BC Hydro picks VIGP; Georgia Strait pipeline still "undead"

Bad energy decisions will increase air pollution, global warming, loss of species diversity. BC Hydro with the support of the BC government, has just made one of those wrong energy decisions.

BC Hydro has announced its selection of “Duke Point Power LP”, a 252 MW gas-fired electricity generation project for Nanaimo. Proposed by Pristine Power of Calgary, the project is the only one left standing following BC Hydro’s year-long Call for Tenders (CFT) selection process.

Isn’t this Vancouver Island Generation Project (VIGP) with a new name?
Yes. Duke Point Power is VIGP, this time privately owned and renamed. VIGP was originally sponsored by BC Hydro, and turned down by the BC Utilities Commission (BCUC) in September 2003 because BC Hydro had not demonstrated that VIGP was not the lowest-cost solution to meet an expected supply shortage in 2007.

If the Duke Point Power project is the same thing as VIGP, how can Pristine Power pitch it at a lower cost than BC Hydro was capable of doing?
Possible answers to that question are:

  • A $50 million credit given by BC Hydro to companies wishing to acquire the assets of VIGP and resubmit them into the CFT process, which is what Pristine Power has done.
  • $98 million “sunk” costs in VIGP were written down by BC Hydro earlier in 2004. Are these costs factored into the Pristine Power project costs? Or are they lost from view, but nevertheless borne by BC Hydro’s ratepayers, or the taxpayers of BC?
  • The relative appreciation in the Canadian dollar compared to the US dollar results in an apparent reduction in borrowing costs, since the debt and repayment currency is $US. This is a cheap and temporary trick, since exchange rates will fluctuate many times in the decades during which the project costs are being repaid.

Will the Duke Point Power project have to undergo a review by the Environmental Assessment Office or by the BC Utilities Commission?
Probably not. Unless the location or technology changes, the EA permit remains valid. And because the project is privately owned now, it is not subject to a review by BCUC.

BCUC has to review something, though. What is that?
BC Hydro will apply to BCUC for a review of the Electricity Purchase Agreement between BC Hydro and Pristine Power or Duke Point Power LP. The EPA is a commercial agreement, subject to confidentiality considerations. In the past, details within EPAs have not been disclosed, and this has been upheld by the Office of Information and Privacy Commissioner (OIPC). We should expect details of this EPA to be unavailable, as well. This becomes a case of “trust the regulator.”, since the Commissioners will be given access to the full agreements. BC Hydro states that they will file this application by November 19.

Who is Pristine Power?
Pristine Power is a group of ex-Westcoast Energy people who were working for Westcoast and Fletcher Challenge and built the Island Cogeneration Project. They claim to have built a number of combined cycle generation plants in North America, although its website gives no indication as to what these are.

Is the GSX Pipeline dead? Where will the Duke Point project get its fuel from?
The announcement deferred the GSX Pipeline decision until the BC Utilities Commission has completed its review of Terasen’s Resource Plan.

The GSX Pipeline is dead, if Terasen’s application is approved by BCUC, according to Richard Neufeld, BC’s Minister of Energy and Mines, on CKNW’s Bill Good Show on November 4 (audio vault, 9-10 am). Until then, GSX remains among the “undead”.

Terasen filed evidence in the review of VIGP that it could provide the needed gas, at lower cost, with upgrades to its existing pipeline to Vancouver Island.

BC Hydro news release
BC Hydro Call for Tenders for more information
Island deal leaves Hydro on the hook for $70m
Duke Point project to power Island
GSX Concerned Citizens Coalition media release

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