In the Dark: “Lies from BC Hydro”
The following item was written by Roger Bryenton P. Eng. (former), MBA, Energy Systems Consultant, Suzuki and SPEC Elder.
What BC Residents Have and Have Not Been Told About Site C Dam and Electricity Prices:
1. “BC Needs More Electricity” – the Biggest Lie.
BC Hydro assessed hundreds of options as part of their Integrated Resource Plan, and Appendices (RODAT). Conservation or Demand Side Management can contribute more in savings than the entire Site C project would provide. And all the savings are at the point of use and save transmission and distribution losses – a bonus of at least another 6% to 8%. This is 1100MW of capacity, or 5100 GWh of electricity per year. The average capacity of Site C is only 580 MW!
– In addition there are 400 MW of savings BC Hydro did not include, that are routinely used to manage demand peaks. Plus, there is Burrard Thermal, roughly 1000 MW!
– There are over 1000 MW’s that BC is entitled to under the Columbia River Agreement!
– There are hundreds of small generators that could be utilized during peak periods, a few hours a year.
What are they thinking? We do not need more electricity.
2. The “Real” Cost of Site C – No figures are given for getting the electricity to people – another 1 to $2 Billion – maybe more?
The “original cost” of Site C was projected to be $8.8 Billion. This is equivalent to $95/MWh, at the point of interconnection, in the Peace region. This was artificially reduced by BC Hydro choosing another more favourable discount rate, from 6% to 5%, creating the illusion of a lower cost for power, $58 to $61/MWh. Adding the cost of transmission and distribution to most of the customers, in the Lower Mainland, is another $1 to $2 Billion. The actual cost of Site C is now $145/MWh according to leading economists. Site C is about the 20th of 200 projects in cost. Conservation is the least expensive at one third to half the cost of Site C, followed by many lower cost renewables: small projects better suited to matching any increases in demand.
3. What are the Risks? Interest Rates, Demand for Electricity, Cost Over-runs.
Demand – If the “need” for electricity drops, and a project that is not needed begin with has to be paid for. Wrong assumptions guarantee wrong answers. Mistakes today result in major corrections needed tomorrow. Big mistakes today can result in disastrous consequences tomorrow. When interest rates rise, the project costs will also increase. Remember 1981 when interest rates rose to 18% – that doubles the cost every 4 years! What about inflation, technical complications and wage increases? They will also increase the cost of the project.
4. Is New Power Cheaper than Saving Power? NO! Not by a long way.
Conservation – “wasting less” can save as much power as Site C will generate. It will do it at roughly half the cost according to BC Hydro’s own numbers! With an average capacity of 580 MW, the real cost per kW from Site C is $8.8 Billion/580 MW, or over $15,000/kW! It is worthwhile for BC Hydro to invest up to $15,000 to ensure that they could save a single kW of electricity at peak times. That would be serious DSM!
New power will be expensive. Just the interest cost on $8.8 Billion at 5% is $440 million / yr.
5. Double the Number of Jobs, from Conservation
Conservation – wasting less, will create more than double the number of jobs that Site C will. These jobs will be geographically diverse – across the province wherever electricity is presently used. Under a “Conservation strategy”, workers will not have to relocate for short term assignments, they can stay where they are, keeping families intact and making a difference to their communities.
6. No Utilities Commission Review
The BC government decided and legislated that the Site C power project would be built. The BC Utilities Commission , which until now, oversees every electricity rate review, addition, change or removal, was specifically excluded from reviewing the Site C project. Why? Because the government knew there was no justification for Site C, and rammed it through. No questions asked!
7. Follow the Money – Who “Wins”
On an $8 Billion project, a lot of people are going to make a lot of money!! Premier Christy Clark and her Cabinet Ministers will be well looked after when they retire from politics, and their patrons remember how much money flowed into their hands during this project, and possibly into re-election campaign funds as well. Watch and see.
8. Pork Barrel Politics? “Let’s pretend this is a good idea, and it will create jobs!” It will be our “legacy” project.
For an unnecessary project, with no economic or financial benefit, and a “real” legacy of trespassing and denying First Nations their constitutional treaty rights, flooding an irreplaceable farmland valley, contributing to greenhouse gas emissions and worsening climate change conditions, it is morally obscene for any politician to pretend that this project is of “lasting benefit”.
9. Future Rate Increases – Let Our Children and Grandchildren Pay.
New Supply – BC Hydro’s internal criteria for new projects is that they must be “Incremental” as well as “Lowest Cost”. How is an 1,100 MW massive dam and powerplant either incremental or lowest cost? BC Hydro’s own analyses show conservation is the lowest cost! It is also incremental. It was rejected in favor of Site C. Lowest cost, incremental, conservation will reduce future rate increases.
New Connection Costs – Utility rates need to reflect the ongoing cost of new supply. How then, can BC Hydro justify huge incurred costs, with a tiny increase of connection cost?. 200 amp service, or 25kW, costs $496, or $500; 400 amp service or 50kW costs $798, $800 nominally. Thus BC Hydro is sending a message that it will only cost $300 for an extra 25k W of capacity. That is about $12/kW. Remember the $15,000?
Assuming that Site C will cost about $8 Billion for 1000 MW of capacity, that would be equivalent to $8000 per kW, actually $15,000 (see point 4 above). Yet they are offering it to large residential homeowners with spas, point of use water heaters, air conditioning, and other large loads – radiant floor heating, electric stoves, clothes dryers and water heaters, at $12/kW. How is that message consistent with a cost of new supply at over $8000, more than 600 times greater?
Wrong messages will not reduce demand, and eventually must be paid for, with massive rate increases.
Recent BCUC hearings attempted to determine an appropriate allocation for residential rates, using an approximate 50:50 split between energy and capacity costs, to be reflected by a rate which is then 50:50 energy and capacity. The folly of these 2015-2016 Rate Design hearings is that a 1100 MW addition, from Site C, is only a 10% capacity/demand increase but results in a 40% increase in debt. What happens to the 50:50 split in 8 years when a 40% increase in costs must be attributed?
A 10% increase in capacity should only result in a 10% increase in costs, ideally. By spending 4 times that amount, 40% debt increase, the capacity allowance should also increase by 4 times, thus the 50:50 split today will be completely wrong in 8 years.
Wrong calculations will result in wrong rates, distortions and future corrections are then needed.
10. Is Site C Really “Green”? No! It is An Environmental Disaster – It Floods Farmland, and Reservoirs Generate CO2, Methane and Mercury-Contaminated Fish
In a report on the Columbia River Treaty, it was noted that reservoirs require substantial mitigation; there are several recommendations about the nature of these effects. Yet BC Hydro and the Province of BC appear to have ignored these recommendations, as if they do not apply to the “pet project” Site C.
Reservoirs are known to generate CO2 and methane, as biological processes decompose algae, plant material and flooded riverbed areas. In upstream reservoirs on the Peace, fish are no longer safe to eat because of mercury contamination, another biological process of decomposition in the reservoirs. Traditional First Nations’ food supplies are substantially affected, and have been since these other power plants were developed years ago.
11. Farming Forever? – Flooded Valleys Cannot be Farmed, or “Un-Flooded”
There are 50,000 acres of productive farmland and forests, enough to feed a million people, which will be lost forever. There are hundreds of families and wildlife supported by this farmland, which will be devastated by such an ill-conceived and completely unnecessary project.
The BC Government legislated the removal of this land from the Land Reserve, with no review, as part of the project approval process. This prevented normal reviews and project justification. There is no precedent for such an outrageous act of parliament. They completely ignored their own guidelines and policies.
12. First Nations Betrayed – Was BC Hydro Invited to Destroy Heritage, Cultural lands, Artifacts and a Way-of-life?
Perhaps the greatest travesty is that both the Federal and Provincial Governments, and BC Hydro, have not complied with the Treaty rights of the First Nations people that will be affected. This is completely unconscionable. Both governments have ignored the needs and wishes of these people. “Mitigation” has been relegated to “buy-offs”. How do you “mitigate” the destruction of a way of life that has endured thousands of years? What does the concept of “heritage” mean, and imply, and what are the consequences of destroying a culture?
13. What about Geothermal? – “BC Hydro does not have enough data”.
During the Joint Review Panel (Federal-Provincial) process it was revealed that BC Hydro had not seriously evaluated the possibility of using geothermal power – “they did not have enough data”. This is inexcusable!
There are hundreds of geothermal powerplants around the world. Ormat, one of the leading equipment suppliers and developers, state that “industry average” costs for a 50MW plant are in the range of $200 – $250 million US. With an exchange rate of .75 that is under $350 million Canadian. With a plant output steady at 50MW, it would take 580MW/50MW per plant = 11.6 plants, which would cost in the order of $4 Billion, less than half the cost of Site C. And it would not be an “all or nothing” case. 50MW plants could be installed as demand grows, not one huge dam – all or nothing! The industry average cost of power is in the order of 5 cents to 7 cents/kWh, as confirmed by the Canadian Geothermal Association. Site C will be in the order of 10 Cents/kWh, possibly more.
14. BC Hydro “Accounting” – Living off the Credit Card!
BC Hydro is using “deferral accounts” to hide the real cost of operations and Site C. This is “living off the credit card”, or using “equity” in your house to borrow money to live on. What happened in 2007-2008? People could not afford the payments and sent the US into a depression; the world into a recession. BC Hydro is aiding in creating the next recession – we cannot use debt financing, hidden from public scrutiny without serious financial implications!
15. “Water, Water, Everywhere” – Dammed Water is a Commodity
Under NAFTA, “Free Trade”, Canada cannot restrict exports of “commodities” to the US. Once dammed, the Peace River becomes water, subject to NAFTA. And a thirsty US, with droughts, wants our water.
16. Cumulative Impacts of Projects
When the Joint Review Panel reviewed the “Environmental Impacts” of Site C, the boundaries of the “affected areas” were cleverly designed to exclude existing industry and commercial activities. Thus BC Hydro’s Site C dam was not seen to have a “cumulative impact”. By ignoring the truth, the conclusion was much more easily reached – that cumulative impacts generally were not significant.
These are some of the “Lies from BC Hydro” to keep Customers and Residents of BC “In The Dark”