its dams while buying private power at egregiously inflated sums under deals this rotten government has forced upon them! And there will be more!
 
More of our rivers shattered by bulldozers so uncaring corporations can provide BC Hydro with power they don’t need any time but are now buying at hugely inflated prices while they piss away their power over the top of their dams!
 
The reason for this ongoing insanity is clearly that the Liberal Government just doesn’t know how it can get unstuck from the tar baby Bre’r Rabbit Gordon Campbell left them stuck to. The chickens have come home to roost – the companies given these sweetheart deals are producing power which BC Hydro is forced to buy at a huge premium even though its own reservoirs are full to brimming.
 
Coleman sees the only way is to brazen it through, scattering wildly inaccurate power needs as he goes.
 
Why has Premier Clark said nothing? She was around at the beginning of these Independent Power Project (IPP) approvals – why has she not said “enough” and put a stop to the program?
 
I’m afraid it’s emerging that she simply is not too bright. Her handlers knew, for example, that the Tar Sands would be high on the agenda at the Western Premier’s Conference, that Clark would be forced to deal with it and just couldn’t handle it, so they conjured up a cock and bull story about her being needed in the Legislature.
 
The insiders know that Premier Clark is no good on issues – she simply cannot understand them well enough to deal with them so she must be confined to what she does best: warm fuzzy issues like Family Day holidays and photo-ops. Coleman is now running the show.
 
The IPP issue is not complicated. IPPs have contracts to make private power, destroying the river and its ecology, and BC Hydro, under the sweetheart deal, must buy that power at a hugely inflated cost, even though they don’t need it. The only complicated part is the obvious question: why would any sane government get into this sort of sweetheart deal? This is followed by another obvious question: how the hell do we get out of this mess?
 
I have a partial answer to that – Adrian Dix makes it clear that no more of these licenses will be granted and all of the present deals will be put to the “smell test”. To those who cry “sanctity of contract”, I pose this in reply: suppose a mayor was elected to clean-up city hall – do you suppose he’d honour the sweetheart long-term and viciously inflated contracts that the previous mayor made with his brother-in-law and other cronies?
 
Briefly, on another matter we’ll be addressing comes the brilliant blog by Captain Edward Wray in the Sunday Province which I emailed out and put up on Facebook.
 
Capt Wray smells a “bait and switch”. The federal and provincial governments will, at the right moment, admit that Kitimat is the wrong port and Douglas Channel the wrong channel and will announce that the new port will be Prince Rupert. Having done that, they will authorize the Enbridge pipeline to the latter port and, like Little Jack Horner, say, “Oh, what a good boy am I.”
 
It’s reminiscent of what the late Robert Strachan said about W.A.C. Bennett: “He puts a stone in your shoe and just when it becomes unbearable, takes it out and you’re so grateful, you forget how it got there in the first place!”
 
More on that in the days to come.

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We've seen this movie before. BC's

BC Hydro’s Exploding Debt – Accident or by Design?

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Mysterious foreign corporate interests are directing our provincial energy policy, as BC Hydro prepares to buy yet another round of discredited private power contracts.

Recent articles about some of the wrong-headed thinking by our government that has put BC Hydro in financial harm’s way, suggest that it has just been a matter of over-enthusiasm and nothing more sinister. It is almost a description of our government as a victim that needs our sympathy not our ridicule – or worse.
 
Ask yourselves if it was prudent of BC Hydro to recently borrow and spend $10 billion, presumably increasing its capacity to do business, knowing that the global economy was in disarray?

Prior to 2008  publicly available indicators showed commercial/economic global affairs were in trouble. It is not unreasonable to expect those who we pay very well to know about these developments and rein in their more bullish instincts. This is called looking after the public interest. Out of the many such “situational indicators” we all have access to, take a moment to look at one – the Baltic Dry Cargo Index, the 5 year chart. The index plummeted by 94% between a record high in May 2008 and December 2008, when it hit its lowest point since 1986. This should have sent a powerful warning to the people forecasting our future energy demand.
 
BC Hydro’s most current forecast shows they expect the domestic need for electricity will become 64,000 GWhrs by 2017. GWhrs are the units of electricity their forecast uses so just think of them as units of useable electricity for discussion purposes. Now, most people I know, acting in a common sense way, would test this outlook against the best possible evidence of real demand available. Since the financial peak of 2008, BC Hydro’s record of sales shows demand collapsing, both in total and on a per capita basis. This reality has yet to be recognized by the “smartest guys in the room”. So for at least three years our Government and BC Hydro have been in denial of reality.

In fact, even as recently as this week, it emerges that BC Hydro is planning to buy even more private power contracts, through a 2,000 GWhr clean power call (see page 9 of Hydro’s 2012 Draft Integrated Resources Plan); at the same time we learn that Alterra Power intends to take another run at its controversial mega-IPP in Bute Inlet, announcing a deal with the Sliammon First Nation to build transmission lines for the project.

So, over the last six to eight years how much new debt has BC Hydro taken on in your name, as a citizen and owner; do you know or care? Besides the formal amount of $8 billion in new total liabilities it has added $2.2 billion of receivables from the ratepayer’s category. BC’s Auditor General reports that it looks like this category is programmed to balloon even more. These obligations do not take into account the present value of the secret IPP contracts that would probably add another $30-40 billion to total liabilities.
 
In the face of evidence that no new electricity generation is needed in the foreseeable future, BC Hydro is presenting a story where it sees the need for 14,000 new units by 2017, not that far off. In terms of new borrowing and spending what does this mean? If we use the values associated with the Site C project, each new unit of useable electricity comes with a capital requirement of about $2 million. Your government/public corporation is planning to contract for or directly finance new generation that will produce a new liability of about $30 billion by 2017 and double that by the end of the forecast period.
 
You may ask, where does this insanity stop? What motive could possibly explain this outrageous mismanagement of our public asset?
 
Perhaps the explanation lies outside of BC. In 2006, a new corporation came into existence in the US, dubbed the “North American Electric Reliability Corporation” (NERC).

This corporation has the legal mandate to impose its will on all North American electricity producers. This will is a legal right to levy fines of consequence on those producers not obeying instructions. This corporation is not beholden to any elected body, nor does it disclose its beneficial owners. Our federal government has accepted this reality by having the National Energy Board sign a memorandum of understanding with NERC, in the fall of 2006. NERC’s most recent annual report affirms it now has “ENFORCEMENT” powers in Ontario and New Brunswick. NERC has been and is active elsewhere in Canada, furthering its restraint of trade objective which certainly does not look as serving the public interest of BC citizens.
 
The forgoing is not something both the BC Government and BC Hydro would have been ignorant of, which makes knowing of an act of complicity.
 
Most people have memories of Enron Corporation that are generally uncomplimentary of the folks in charge of it. Some of the more prominent of these people are still around. It might amuse you to read what is essentially the Enron oath of office. It serves to illustrate the difference between the “talk and the walk” for some people.
 
The following quotation is taken from the 1998 Annual Report by Enron:
 
Our Values
 
RESPECT: We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness, and arrogance don’t belong here.
 
INTEGRITY: We work with customers and prospects openly, honestly, and sincerely. When we say we will do something, we will do it; when we say we cannot or will not do something, then we won’t do it.
 
COMMUNICATION: We have an obligation to communicate. Here, we take the time to talk with one another … and to listen. We believe that information is meant to move and that information moves people.
 
EXCELLENCE: We are satisfied with nothing less than the very best in everything we do. We will continue to raise the bar for everyone. The great fun here will be for all of us to discover just how good we can really be.
 
Don’t for a moment think that juvenile insincerity is limited to the US when the smell of big money is in the air. The time has long passed for being apologists for the folks who are determined to help others get control of our best provincial asset and the business monopoly that is attached.

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Marvin Shaffer: BC Hydro Problems Stem from Bad Government Policy

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Read this op-ed by SFU’s Dr. Marvin Shaffer in the Vancouver Sun, putting the blame of skyrocketing hydro rates squarely on the shoulders of the BC Liberal Government as opposed to BC Hydro’s management. (June 7, 2012)

Though presented as part of its effort to protect families, the government’s recently imposed cap on BC Hydro rate increases will not help British Columbians – families or other-wise. The cap on rates does nothing to reduce costs. At best it provides a short-term gain, but sooner or later BC Hydro will have to increase rates to match the increase in its costs.

British Columbians will benefit only when BC Hydro is able to plan and operate its system more efficiently. And as much as the government would like to blame the BC Hydro board and management for rising costs and rates, the fact is that the government’s own policies are largely to blame.

In an unprecedented series of directives, the government forced BC Hydro to acquire more power than it needed to ensure reliable supply, or could otherwise justify. It also dictated that all new customers, including large electric-intensive industrial loads, would pay the same standard rate, even though that rate is less than half the cost of the new supply BC Hydro has to acquire to meet the new customers’ requirements.

Through new legislation the government authorized BC Hydro to make major investments in smart meters, new transmission lines and other projects without any independent assessment of their costs and benefits or business plan. That same legislation also directed BC Hydro to develop plans to buy and export private power, and enabled cabinet to force BC Hydro to do so regardless of the costs of the back-up and other services BC Hydro would have to provide and the market risks it would have to assume.

These measures have already had major impact. In its rate application, BC Hydro reported that by 2014 it will be buying over five million megawatt hours of private power as a result of the government’s policy. This is power that BC Hydro does not yet need, would not otherwise have acquired and the BC Utilities Commission would not have approved. The average price BC Hydro will be paying for this power is well over $100 per megawatt hour and its value, based on BC Hydro’s latest forecasts of its market value, will be less than $50 per megawatt hour. The financial loss to BC Hydro will be well over $250 million in that year alone.

The government cannot reverse the costs and losses it has already imposed on BC Hydro. Rate freezes only mask, they do not undo what has been done. What the government can and should do, however, is to change its policies and rescind the legislation and directives that have prevented BC Hydro from planning and operating its sys-tem more efficiently.

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The inkfish fools its predators by emitting a cloud of black ink

Anton ‘the Inkfish’ Clouds Hydro Losses from Bad IPP Deals

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Yesterday morning, listening to Suzanne Anton, one of my co-panellists on Rick Cluff’s Early Edition political panel, avoid the issue of BC Hydro rates rising because of the scandalous sums they are forced to pay private power companies – and government avoidance of the BC Utilities Commission (BCUC) – fill the airwaves with hot air and non sequiturs, I called her an inkfish and was asked through emails to say what this meant.

Well, the inkfish is a species of octopus that has an ink sac, which can be used to expel a cloud of dark ink to confuse predators.
 
I was not, of course, saying that Ms. Anton’s verbal flatulence was literally an emission of dark ink but that the techniques are the same and clouding of the issues the same result.
 
The issues are not complicated:

  1. The Campbell/Clark government has forced, and continues to force BC Hydro to buy power from Independent Power Producers (IPPS) on a “take or pay” basis, meaning Hydro is spilling its reservoirs over their dams and paying several times the market value to IPPs. Literally, Hydro is spilling your Hydro rates over the dam in order to meet the “sweetheart” deals the Campbell/Clark government has forced them to sign.
  2. This has forced Hydro to incur huge debts that will be paid for by the only way they can be paid – by us as ratepayers or taxpayers, or both.
  3. Some three years ago, the BCUC determined these IPP deals were not in the interests of British Columbians. BCUC was, for its candour, stripped of its power to review BC Hydro rate increases unless directly asked by the government to do so.
  4. Scheduled BCUC hearings into Hydro’s proposed rate increases in consequence of these IPPs have been cancelled by Minister Rich Coleman, thus public scrutiny of this scandal won’t happen.
  5. The Minister and the Cabinet have rejected BC Hydro’s proposed 30% rate increase over 3 years and cut it to 17%. This is a purely political decision which is supposed to make us feel warm and fuzzy about Premier Clark.
  6. The fact is that BC Hydro’s proposed 30% hike would not, by a long shot, cover their escalating IPP-induced deficits. It is also a fact that you and I will cover these deficits either through increased rates or taxes, or both.
  7. BC Hydro has also set up special deferral accounts. As CTV reported, “the amount of debt that BC Hydro has deferred’ into special accounts is expected to more than double to $4.5 billion in the next two years, the province has acknowledged.” Madam Inkfish would have us believe that this amount represents deferred capital expenditures, but this simply is not so and the Auditor-General has stated that this policy must end.

These deferred accounts are, for the most part, taking Hydro’s losses due to the IPP sweetheart deals, making them into a special account which they then say – because ratepayers now owe this money to BC Hydro – is now a Hydro asset! (By all means, read that again!!! Monty Python lives!)
 
Marjorie Griffin Cohen, a professor of political economy at Simon Fraser University, told CTV News that the BC Government is to blame for rising hydro costs because of a number of political directives it has handed down during the last decade.

Professor Griffin Cohen said, “The government has required BC Hydro to buy very expensive private electricity at a time when it basically doesn’t need it. It has also introduced the smart meter program, which is very expensive.” (Emphasis added)

Here we have it, once the ink has dissipated. Where BC Hydro once put hundreds of millions of dollars into the Provincial Treasury as a dividend for us the citizens, we are now on the hook for a minimum $4.5 Billion over the next two years by the government’s own admission – this increase being largely the Campbell/Clark “sweetheart” deals with corporate pals.
 
When Premier Clark and Minister Coleman say they are reducing BC Hydro’s proposed rate increase from 30% to 17%, that is a contemptible distortion of the truth. The fact is that BC Hydro’s deficits are our deficits and whether we pay them off by rate increases or tax increases is a purely political calculation. To say they cut Hydro’s demands is an election ploy which, even for this bunch, is remarkable dissembling.
 
Why is our healthcare, education funding and the like strapped for cash?
 
Ask Madam Inkfish and her clients that question.

 

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