Remember B.C.’s Clean Energy Act, championed by former Liberal Premier Gordon Campbell to position B.C. as a “world leader” in addressing climate change?

The act exempted hydro undertakings like the Site C dam from independent oversight by the watchdog B.C. Utilities Commission (BCUC), an independent body set up to ensure that projects proposed by the government are in the public interest, and not promoted for partisan political gain.

The act further set the legal stage for building the Site C dam, a pet project of the B.C. Liberals, by closing the door on energy sources such as the Burrard Thermal natural gas-fired plant and the power to which B.C. is entitled under the Columbia River Treaty.

On Thursday, B.C.’s Auditor General Carol Bellringer — the province’s public interest watchdog — issued a report nudging the NDP government to review and amend the Clean Energy Act’s objectives, which the report describes as “too diverse and in many cases contradictory with each other.”

Bellringer also found the act’s objectives are often in contradiction with the utility commission’s mandate.

“There is a risk that exempting the commission from reviewing large projects can undermine public confidence in those projects and in the regulator [the BCUC] itself,” says the report, noting that regulators are set up to provide a “transparent and evidence-based process.”

The report highlights the Site C dam project as a case in point. “Our office has received many requests to examine government’s decision to build the Site C dam, which government initially excluded from the review process,” the report notes.

“Government’s decisions to exclude the commission from overseeing certain BC Hydro projects is inconsistent with one of the original purposes of the commission — to fully regulate BC Hydro.”

Independence of BCUC a concern

In a teleconference Thursday, Bellringer said the government “already knows how it can make the BCUC more effective.”

Bellringer zeroed in on the commission’s independence as one area that needs attention.

“An effective regulator is in the interests of all the residents of British Columbia,” she said.

“Independence means that regulators are able to make objective decisions based on facts. Independence enables regulators to consider the short and long-term interests of ratepayers, regulated companies and the public.”

By excluding the BCUC from key decisions, Bellringer said the government “loses out on the value of an independent transparent review and expert advice.”

In a later telephone interview, Bellringer said her office continues to look into the $10.7 billion Site C dam project.

“We’re still planning to do an audit,” she told DeSmog Canada. “We’re still trying to figure out what aspect to look at. I know there’s quite a bit of pressure on us from all kinds of people who would like us to do that very quickly but as you know it’s a very large project, so not so easy to narrow down.”

The auditor general also said there is “no question” that on-going Site C oversight by the BCUC would “add to the strength” of the independent review it conducted last fall, which found that the project is behind schedule and over-budget, with a final price tag that could exceed $12.5 billion.

“I just don’t have a view on exactly what it would look like.”

“There is a risk that exempting the commission from reviewing large projects can undermine public confidence in those projects and in the regulator itself.” B.C. Auditor General, Carol Bellringer, on the exemption of the Site C dam from BCUC review https://t.co/Vmnij9jLDQ

— DeSmog Canada (@DeSmogCanada) March 16, 2018

Oversight lost with Clean Energy Act

Site C was far from the only energy project that the Clean Energy Act removed from independent BCUC review.

The Northwest Transmission Line, an over-budget project that brought power to remote mining operations, was also stripped of oversight, as were BC Hydro’s smart meters plan and power supply proposals from independent power producers, to which BC Hydro is now paying millions of dollars not to produce power because of an electricity surplus in the province.

The operation of Burrard Thermal, a natural gas-fired generating plant on the north shore of Port Moody in the Lower Mainland, was also removed from BCUC scrutiny.

Built in 1963, the plant was refurbished in the 1990s to become the cleanest standby natural-gas fired plant on the continent. It was capable of generating 950 megawatts of electricity, nearly as much as the Site C dam.

The district of Hudson’s Hope, the municipality hardest hit by the Site C dam, has pointed out that Burrard Thermal could have been refurbished for $1 billion to bring it into compliance with the Clean Energy Act, at a fraction of the cost of the Site C dam project.

The BCUC wanted Burrard Thermal to continue operating, to provide emergency backup power, but the BC Liberals shut down the plant in the spring of 2016.

What Is the Clean Energy Act?

Former Premier Gordon Campbell described the act as a legal chisel that would enable B.C. to chip away at its greenhouse gas emissions and invest in renewable energy.

“We want British Columbia to become a leading North American supplier of clean, reliable, low carbon energy,” the Campbell declared on the day the act was introduced.

Among other changes, the act positioned B.C. to become a bigger exporter of electricity, with the Site C dam as the cornerstone of new energy experts, although there were no committed buyers for the dam’s power.

There is still no confirmed buyer for the Site C’ dam’s electricity, and energy demand in B.C. has been flat for more than ten years even though the population has grown by 17 per cent.

The act also mandated that B.C. must be almost completely self-sufficient in electricity, shutting the window on electricity imports, including from clean energy sources.

It prohibited B.C. from accepting Columbia River electricity generated in the U.S. — about the same amount of power as Site C would produce — even though a provision for claiming that power is included in the Columbia River Treaty.

Although the Site C dam project received an expedited BCUC review last fall, the NDP government did not allow the BCUC to recommend whether or not the project should proceed, as the commission would have done before the Liberals removed its oversight.

Notably, the BCUC review revealed troubling geotechnical issues and on-going problems with Site C’s major contractors, who are suing BC Hydro for more money. It also determined that energy alternatives such as wind and geothermal could provide the same amount of energy at a lower or equal cost.

Bellringer said her office originally intended to conduct an audit of the BCUC to determine if it is exercising effective oversight of BC Hydro and other organizations it regulates, such as ICBC.

But preliminary planning work for the audit determined that many of the same risks to the BCUC’s effectiveness had already been identified in two task force reviews in 2013 and 2014, and that further audit work would not contribute to a better understanding of the issues.

“We felt that those important areas needed to get attention and so we decided to issue this report instead.”

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On January 17, 1961, Canadian Prime Minister John Diefenbaker and United States President Dwight Eisenhower signed the Columbia River Treaty.

It was a landmark agreement that required Canada to build three dams to aid in U.S. flood protection and power generation. In exchange for taking on the impacts of these water storage projects, Canada was paid $64 million for 60 years of flood control benefits.

Canada also received an entitlement to one-half of the estimated additional hydroelectric generation capability at power plants on the Columbia River in the United States made possible by the operation of the dams in Canada.

This power is referred to as the “Canadian Entitlement” and since 2003 it has amounted to at least 1,176 megawatts of capacity and 4,073 gigawatt hours of energy a year.

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That just so happens to be nearly identical to the amount of electricity B.C. could create via the controversial $8.8 billion Site C dam — the most expensive public project in B.C. history.

The B.C. government gave Site C the go-ahead in December 2014, but the third dam on the Peace River is facing several court challenges from landowners and First Nations who oppose flooding 83 kilometres of the Peace Valley.

This week, a U.S. energy economist said the power from the dam is dramatically more costly than previously thought. The B.C. government has argued the dam is the most cost-effective way to meet the province’s electricity needs and has rejected repeated calls for an independent review of costs by the B.C. Utilities Commission.

Failure to Consider Columbia River Power ‘Inexplicable’: Panel Chair

Harry Swain, the chair of the joint federal-provincial panel that reviewed the Site C dam, panned the B.C. government’s actions on the dam in March, in comments called “unprecedented” by environmental law experts.

 “To say we will not consider our entitlement under the Columbia River Treaty is inexplicable,” Swain told DeSmog Canada.

In recent years, B.C. has been selling off the Canadian Entitlement to the tune of $100 to $300 million annually. From 2010 to 2012, the province received about $30 per megawatt-hour for that power. Meantime, the cost of power from the Site C dam is estimated at $83 per megawatt-hour.

“On the face of it, it doesn’t make a lot of sense to be building new sources at $83 (per megawatt hour) and continuing to export at $25 or $30 or $40 per megawatt hour,” said Philip Raphals, an energy analyst hired by the Treaty 8 Tribal Association to provide expert testimony during the Site C hearings. “Why not just use our own inexpensive resources instead of selling them off for so little?”

Using Columbia River Power Would Save B.C. $2 Billion: Treaty 8

In a 20-page letter to the B.C. government, the Treaty 8 Tribal Association made the case that taking into account just 50 per cent of the Canadian Entitlement would defer the need for new electricity capacity in the province to 2034.

“We have estimated the potential benefits to ratepayers of enacting such a regulation to repatriate the Canadian Entitlement to be at least $2 billion compared to the Site C portfolio preferred by BC Hydro,” said the letter sent in Dec. 2014 to Minister of Energy and Mines Bill Bennett and Minister of Finance Mike De Jong.

Days after the letter was sent, the B.C. government announced it intended to move ahead with the Site C project.

Canadian Entitlement ‘Fell Between Cracks’: Energy Expert

The panel that reviewed the Site C dam was not allowed to consider the possibility of repatriating the Canadian Entitlement, nor did BC Hydro bring it forward as an option.

Why not? B.C.’s Clean Energy Act.

The act includes a self-sufficiency requirement, which requires that BC Hydro be able to produce enough electricity to satisfy provincial electricity demand. It was designed so BC Hydro can’t rely on market purchases, particularly imports of high-polluting power, for planning purposes.

 “The Canadian Entitlement, however, consists of hydropower, the environmental costs of which are already borne by British Columbians,” reads the Treaty 8 letter. “Adopting a regulation allowing the import of the Canadian Entitlement (for planning purposes) could not be seen as compromising B.C.’s climate polices or its goal of energy self-sufficiency.”

Because of this requirement, BC Hydro never examined the possibilities of using the Canadian Entitlement to meet B.C.’s needs, Raphals says.

“How, then, would the provincial government ever become aware that it could avoid the environmental and treaty infringement consequences of the Site C project, avoid borrowing billions of dollars and avoid major rate impacts by repatriating BC Hydro power, if BC Hydro believes it is barred from even mentioning this possibility unless explicitly asked to do so by the government?” the Treaty 8 letter to government said.

The panel’s mandate was to work within existing laws, regulations and policy, which meant the Columbia River power only came up as an aside during the environmental review.

“The downstream benefits are off of everyone’s radar … It seemed to us that it’s a solution that has fallen between the cracks,” Raphals said.

The joint review panel did comment on the self-sufficiency requirement briefly, saying:

“Taken literally, this means a B.C. disconnected to the outside world, a vision of autarchy truly strange for a province that relies on trade, and a long way from its recent history …. Minor relaxations could mean being connected for reliability or for diversity exchange …”

The consequences of the self-sufficiency requirement were also evaluated in a 2011 BC Hydro review.  That panel wrote:

“The panel recognizes that the economic and energy situations have changed, and that the existing self sufficiency definition may be overly conservative and place an undue burden on ratepayers. The panel recommends that BC Hydro and the province evaluate alternative definitions and timelines for self-sufficiency that meet the needs of the province and ratepayers in a way that is sustainable for the long term.”

Re-Negotiation of Treaty Creates Too Much Uncertainty: B.C. Government

Given these well-documented concerns and the low market rate of electricity, why hasn’t the B.C. government considered using the Columbia River power to defer the need to build more expensive sources of power, such as the Site C dam?

In low water years, B.C. currently may import up to 10 per cent of annual demand, according to the Ministry of Energy and Mines.

“Meeting new B.C. demand by relying on the Canadian Entitlement instead of building new sources of power in B.C. would increase this exposure,” a ministry spokesperson said in a written response to DeSmog Canada. “While BC Hydro is comfortable with a 10 per cent level of exposure, a higher level of exposure would introduce risks regarding the ability of the market to reliably meet B.C.’s electricity needs under certain conditions.”

In addition to that, the treaty is up for re-negotiation.

“It is also not a long-term resource as either country may unilaterally terminate the treaty with 10 years notice,” the spokesperson said.

Raphals argues that, given the importance of the treaty for U.S. system operations, it is “implausible” that the U.S. would simply abrogate it. 

“It is, however, entirely possible that the amount of the Canadian Entitlement will eventually be reduced,” he said.

And that’s why, when modeling the impact of the Canadian Entitlement, Raphals limited the downstream benefits to half of what is currently available.

Raphals argues that taking the Canadian Entitlement into account allows B.C. to delay the need to build new projects and ultimately make smarter planning decisions.

“There is no need for BC Hydro to make firm decisions in 2014 on how to serve its loads 20 years from now,” Raphals said. “The world today is very different than it was 20 years ago, and there is every reason to believe it will be very different as well, in very unpredictable ways, in 2034.”

Photo: Canadian Prime Minister John Diefenbaker and U.S. President Dwight Eisenhower sign the Columbia River Treaty in 1961.

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One of the thorniest issues raised in the joint review panel’s report on BC Hydro’s Site C dam proposal is that of the B.C. government’s hypocritical policy on the burning of natural gas for electricity.

“The LNG developers have been promised a free hand to burn their gas here for their own purposes, but BC Hydro has been denied the same privilege,” the panel wrote in its report on the $7.9 billion proposed dam.

The controversy revolves around the 2010 Clean Energy Act — and who it applies to and, perhaps more importantly, who it does not.

The act limits BC Hydro’s options for generating electricity by demanding that 93 per cent of the province’s energy needs be met by “clean or renewable resources” — eliminating the use of gas turbines and sending the gas-fired Burrard Thermal generating station into early retirement.

It’s a reasonable policy from a climate change perspective — but there’s a catch.

In June 2012, the province exempted the liquefied natural gas (LNG) industry from the Clean Energy Act, enabling plants to burn as much natural gas as they’d like to power their giant compressors — despite originally promising they’d be powered by clean electricity — and, as of now, that’s exactly what they intend to do.

“If it is acceptable to burn natural gas to provide power to compress, cool, and transport B.C. natural gas for Asian markets, where its fate is combustion anyway, why not save transport and environmental costs and take care of domestic needs?” the Site C panel wrote.

To turn natural gas into a liquid for export, it must be cooled to 163 degrees below zero. Doing so essentially requires running a gigantic refrigerator 24/7. Each of the large LNG plants proposed for B.C.’s coast (there are 10) would need the equivalent of an entire Site C dam to power it by electricity.

Oilsands-sized pollution problem

The Pembina Institute reports that for the province to meet its annual revenue hopes of more than $4 billion (five to seven LNG facilities) by 2020, the resulting carbon emissions from that industry would rival that of Alberta’s oilsands.

In case you missed it, this is the industry that Premier Christy Clark has repeatedly touted as producing the “cleanest LNG in the world.”

For B.C.’s LNG industry to come anywhere near to being “clean,” plants would need to be fuelled by renewable electricity, not natural gas.

With that in mind, Clean Energy Canada recently commissioned a feasibility study that looks at meeting the energy demands of LNG plants with regional renewables, such as wind on the north coast, which wouldn’t require transmission upgrades or power from the Site C dam.

“Any LNG facility on the North Coast could primarily power its production facilities with renewable energy and do so reliably, affordably and on schedule—using established commercial technologies,” Navius Research concluded. “Further, doing so reduces that plant’s carbon pollution by 45 per cent, and increases local permanent jobs by 40 per cent.”

Seems like a no-brainer, doesn’t it?

If the province is going to forge ahead with an LNG industry, 91 per cent of British Columbians say it’s “very important” or “somewhat important” for LNG plants to maximize their use of renewable energy, according to a poll conducted by NRG Research Group in October 2013.

I haven’t seen any poll results on the matter, but methinks British Columbians wouldn’t respond to kindly to the natural gas industry playing by a different set of rules than the rest of us. After all, a Strategic Communications poll from April 2014 found 78 per cent of British Columbians supported the province moving off of fossil fuels completely in favour of clean sources of energy to prevent climate change from worsening.

B.C.’s natural gas contradiction

Due to the Clean Energy Act, BC Hydro couldn’t include gas-fired electricity in any of its scenarios presented to the Site C panel — even though the LNG industry can now burn gas willy-nilly.

That means natural gas facilities like Burrard Thermal, which has similar capacity to Site C, couldn’t even be considered as an intermittent source of power for times when electricity demand peaks.

With a price tag of $7.9 billion, Site C is the most expensive infrastructure project on the books in Canada — and could be the largest public expenditure in B.C. for the next 20 years. Meantime, the lower impact, more affordable alternative of geothermal power hasn’t been placed on the table by BC Hydro due only to the province’s “failure to pursue research over the last 30 years,” according to the panel.

If the province approves Site C this fall and it actually gets built, the project is expected to chalk up $800 million in losses in the first four years due to a lack of market for its power — and it’s BC Hydro customers (pssst … that’s you and me) who will be on the hook for covering the loss.

While British Columbians are picking up the tab for that, the LNG industry will be enjoying a free pass to pollute.

It’s high time for Clark to force the LNG industry to play by the same rules as the rest of us — and, for her own sake, she’d better do that before British Columbians cotton on to the fact she’s trying to sneak an oilsands-sized pollution problem below the radar while sticking British Columbians with a pricy and impractical megadam.

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Major industrial power users in British Columbia fear that if the proposed Site C dam becomes a reality, rate hikes could put mills and mines out of business while saddling taxpayers with a costly white elephant and ballooning BC Hydro debt.

A decision on the $7.9 billion plan to build a third hydroelectric dam on the Peace River will be made by the federal and provincial governments this fall.

Economic questions about the mega-project were raised by last month’s joint review panel report, which noted the dam would likely be “the largest provincial public expenditure of the next 20 years.”

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The panel, which did not come out for or against the project, found that, based on cost comparisons provided by BC Hydro, Site C would be the most economical way to provide new power — but said it could not measure the true cost or need and recommended the B.C. Utilities Commission should look at it, an idea immediately dismissed by Energy Minister Bill Bennett. (The commission turned down the Site C project in the early ’80s.)

Strong opposition to Site C is now coming from the unlikely direction of the Association of Major Power Customers of B.C., an organization representing about 20 of the largest employers and industrial customers in the province.

“We have absolutely no confidence that this is the least cost plan,” association executive director Richard Stout told DeSmog Canada.

“It’s not the right project right now”

Major industrial power users in B.C. have seen a 50 per cent increase in rates over the last five years and are looking at another 50 per cent over the next five years, he said.

“It is unusual for us to criticize a government of this stripe, but BC Hydro has been out of control for a good 10 years,” Stout said, pointing to almost $5-billion in deferred accounts.

“Any other business would have been declared bankrupt by now,” he said.

Site C will take a decade to build and, with changing markets and a burgeoning natural gas industry causing a surplus of generating capacity in North America, it is almost impossible to accurately predict demand and prices, Stout said.

“All we know is the original load forecasts are going to be wrong,” he said. “It’s not the right project right now.”

Craig Thomson, energy and environment supervisor at Canfor Taylor pulp mill told DeSmog Canada that industry in B.C. was built with a foundation of low power rates, but in the last five years that has changed and Site C would be the final straw.

“I think the cost of hydro-electric dam construction is so astronomical that no one will ever do it again and we’re going to have this huge white elephant,” he said.

“Potentially it’s going to drive our industry out of business.”

B.C.’s natural gas hypocrisy

Doubts are growing about cost comparisons made by BC Hydro, which didn’t include the use of gas power because the 2010 Clean Energy Act demands that 93 per cent of the province’s energy needs be met by clean, renewable power.

The act effectively eliminated the use of gas turbines and sent the gas-fired Burrard Thermal generating station into early retirement.

But the province has now handed a Clean Energy Act exemption to the liquefied natural gas (LNG) industry, a move that allows gas plants to meet their massive power needs with natural gas. Meantime, BC Hydro is prevented from using natural gas even as a backup to renewables.

“It’s really hypocritical to allow them [LNG facilities] to burn gas,” Merran Smith at Clean Energy Canada told DeSmog Canada. “The carbon emissions, as well as the air pollution, are inconsistent with the province’s goals.”

“Gas is a fossil fuel. It may be cleaner than coal or oil, but it still has a heavy carbon footprint.”

Should gas turbines be allowed for backup power?

Like many others, Stout believes alternatives to Site C should be considered, including the use of gas turbines as an intermittent source of power — something that would first need the government to change the Clean Energy Act.

Thomson is looking at new technologies coming on stream and, in the meantime, Burrard Thermal, with a similar capacity to Site C, could provide sufficient intermittent power, he suggested.

“Electricity is 32 per cent of our operating cost and, if it goes up and up, someone is going to say the business is not viable and the doors will close,” he warned.

Energy economics expert Marvin Shaffer, adjunct professor at Simon Fraser University, believes Burrard Thermal should never have been eliminated as a source of backup energy.

“I’m not suggesting that an old, relatively inefficient plant like Burrard should be used as a base load facility. What Burrard can do is provide a very cost-effective backup to the hydro system as well as back-up peak capacity exactly where it might be required,” Shaffer said.

Burrard Thermal generating station was sent into early retirement with the introduction of the 2010 Clean Energy Act. Credit: Niall Williams via Flickr.

With Burrard in place, B.C. would have no shortfall of energy until 2033 and, even without Burrard, strategically placed gas thermal plants could supply low cost energy as needed, he said.

Faced with Site C as the alternative to intermittently using gas turbines, even Joe Foy of the Wilderness Committee comes down on the side of occasional gas use.

“It seems a better solution than drowning 100 kilometres of farmland when you don’t even need that power for 300 days of the year,” he said.

Oxford study: Dams routinely come in 90% over budget

Many also have concerns that, when costs such as transmission lines are factored in, Site C’s cost will soar above $7.9 billion.

Fears that costs will run amuck are backed by an Oxford University study of power dams that found construction costs of large dams are, on average, more than 90 per cent higher than their budgets.

Mark Winfield, associate professor in the environmental studies faculty at York University, sees parallels between Site C and costly nuclear power plant plans in Ontario.

“Large hydro projects like Site C and nuclear power plant construction or refurbishment reflect a focus on large, centralized, high-cost, high-risk, high-environmental impact, long-lived generating infrastructure,” he said.

That limits opportunities for the system to adapt to market changes and sets the focus on only one path, Winfield said.

“In both cases there are significant uncertainties about future demand and, therefore, substantial risk of making major investments in projects which may turn out not to be needed or which are overtaken by newer, better technologies,” he said.

Site C’s legacy: cheap power or wealth destruction?

Dan Potts, former executive director of the Association of Major Power Customers of B.C., believes the lasting legacy of Site C would be wealth destruction.

“The huge cost will rob the province of valuable resources that could be used to deliver other needed government services as well as burden the B.C. economy with debt and high electric power rates that will sap our competitiveness,” he said.

Times have changed from when previous dams were built on the Peace and Columbia Rivers, said Potts, who has calculated that gas prices would have to almost quadruple before power from Site C would be economically viable for export.

“B.C. Hydro has filed information that the cost of electric power from Site C will be in the range of $100 per megawatt hour. Current market prices are in the range of $30 per megawatt hour. If Site C were now operational, the market value of the power produced would be $350 million per year less than the cost,” Potts said.

Site C will lose $800 million in first four years: report

The possibility of exporting excess power to help fund the dam was discounted by the joint review panel, which predicted that, unless prices changed radically, B.C. Hydro operations would lose $800-million in the first four years of operations:

These losses would come home to B.C. ratepayers in one way or another. B.C. Hydro’s expectation is that it might sell Site C surpluses for only about one-third of costs, leaving B.C. ratepayers to pay for the rest.

But the panel also says that Site C, after an initial burst of expenditure, would lock in low rates for decades and produce fewer greenhouse gas emissions than other sources.

Ignoring the Clean Energy Act is not an option for BC Hydro and there is no doubt Site C compares favourably to other clean energy costs, said Hydro spokesman Dave Conway. In comparison to Site C power at $100 per megawatt hour, new generation from wind or micro-hydro comes in at $128 per megawatt hour, he said.

However, the panel noted that geothermal energy would cost about the same as Site C power — and as a firm source of power could present a viable alternative to the dam. Geothermal could be built incrementally to meet demand, eliminating the early-year losses of Site C, the panel noted.

Even without Site C, customers are looking at a 28 per cent increase in rates over the next five years, but British Columbians should bear in mind that they are paying one of the four lowest energy rates in North America, Conway said.

However, Foy would like all British Columbians to consider what else could be done with almost $8-billion.

“Maybe better education for kids or health care?” he asked.

“If we spend $8-billion on Site C, what community doesn’t get a health care facility?”

Image Credit: An area of the Peace River Valley threatened by Site C. Photo by tuchodi via Flickr.

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Thirty-one years ago, when the Site C dam in B.C.’s Peace Valley was rejected for the first time, BC Hydro was told to investigate alternatives sources of energy, specifically geothermal energy, by the B.C. Utilities Commission.

But the Crown corporation has utterly failed to do so, according to the report of the joint review panel on the Site C project, released last month.

Ken Boon, a Peace Valley farmer whose land would be flooded by the dam, pointed this out to the panel, noting that somehow “we’re back here now 30 years later and still talking about the dam.”

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The panel doesn’t mince words on the province’s failure to investigate alternatives.

“The low level of effort is surprising, especially if it results in a plan that involves large and possibly avoidable environmental and social costs,” it writes.

The $7.9-billion dam would flood 107 kilometres of the Peace River and its tributaries, threatening endangered wildlife and putting farmland under water.

Why haven’t alternatives been researched? The panel points the finger at the government’s lack of funding for geological exploration, while outlining a culture of complacency fuelled by plentiful, low-cost electricity.

But times have changed, the panel says, and failure to ramp up exploration of alternative renewable sources a decade ago is hurting the province now: “The panel concludes that a failure to pursue research over the last 30 years into B.C.’s geothermal resources has left BC Hydro without information about a resource that BC Hydro thinks may offer up to 700 megawatts of firm, economic power with low environmental costs.”

With the largest public expenditure of the next 20 years on the table and a lack of clear demand for the Site C project, a serious look at the alternatives is in order.

Someday, a growing B.C. population will need more energy. “The question is when,” the panel writes. “A second question is what alternatives may be available when that day comes.”

Geothermal offers alternative reliable source of power

Even with next to no research, BC Hydro has estimated geothermal energy could replace two-thirds of Site C’s power.

Canada is currently the only major country located along the Pacific Rim’s Ring of Fire not producing geothermal energy. A Geological Survey of Canada report recently noted that northeast B.C. has the “highest potential for immediate development of geothermal energy” anywhere in the country.

The advantage of geothermal power over other types of renewable energy is that it’s considered a “firm” source of base load power, comparable to a hydro dam. The United States has about 3,400 MW of installed geothermal capacity.

“The wind doesn’t always blow and the sun doesn’t always shine, but the earth is providing heat at a constant rate,” explains Grant Van Hal, a senior policy advisor for the Canadian Geothermal Energy Association (CanGEA).

During the Site C hearings, the association argued geothermal energy offers more jobs spread through B.C. and First Nations, less transmission upgrade costs, fewer environmental impacts and the planning flexibility to follow the actual demand growth in the provincial system.

Despite this potential, the panel noted that BC Hydro reported its current investment in geothermal research as under $100,000 a year.

“We don’t really have funding to do R&D… In fact we’re expected not to do that,” BC Hydro said at the hearings.

However, the Clean Energy Act states it is a provincial objective “to use and foster the development in British Columbia of innovative technologies that support energy conservation and efficiency and the use of clean or renewable resources.”

The panel doesn’t overlook this contradiction and raises several issues with it — chiefly that “if BC Hydro is to continually scan the resource and technology horizon for future supply and conservation possibilities, it must have a budget and a mandate to do so. Without these, long-term planning is seriously uninformed.”

In an effort to prevent future decision-makers from also being “seriously uninformed,” the panel re-iterates what was said in 1983:

The Panel recommends, regardless of the decision taken on Site C, that BC Hydro establish a research and development budget for the resource and engineering characterization of geographically diverse renewable resources.

Next, in one of the panel’s more pointed remarks, the report reads: “If the senior governments were doing their job, there would be no need for this recommendation.”

Building new supply bit by bit reduces costs

Despite the lack of detailed information for B.C., based on costs in other jurisdiction, the panel is able to say that geothermal power is available at a similar cost to Site C — and is more flexible.

“These sources, being individually smaller than Site C, would allow supply to better follow demand, obviating most of the early-year losses of Site C,” the report says.

That’s a point re-iterated by Paul Kariya, the executive director of trade association Clean Energy BC.

“Times have changed. We’ve been through an era of building big dams,” he told DeSmog Canada. “When you build a dam, you get this one massive lump of power and that’s not the way that energy is planned for anymore.”

This part of the Peace Valley would be flooded if the Site C dam is built. Credit: Graham Osborne.

While much has changed, some things haven’t.

“One of the things that hasn’t changed is governments of all stripes like mega projects,” Kariya says. “Site C is potentially the last mega hydro dam project in B.C. They’ll want it there as a potential.”

Matt Horne of the Pembina Institute, a sustainable energy think tank, says predicting future power demand is an uncertain game.

“One of the uncomfortable parts of Site C, is that you’re saying, ‘This is where demand is going to be at in 15 years,’ whereas other options … are much more scalable and can be matched to demand over time,” he says.

“That way, if we end up in a scenario where demand doesn’t increase as fast as BC Hydro is predicting, we don’t have to overbuild, whereas with Site C it’s one big block.”

A study commissioned by the Treaty 8 First Nations, “Need for, Purpose of and Alternatives to the Site C Hydroelectric Project,” found Site C is not a cost-effective solution to meeting BC Hydro’s forecast needs for additional energy and capacity. Study author Philip Raphals of the Helios Centre found that when compared to alternative portfolios built as needed to meet demand, the dam comes out as the most expensive of alternatives.

But what about natural gas plans?

Some of the bigger uncertainties in terms of electricity demand are around the scale of resource development, particularly the liquefied natural gas (LNG) industry. That’s because each large LNG terminal, if run entirely by electricity, would require an entire Site C dam to power it.

However, the panel found large LNG plants are likely to be powered by natural gas directly (because they’ve been given an exemption from the Clean Energy Act) and, even if they did use electricity, the power would be required before Site C became operational.

The panel seemed unimpressed by B.C.’s double-standard on the topic of burning natural gas for electricity (much more on that coming later in this series).

“LNG developers have been promised a free hand to burn their gas here for their own purposes, but BC Hydro has been denied the same privilege,” the panel wrote.

Cost of renewables dropping rapidly, cost of dams increasing

Merran Smith, executive director of Clean Energy Canada, says the cost of renewables has gone down rapidly in the past five years, with solar costs dropping 80 per cent and wind costs dropping 35 per cent.

“And we only see those lines continuing down, so a decade from now, the cost one will assume will be lower,” Smith told DeSmog Canada. “Whereas the cost for building large dams is only going up.”

After conserving as much as possible, it makes most sense to build new electricity supply where it’s needed, Smith says.

“There’s renewable potential all over this province, so rather than having one large dam in the north with a huge transmission line, we can create renewable energy in the regions where it’s needed,” she says.

Given this, Smith questions whether Site C is the best path forward for British Columbians.

“Why would we lock ourselves into a very expensive large dam when we could build units in clean, efficient renewable energy as we need it and where we need it?”

Photo: “Geothermal borehole house” by Lydur Skulason via Flickr

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Every day British Columbians flick on light switches, power up their computers and cook dinner, confidently expecting the power supply will not fail them.

The expectation that reliable electric power will be available is emphasized by BC Hydro as it touts benefits of the proposed Site C dam on the Peace River and the resulting “clean” energy that could theoretically power 450,000 homes each year.

“Our forecasts show the demand for electricity will increase by approximately 40 per cent during the next 20 years,” said Charles Reid, BC Hydro president.

“And an emerging liquefied natural gas sector could further increase the demand for electricity.”

But, looking into the future is an unreliable art and, while BC Hydro insists that the power will be needed by the time the $8-billion project is completed in 2024, opponents say that, especially at a time when the energy market is undergoing rapid change, the mega-dam will end up as a costly white elephant.

The unknowns include changes in demand because of economic development, the cost of electricity, public policy changes and development of alternative energy sources.

Need for Site C dam not proven: joint review panel

The joint review panel assessing the Site C dam concluded that, although there will be an increasing need for power in the future and Site C is likely to be the most cost-effective option, BC Hydro failed to prove that the new energy would be needed within the timeframe set out in the proposal. [view:in_this_series=block_1]

“The panel concludes that the proponent has not fully demonstrated the need for the projects on the timetable set forth,” says the report submitted this month to the federal and provincial governments.

The panel makes it clear that federal and provincial government decision-makers need to be sure the power is needed before giving the go-ahead.

Justification for Site C “must rest on an unambiguous need for the power and analysis showing its financial costs being sufficiently attractive as to make tolerable the bearing of substantial social and other costs,” the report says.

The findings have sparked more questions about the need for Site C power, especially as annual figures show B.C. is usually a net exporter of energy

“This opens the door for us to have conversations about alternatives – local projects with benefits for local people – projects like smaller hydro, wind, natural gas and even geothermal,” said Treaty 8 Tribal Chief Liz Logan.

LNG argument has cracks

Even the LNG argument — used by Premier Christy Clark in last year’s election campaign as a major reason for building Site C — is losing traction as most companies indicate that, for compression and liquefaction of the gas (which takes vast amounts of electricity), they will generate their own power by burning natural gas already flowing through their pipes.

In order to burn natural gas, the LNG industry has been handed a blanket exemption from the Clean Energy Act, raising concerns about the government’s commitment to cutting greenhouse gas emissions.

The Pembina Institute estimates that if five LNG facilities are built, the industry would more than double B.C.’s carbon pollution, single-handedly emitting nearly three-quarters as many greenhouse gases as Alberta’s oilsands.

However, even those who argue that LNG plants should be powered using renewable electricity, don’t necessarily point to a need for the Site C dam. Clean Energy Canada, for instance, argues that the LNG industry can power itself on regionally produced clean electricity, mostly wind power on B.C.’s north coast.

Even under that scenario, LNG plants will need power from BC Hydro for ancillary needs, such as running the site, said Dave Conway, BC Hydro spokesman.

Initial estimates said increased capacity would be needed by 2027/28, but, with taking LNG plans into account, even a “low LNG load forecast” moves the need for energy up to 2024.

“Mining is also one of the big drivers so, with or without LNG, new capacity and new power is needed by 2024,” Conway told DeSmog Canada.

In B.C., about one-third of electricity is used by residential customers, another third is used by commercial customers and another third goes to industrial customers, he said.

“The need for this project comes from growing demand,” Conway said. “Economic development is the primary driver.”

BC Hydro overestimates demand for power: retired federal economist

That need continues despite residential customers reducing power use because of conservation and BC Hydro’s own documents showing it plans to meet 70 per cent of future demand growth through conservation. It is essential that BC Hydro is able to meet peak load requirements, Conway said, even though peak demand may come only one day a year.

However, retired federal economist Erik Andersen said BC Hydro has a chronic problem with over-estimating the demand for power.

“Over the course of the past four decades, the need for a Site C generation facility has been part of the larger and exaggerated demand narrative BC Hydro has been telling,” he told DeSmog Canada..

Andersen crunched the numbers and is questioning Hydro’s estimates of a population growth of one million people in the next 20 years, which he says doesn’t fit with B.C Statistics forecasts.

“There has been one heck of a rollback in population growth, but BC Hydro seems to want to ignore that,” he said.

Future demand analysis based on "serious market failure"

Energy economics expert Marvin Shaffer, adjunct professor in the school of public policy at Simon Fraser University, said BC Hydro’s analysis of future demand is based on a “very serious market failure” in the pricing of electricity.

“The only reason Site C is ‘needed’ is because the government is preventing BC Hydro from using gas-fired thermal units to back up its hydro system when needed,” he told DeSmog Canada.

“If the project is built as planned, it will be surplus to forecast requirements for many years and sold in the export spot market at a significant financial loss.”

Even if some power was sold to LNG plants, which would otherwise use gas-fired thermal power to meet their energy needs, it wouldn’t be at a price that would begin to recover Site C’s full cost, Shaffer said.

It is unlikely that surplus power could be exported because energy produced at Site C would be too expensive, agreed NDP opposition leader John Horgan.

“With the advent of shale gas everywhere in North America, the price of electricity has plummeted because people can get gas and turn it into electricity at a relatively low price,” he told DeSmog Canada.

Is the era of building big dams over?

Government will decide this fall whether to proceed with Site C, but Energy Minister Bill Bennett already seems convinced of the need for more power.

“We don’t need the electricity today or tomorrow or the next year, but we are pretty darn sure we are going to need it 10 years from now,” he told reporters after the release of the joint review panel report.

However, Paul Kariya, executive director of Clean Energy BC — an industry trade association that represents independent power producers, including gas generators —told DeSmog Canada that predicting power demand is a “mug’s game” and there is a way to meet power needs incrementally.

“Times have changed. We’ve been through an era of building big dams,” Kariya said. “When you build a dam, you get this one massive lump of power and that’s not the way that energy is planned for anymore. What we offer is a more incremental approach.”

Up next: Part 3 of our Site C series will explore the alternatives to building the Site C dam.

Photo: "LNG Canada joint venture agreement signing" by Province of British Columbia

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.