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.”

[view:in_this_series=block_1]

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.

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.

With two weeks to go until Ontarians vote in a new government, it appears proposed oilsands pipeline projects for the province will not be a prominent election issue.

Ontario’s 2014 election will not be B.C.’s 2013 election.

“We would like to see all elected leaders in Ontario — not just MPPs — saying no to tar sands pipelines until sanity can be restored to federal environmental policy and the environmental regulations recently rolled back by the Harper government are put back in place,” says Graham Saul, executive director of Ecology Ottawa.

Last year’s provincial election in B.C. left many (especially those living outside of B.C.) with the impression that the Northern Gateway and Trans Mountain oilsands pipelines were the only election issues. Ontario also faces two proposed oilsands pipelines that would cut through the province — TransCanada’s Energy East and Enbridge’s Line 9 — but no political party has addressed the risks these pipelines pose for the province on the election trail.

“We are seeing momentum build in Ontario against tar sands pipelines, but resistance is still new,” Saul told DeSmog Canada. Ecology Ottawa leads local opposition in the Canadian capital against Energy East. If approved, the 4,600 kilometre pipeline will transport 1.1 million barrels a day of oil and oilsands bitumen from Alberta through Ontario to Saint John, N.B.

Ontario Opposition to Oilsands Pipelines Has Yet to Reach B.C. Levels

Public outcry in Ontario against oilsands pipelines has yet to reach the same levels as opposition to pipelines in B.C. or the Keystone XL pipeline in the U.S. This may be because Line 9 and Energy East are existing pipelines being repurposed to ship heavy crudes such as bitumen. Both pipelines have been in the ground for decades — Line 9 as a conventional oil pipeline and Energy East as a transporter of natural gas.

TransCanada's Energy East pipeline. Credit: Environmental Defence.

“People have the impression that it is not dangerous to retrofit pipelines for tar sands oil,” Saul says.

An examination of pipeline spills in the U.S. Midwest between 2010 and 2012 by the Natural Resources Defence Council found pipelines transporting oilsands bitumen ruptured three times more often than the national average. The heavy bitumen’s tendency to sink in water (confirmed by a federal study earlier this year) makes cleaning up bitumen spills in waterways extremely difficult. Conventional oil floats when spilled in water.

Line 9 in southern Ontario and Energy East in northern Ontario pass through or come dangerously close to the drinking water supply for millions of Ontarians, specifically the Great Lakes. Ontarians and their drinking water are effectively boxed in by proposed oilsands pipelines that critics describe as “all risk, no reward” for the province. The oil in both projects is not destined for Ontario, but for refineries in eastern Canada and overseas.

Enbridge's Line 9 Pipeline. Credit: Enbridge.

The timing may also be off for oilsands pipelines to be an Ontario election issue. The rushed review process of Line 9 concluded with the project’s approval last March by the federal regulator, so for some Ontarians the issue of Line 9 may have already come and gone. Saul of Ecology Ottawa points out a decision on Energy East is not expected until 2016, so it may not be an imminent concern for Ontarians at the moment.

The Debate On Energy Is Being "Incorrectly" Informed By Political Parties

What Ontarians are left with is a provincial election energy debate revolving entirely around the rising costs of home power bills in the province. 

“Power bills are a more tangible and directly visible concern. It hits people in their pocketbooks,” says Mark Winfield, professor of environmental studies at York University in Toronto.

Ontarians do pay some of the highest rates of electricity when compared to other provinces, so it is a conversation worth having. Unfortunately, the major political parties — the NDP and Progressive Conservatives especially — have plunged this conversation down a path that ignores why power bills have gone up in the first place.

Ontari-Hydro.com chart showing average cost per 1,000 kWh of electrcity per province.

“Under [Ontario Premier] Harris we had a ten-year period of very little investment in electricity infrastructure. We are playing catch-up now,” Winfield says.

“Its like taking out a new mortgage on your house to do badly needed home renovations,” Winfield told DeSmog Canada.

The Progressive Conservatives claim the ruling Liberals' subsidies for renewable energy are to blame for the high cost of power and vow to get rid of them if elected. The NDP propose capping CEO salaries in the provincial power corporations and merging Ontario’s four energy agencies into one to save money. 

“This is informing the conversation on power incorrectly and ignores the historical operating costs of power in Ontario,” Winfield says.

Ontario Is Still Paying Off Past Investments In Its Power Grid

A report released earlier this year finds paying off the construction of Ontario’s nuclear power plants (all of which ran massively over budget) and investments made in Ontario’s electrical delivery system over the last ten years is the largest component of the average home power bill in Ontario. Green energy, including solar, wind and biomass, comprises nine per cent of the bill.

Average power bill in Ontario according to the “Your Home Electricity Bill” report.

Winfield argues the most cost effective method for savings on electricity is investing in energy conservation. The NDP, Greens and, to a certain extent, the Liberals all promote ‘Conservation First’ energy strategies. Winfield would also like to see discussion on whether Ontario is overbuilding electrical production facilities (electrical demand in Ontario is declining) and investing in “inflexible assets,” such as nuclear power.

“There is still the perception in Ontario that it is the 1960s and we are getting lots of cheap hydro-power from Niagara Falls. Today in Ontario, hydro accounts for only 25 per cent of the province’s electrical use. Constructing new sources of electricity costs money,” Winfield says.

Ontario does sit beside a large, relatively inexpensive source of hydro power: Quebec. It is estimated Ontario could save $1 billion annually from 2020 to 2050 if the province imported hydro power from Quebec through existing power lines instead of refurbishing its nuclear plants to extend the plants’ lives. All four political parties speak favourably of the proposal, although the Greens and the NDP are the strongest supporters.

Ontarians will hit the polls on June 12. Premier Kathleen Wynne’s Liberals currently have a slight lead in the polls on Tim Hudak’s Progressive Conservatives. Andrea Horwath’s NDP, which forced the election, is trailing both parties significantly. 

Image Credit: Sharon Drummond via Flickr.

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.

Ontario could avoid refurbishing aging nuclear stations and save over $1 billion annually on electricity bills if the province imported water power from Quebec, says the Ontario Clean Air Alliance, a coalition of 90 organizations that promote renewable energy. 

“This one is really a no-brainer,” Jack Gibbons, chair of the alliance, told DeSmog Canada. The alliance was largely responsible for Ontario agreeing to phase out all coal-fire power plants by December 31, 2014.

Quebec is the fourth largest producer of hydroelectricity in the world (behind China, Brazil and the U.S.) and has a large hydro surplus the province usually sells to the U.S. Existing power lines between Ontario and Quebec can transport nearly as much power as Ontario’s Darlington nuclear station produces. This amounts to more than 10 per cent of Ontario’s peak demand on a hot summer’s day.

“Importing hydro from Quebec is technically feasible. The only barrier is lack of political will,” Mark Winfield, associate professor of environmental studies at York University, says.

Successive Ontario governments have insisted on the province producing all of its own electricity despite the fact it sits between two provinces with massive hydroelectric generating capacities — Quebec and Manitoba. Transmission lines from Ontario to both of these provinces have existed for decades. Ontario-based water and nuclear power provide the province with most of its electricity.

Ontario's electricity supply mix in 2013. Source: Long Term Energy Plan 2013

“Ontario imports natural gas from outside the province, and uranium for its nuclear plants from Saskatchewan, and used to buy its coal from the American Midwest,” Winfield told DeSmog Canada.

“Why would importing electricity from Quebec be any different?” he says.

Ontario’s long-term energy plan, released last December, projects home power bills will rise 42 per cent by 2018. The plan calls for energy conservation and refurbishing old nuclear reactors to prevent rates from increasing even more.

Importing water power is mentioned in the province’s energy plan as a possibility if the price is right:

“Ontario will consider opportunities for clean imports [i.e. renewable energy such as water power] from other jurisdictions when such imports would have system benefits and are cost effective for Ontario ratepayers.”

Transmission power lines from Ontario to other provinces and states. Source: Long Term Energy Plan 2013

The Ontario Clean Air Alliance estimates the savings for Ontario will be at least $1.2 billion annually between 2020 and 2050 if the province cancels the refurbishment of Darlington’s nuclear reactors and signs a long-term power contract with Quebec instead. The cost of the refurbishment will be 8.6 cents per kilowatt-hour (kWh) according to Darlington’s operator, Ontario Power Generation. Quebec exports power at 4.1 cents/kWh on average.

The savings could be even more.

“Nuclear projects in Ontario usually run 2.5 times over budget. We are concerned that the actual cost of the Darlington re-build will be between 19-37 cents/kWh,” Gibbons told DeSmog Canada.

Ontario Power Generation, a provincially owned power company, has asked the Ontario Energy Board to approve a 30 per cent rate increase on what the company is paid for nuclear power. A big chunk of the rate increase is expected to go to extending the lives of Ontario Power Generation’s nuclear reactors at Darlington by an additional 30 years.

“As we see it, energy conservation and importing hydro from Quebec is the only way Ontario can reduce electricity bills for consumers,” Gibbons says.

Quebec stands to benefit from a power contract with Ontario as well since the U.S. export market is collapsing. The U.S. shale gas boom has dropped the price of natural gas so low that American states are burning more gas for their power than before, creating less economic incentive to buy electricity from Quebec.

Ontario could reap further economic benefits beyond being a consumer of Quebec’s cheap hydro. Winfield points out that Quebec’s electrical demand is the highest in winter when Ontario's demand is low and wind power is at its strongest. Ontario could sell its power back to Quebec as part of the deal.

Cheaper electricity rates could provide some relief for Ontario's declining manufacturing industry by reducing the cost of doing business and making manufacturers in Ontario more competitive.

“Although there would be some job loss in Ontario’s power generating sector, there would be a net-gain for the province’s economy,” Gibbons says. OCAA is currently circulating a petition demanding Ontario sign a long-term electricity supply contract with Quebec.

Image Credit: DeborahCoyne.ca, Government of Ontario

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.