First Nations ultimatum: Site C dam or LNG, but not both

"OTTAWA — The power struggle between B.C. First Nations and the federal government over resource development in the B.C’s North escalated this week with both sides issuing public statements about who has the final say over major projects.

Tensions have been high since a Supreme Court of Canada decision in June ruled the Crown can only infringe on an aboriginal or treaty rights if it meets a tough test aimed at reconciling those rights with the broader public interest.

The court ruling, which stressed the need for consent, has triggered lawsuits from First Nations challenging numerous proposed economic development projects.

A delegation of B.C. First Nations leaders travelled to Ottawa this week to warn the federal government not to approve the Site C hydroelectric project in northeastern B.C. They said the provincial and federal governments would have to choose between Site C and the liquefied natural gas developments that affect the Peace River in northeastern B.C.

Chief Roland Willson of the West Moberly First Nation said his people, who would be affected by Site C, are not opposed to resource development. But multiple developments would be too much.

“I’ve said you can’t have both,’’ Willson said told The Canadian Press. “If you want to push Site C, we’re not going to be in favour of any LNG projects, any of the pipeline projects up there. We don’t want to be there but if that’s the case, we don’t have any other choice.’’

The government of Prime Minister Harper has been at the United Nations this week for discussions on global security. But it took the opportunity to tell the world that Harper believes aboriginal people do not have a “veto” over development.

The UN assembly adopted a “consensus outcome document” Monday, which essentially reiterated a 2007 declaration, stating that governments must obtain “free, prior and informed consent” before adopting administrative or legislative measures that might affect indigenous peoples.

The Harper government appears to consider consent in that mean veto. But First Nations leaders said they do not have a veto but that the UN document, like the June Supreme Court of Canada ruling, means government must consult with native governments and seek their consent. Only after that process, if an agreement has not been reached, can Ottawa go on to make the argument that public interest trumps aboriginal rights,

The Harper government adopted the 2007 UN declaration in 2010 but stated publicly that it was an “aspirational” document and that “free, prior and informed consent” shouldn’t be interpreted as a “veto” on development.

On Monday, the Canadian government issued a similar caveat, saying that the new “outcome document” again contained wording on “free, prior and informed consent” that could be “interpreted as providing a veto to aboriginal groups and in that regard, cannot be reconciled with Canadian law.”

Canada was the only member state at the UN General Assembly gathering Monday to object to the UN document.

Aboriginal leaders accused the federal government of misinterpreting the UN declaration and disregarding the Supreme Court of Canada decision involving B.C. Tsilhqot’in First Nation.

Grand Chief Ed John said the Canadian position was an “inflammatory” move aimed at implying that “consent” means “veto.” Stewart Phillip, president of the Union of B.C. Indian Chiefs, said the government is “thumbing its nose” at Canada’s highest court."

First Nations ultimatum: Site C dam or LNG, but not both:

B.C. Hydro on the edge of change as huge growth planned for North

B.C. Hydro on the edge of change as huge growth planned for North

B.C.’s north is in a frenzy of planning. There are applications for port expansions, coal and mineral mines, oil terminals, pipelines, synthetic fuel plants, liquefied natural gas facilities and hundreds of new drill rigs for shale gas extraction.

While the North is poised for unprecedented growth, BC Hydro is at pivotal moment in its history. Key energy decisions remain undecided by the policy makers in Victoria who will shape how big, how fast and how green that development will be.

Competing interests are demanding lower rates, more flexible service, a tougher watchdog, a leaner corporation.

Since 1962, the Crown utility has played a fundamental role in opening up the province to industrial development. What happens next in the North will determine what role B.C. Hydro plays in the province’s in the future.

The electricity grid mostly runs one way: The North supplies 35 per cent of all of B.C.’s hydro-electric power, but half of that is consumed in the South.

For all the North’s new, energy-hungry endeavours – which could easily double +BC Hydro's current industrial demand if only a third of them are built – the power isn’t set to return.

Sandwiched between demands for huge dividends to the provincial government and outrage from its ratepayers over threatened rate hikes, B.C. Hydro is prepared to walk away from its new customers. If these developments are built, many will have to provide their own power by burning natural gas.

This runs counter to the government’s legislated targets to reduce greenhouse gas emissions.

But that core agenda of Gordon Campbell’s B.C. Liberal government no longer resonates with the Liberals under Premier Christy Clark. The clean-energy mantra has been replaced by one that puts investment first, and fiscal restraint a close second.

But B.C. Hydro is poised to pass along hefty rate increases – as much as 26 per cent – to its 1.9 million industrial, commercial and residential customers.

That figure, contained in a leaked draft document, has become a lightning rod for customer complaints about bloated Hydro salaries, the $1-billion smart-meter program, contracts with private power producers, and more. In that framework, Hydro can use the need to contain spending as insulation against demands to offer new supplies of clean, renewable power.

“The challenge is that we find ourselves, in 2013, with limited options for taking that pressure off,” Energy Minister Bill Bennett said in an interview. Months ago he was vowing to “get a grip” on Hydro’s gold-plated operations. Now, he warns it is a long-term turnaround project. “It’s a large Crown, under repair.”

Residential customers – who still enjoy some of the lowest rates in North America – would direct their anger at the B.C. Liberal government that promised to keep rates low, but the next election is more than three years away. In 2006 British Columbia had the second lowest rates of 22 jurisdictions and in 2012 B.C. was fourth lowest.

Bigger customers have other leverage: Investment decisions may hinge on what Hydro will or will not offer. And those already on the grid warn the threatened rate hikes would lead to job losses.

Catalyst Paper is Hydro’s largest industrial customer, consuming 5 per cent of the entire provincial electricity load. The company sent every MLA a warning this summer: The company contributes $2-billion annually to the provincial economy across 25 communities – and that is at risk in the face of double-digit rate hikes.

“Energy is a big cost item for us,” said Lyn Brown, Catalyst’s vice-president for marketing. It is the company’s second-largest expense, after fibre. Having just climbed out of creditor protection through a major restructuring last year, “any rate increases could wipe all that heavy lifting away,” she said.

Part of the difficulty in tackling rate hikes is that the government has been circumventing the utility’s regulator to suppress rates in advance of the election.

By “smoothing” rates, B.C. Hydro has racked up billions of dollars in “deferral accounts” which it now must start to repay.

And, the aging infrastructure needs to be maintained. The Ruskin dam in the Fraser Valley is more than 80 years old and increasingly unreliable. B.C. Hydro is now spending more than $700-million to reduce earthquake risk and upgrade the powerhouse. It’s just one part of the $2-billion it is spending each year to maintain the grid.

Given those limitations, letting industry in the North use cheap, abundant natural gas to satisfy new energy needs offers a tempting relief valve.

The Clean Energy Association of B.C. estimates that, conservatively, the potential load growth in the North could add up to 35,000 gigawatt hours annually by the year 2026. Last year, B.C. Hydro’s load for the entire province was about 51,000 gigawatt hours.

Paul Kariya, executive director for the association, believes that B.C. could meet the pending demands in the North with clean energy. But he worries that the government is too preoccupied to consider the long-term planning that is required.

“There are two things on government’s mind: the rate hike and the balanced budget,” he said. B.C. Hydro will contribute about $1.8-billion in dividends over the next three years and that reliance on the Crown corporation limits just how big a stick Mr. Bennett wields.

“They want to get through the next two years somehow, but they’ve got to do something about the bow wave of those rates,” said Mr. Kariya, adding that the government may need to consider a reset for Hydro, to write down some of the debt to start fresh.

There is little appetite in Victoria for such an intervention, however. Mr. Bennett wants the corporation to behave more like a commercial operation, but he appears to be largely in agreement with B.C. Hydro’s current approach to new demand.

The Crown utility will table its integrated resource plan later this month, mapping out how it intends to meet future needs. But its draft plan offers to meet just a fraction of that potential new load. Some of the biggest demand would come from the new LNG industry that the provincial government has made a top priority. B.C. Hydro concludes that most LNG proponents will meet 90 per cent of their energy needs with natural gas. To meet the ancillary demand, Hydro proposes to build its own gas-turbine-powered electrical generation facility in the Kitimat region.

The final plan hasn’t yet been approved by the province, and a backlash is building. An internal report, obtained by The Globe and Mail, shows industrial users are frustrated by the Crown utility’s modern concept of customer service.

“Delays in transmission availability are cited as an obstacle to industrial development in British Columbia. B.C. Hydro’s transmission interconnection process is perceived as slow, cumbersome, unresponsive and expensive by customers,” the draft report, dated Oct. 4, says.

Tom Syer, senior executive for policy at the B.C. Business Council, released a report last week urging the province to take a stronger role in making sure the Crown utility becomes more nimble.

“They were, and remain, a foundation of our industrial infrastructure,” he said. “It is a critical time. We have serious competitive challenges and it is an identified issue for those who want to make big investments – they need to know B.C. Hydro’s system is working for them.”

A major policy obstacle remains the province’s climate-change targets, he said. By law, British Columbia must cut its greenhouse-gas emissions by at least 33 per cent below 2007 levels by the year 2020.

“There is a need to reconcile and where necessary revise climate-change objectives,” Mr. Syer said. “The simple reality is you cannot do this level of development – even if we did choose to use clean electricity inputs – and meet the GHG targets.”

The Energy Minister says those are decisions that still must be made by the B.C. cabinet. But this is a government that has been consumed with the pursuit of a new LNG industry – the climate-change law was the agenda of a previous Liberal administration.

“It may make more sense to let the companies use natural gas to drive their compressors,” Mr. Bennett said. “I’m doing my best as energy minister to try to carve out some opportunity for the clean energy sector in this province to continue investing. Having said that, I can’t do that to the extent that it is going to put pressure on rates. There is enough pressure on rates already.”

Richard Stout, executive director of the Association of Major Power Customers of B.C., said ratepayers big and small all have an interest in seeing B.C. Hydro reined in. He doesn’t quibble about the infrastructure spending but suggests the province is skimming far too much profit.

“Customers would be better off if B.C. Hydro was privatized – shareholders don’t expect that kind of profit.”

The draft report by the government’s industrial rate review, which will be finalized in the coming weeks, points to government intervention as a key problem. Mr. Stout says it is time the B.C. Utilities Commission was restored as Hydro’s watchdog.

“If you don’t allow an independent regulator to get involved, then rates are going to hell in a hand basket.”

The NDP’s energy critic, John Horgan, is not against the notion of burning natural gas in lieu of renewable electricity – especially if it helps B.C. Hydro escape from its present, costly bind.

But choosing the way forward – a future of clean energy or a future that increasingly relies on burning natural gas for power – is a decision that the public should be a part of, he said.

“It’s a big pivot. Let’s let the public decide.”

Justine Hunter - The Globe and Mail

Quebec-Ontario electricity trade is smart, but not simple - The Globe and Mail

Quebec-Ontario electricity trade is smart, but not simple - The Globe and Mail:

Last week, Quebec’s and Ontario’s premiers announced their desire to work together on crucial issues, including climate change, interprovincial trade and infrastructure. It is very positive for Canada when our two largest provinces recognize the benefits of co-operation. We should certainly hope they succeed, but let’s also be mindful of the obstacles in their way

Especially interesting is the prospect of greater interprovincial trade in electricity. This would be a game-changer in Canada, and a very positive one. Quebec has a great deal of low-cost hydroelectricity available to export, and its current U.S. markets are becoming less interested in purchasing long-distance hydro power because of their own development of low-price shale gas. At the same time, Ontario’s economy continues to grow but has few options for increasing its electricity capacity at costs anywhere close to Quebec’s. So the idea of Ontario buying electricity from Quebec is obviously sensible.

Any idea that is so obviously sensible must have serious problems, and there are at least three that come to mind.

The first will be the pressures from within Ontario to resist importing cheaper Quebec electricity. It will be argued that Ontario has built a world-class nuclear industry and that refurbishing existing nuclear plants and building new ones is necessary to keep this expertise at home. The fact that approximately nobody in the rest of the world wants to purchase this expertise or the associated technology will be ignored, or perhaps held up as an example of how government needs to do more to sell these products. Other “anti-importers” in Ontario will argue along the lines of securing jobs and economic development – that building electricity capacity (of any kind) within Ontario keeps the projects and associated construction jobs at home.

Though they may be dressed up and spun differently, these arguments are nothing more than simple protectionism. Hopefully Ontario Premier Kathleen Wynne will see this and focus on the bigger picture: In a world where Ontario needs electricity and Quebec has it in spades, it can only be good for Ontario to purchase it.

This brings us to the second obstacle, and it will come from la belle province. Quebeckers have no problem with selling their surplus electricity to Vermont and New York at prices that exceed the internal Quebec ones. Except in a few small industries, Quebec firms do not see themselves as competing with American ones.

But many won't want to make the same offer to Ontario, as they will see it as giving an advantage to competing firms. Indeed, Ontario will argue that having access to Quebec’s cheaper power will improve the competitiveness of its firms; so it’s only to be expected that Quebeckers will view the same transaction as causing their own competitive decline.

Again, these arguments are nothing more than raw protectionism, and hopefully Quebec Premier Philippe Couillard will resist them strongly. Quebec as a whole will benefit by selling its surplus power to any jurisdiction prepared to pay the price; it will also benefit if the consequent greater development in Ontario leads to more trade in other products between the two provinces, which is very likely.

The third obstacle is the toughest. Suppose Ontario and Quebec enter into a long-term partnership in which Ontario’s electricity needs are increasingly satisfied by Quebec’s production. This would be great for both provinces. But increasing Quebec’s electricity capacity means the construction of more hydro generating stations, and this will require more development in Quebec’s northern regions. This will certainly require the close involvement of First Nations communities.

First Nations communities will demand genuine consultation at every step of the project, and that close attention be paid to the project’s impact on the environment and on traditional hunting and fishing grounds. They will also demand a share of the income generated. The Quebec government will need to recognize the legitimacy of these demands and partner with the First Nations in a genuine and transparent manner. All of this is possible, but it is not simple.

To any objective observer from far away, greater electricity trade between Ontario and Quebec would appear to be a no-brainer. And it is. But there are real obstacles. We should all celebrate the fact that Premiers Wynne and Couillard are starting this much-needed conversation, and we should wish them all the luck in the world. They will need it.