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 The clean-energy mantra has been replaced by one that puts investment first, and fiscal restraint a close second.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

Major changes in works for Canada's electrical grid - Canada - CBC News

This article provides a very comprehensive picture of the current Canadian electricity system.  A long read but informative and worth it!

The power structure in Canada is changing — not the government, but the country's electricity infrastructure.

By 2020, where electricity comes from and how it gets to your door will have undergone an unprecedented overhaul. Windmills will dot the landscapes of the Great Lakes and remote B.C. Smoke from coal plants will be buried in Saskatchewan and Alberta. A massive underwater cable will feed voltage from Labrador to as far away as New England.

It's all part of a complex series of initiatives that will reformulate everything from who produces the energy that powers your stove or dishwasher, to how they produce it, to your own power consumption habits and how much you'll pay each month.

"Electricity is one of the basic fuels of the economy. Not much happens without it," says Pierre Guimond, CEO of the +Canadian Electricity Association, an industry group. "So getting the basics done correctly — yeah, we've got a lot on our plates."

+CBC News  has analyzed hundreds of studies, contracts, reports, strategy documents, maps and statistics about the country's electrical future. Many of the details have never before been gathered and shared with the public. We've produced the first map, for example, of every major generating station that's operating in Canada today or forecast to start up by 2020. And we've calculated what it will likely cost for your electricity, based on each province's current power generation strategy — and the surprising array  of companies you'll be buying it from.

Will there be enough?

To the tens of millions of North Americans who spent many hours in the dark during the blackout of 2003, the question lingers: Do we generate enough electricity to meet the growing needs of homes and businesses, and do we have a robust enough grid to stave off future outages?

The +Cn Tower  is silhouetted against the setting sun as a blackout grips Toronto on August 14, 2003. As many as 10 million people in eastern North America were affected by the massive power failure. ((Andrew Wallace/Reuters))

In 2003, Ontario, Canada's second-largest powerhouse after Quebec, was on the brink. Its independent grid operator made doomful pronouncements about shortages, and Ontario had to import a sizeable chunk of its energy from the United States.

More recently, British Columbia has become a net importer of current from south of the border. Alberta, Nova Scotia and Saskatchewan also rely on foreign sources.

The outlook has improved, but there's still cause for caution.

Ontario now sends $400 million in electricity to the U.S. each year, while B.C. is aiming to be self-sufficient by 2016. Alberta has seen a torrid pace of generator construction, although a March report by +Canaccord Genuity Wealth Management  predicts the province's power consumption is expected to rise by an estimated 4 per cent a year, putting pressure on the amount of power available and driving prices up. On the East Coast, the hydroelectric development of the Lower Churchill River will eventually bring online enough capacity to power any one of the Atlantic provinces in its entirety. 

Overall, the country's system still needs massive cash infusions.

The International Energy Agency estimates Canada will require $10 billion a year in investments in its electrical infrastructure  from now until 2030. A little over half of that will go towards generation and the rest to improve the bulk transmission  grid and the more modest power lines  that distribute electricity to homes.

The most recent assessment from the North American Electric Reliability Corp. – which is authorized by both the Canadian and U.S. governments to ensure the adequacy of the grids in both countries and ensures there's an adequate power supply — isn't overly rosy, either. NERC says that as of 2012, Quebec "needs additional resources" on its generation side, while B.C. and Alberta still need to "accelerate … resource development" to meet their needs for 2020. Ontario, despite its scheme to bring hundreds of small-scale generation online through guaranteed rate offers, is predicted to be a "tight area." 

How much will it cost?

As a result, in almost every region of Canada, electricity prices are going up . Way up. (Try the interactive calculator  to get an idea of what you'll be paying for base electricity in the coming years.)

Customers in several provinces are already seeing it. BC Hydro raised its rates 7.3 per cent this year and has announced it will seek an additional 30 per cent hike over the next three. The Ontario government declared in late 2010 that the province's rates will rise an estimated 46 per cent by 2015. Alberta still has the fourth lowest electricity cost in the country, but the Canaccord Genuity report noted that the cost of wholesale electricty has surged recently, more than doubling in January and February compared to last year, and it is expected to continue to rise over the next few years.

With the possible exception of Manitoba, nobody will be spared cost increases. A CBC News analysis of provincial utilities' power-purchase agreements and financial statements suggests the average price per kilowatt-hour countrywide will rise more than 50 per cent by 2020.

The Jean-Lesage hydroelectric dam in Baie-Comeau, Que. A large amount of Canada's electricity currently comes from sites like these but the cost to generate power will increase as new, more expensive projects are constructed. ((Jacques Boissinot/Canadian Press))

Until now, prices have stayed relatively low — among the cheapest of the nations belonging to the Organization for Economic Co-operation and Development (OECD) — because the majority of Canada's power comes from hydroelectricity, most of which was developed decades ago and has been paid off for years. The operating costs of hydro dams are minimal, which is why Quebec can generate its power for a couple pennies per kilowatt-hour.

But those power plants are no longer enough to meet the country's needs. And the new plants being built, plus the copper and aluminum heavy-transmission lines to reach them, will cost a lot more. The end result is that ratepayers will end up footing the growing bill.

"Newer hydro that has been built is a lot more expensive than what was built generations ago," the Canadian Electricity Association's Pierre Guimond says. "Everything is more expensive nowadays, because the sites are further away, they're more difficult to develop, and that is reflected in the cost of electricity."

Take Quebec's current biggest hydro project, a series of dams on the Romaine River north of the Gulf of St. Lawrence. It's anticipated to generate power at a cost of close to 6.4 ¢/kWh — or more than three times the price of electrons from that province's currently installed capacity.

What's happening with hydro is happening with every kind of generation. In Ontario, new wind farms get paid 13.5 ¢/kWh, and rooftop solar systems 80 ¢/kWh. A recent power industry study found new nuclear plants cost twice as much to build as they did only seven years ago. Coal-fired plants, once a cheap source of energy based on an abundant fuel, cost far more because of emissions restrictions.

It spells certain pain for consumers' wallets.

"We've underinvested in our electricity system across the country for decades," says Tim Weis, the director of renewable energy and efficiency policy for the Pembina Institute, a national think-tank on sustainable energy. "Whatever you're going to build today is going to be more expensive."

Who will generate it?

Crown-owned utilities once dominated the production and transmission of electricity. A recently as 10 years ago, more than 80 per cent of the generating capacity in Canada was run by provincial governments. But since then, the private sector has held sway.

In the past, most of the generating capacity has been owned by public companies, such as the Pickering nuclear plant. By 2020 nearly all of the new generating sites will be privately owned. ((OPG))

All new net generating capacity constructed since 2000 has been by private companies, and virtually all planned future net capacity will be built by the private sector. From now until 2020, private power sources will grow by almost 50 per cent countrywide, whereas government-provided electricity will nudge up a mere three per cent.

In British Columbia, where the government's procurement policy for new power sources relies almost exclusively on for-profit corporations, companies like General Electric are building hundreds of megawatts of new generating capacity.

In Alberta, oil patch heavyweights Suncor, Imperial Oil and TransCanada are putting up big plants fuelled by natural gas.

In Ontario, +TransAlta Corp. runs four gas-fired stations, but also three wind farms. And in the Maritimes, TransAlta is erecting dozens more wind turbines alongside a host of small specialist companies.

For some critics, it's a disquieting trend: Natural resources such as waterways are falling into private hands, while consumers pay higher prices to effectively subsidize the private development of new industries in solar and wind power. There are also few if any provisions for all the new generating assets to transfer to public ownership once the companies' power-purchase contracts are up, and no guarantees those companies won't seek to hike their prices when that day comes.    

Where will it come from?

A worker pulls on a rope to help guide the blades while installing a wind turbine for Toronto Hydro at Exhibition Place on Dec. 18, 2002. The future of generation lies in wind and gas, experts say. ((Kevin Frayer/Canadian Press))

The first half-century of electrification in Canada was all about the country's hydro power. Then came coal, oil and nuclear. The future is written in wind and natural gas.

From fewer than 100 megawatts in wind turbines at the dawn of the millennium, Canada has been rapidly expanding its capacity   to 3,500 MW today, and plans to have 12,765 MW by 2020. That still represents less than 10 per cent of national capacity, but the country is adding more wind power than any other type (with the possible exception of hydro if the full development of Labrador's Churchill River proceeds). And the extra capacity will help enable the shutdown of one of the country's worst sources of greenhouse gas, the Nanticoke generating station in Ontario.

The move away from coal will also be aided by the slew of gas-fired plants that have started up in the past decade. While politicians prefer to tout their provinces' investments in enviro-chic renewable power, the reality is that natural gas is driving the grid's expansion. Sixty per cent of the new generation built in the 2000s is gas, and the sector is slated for another 25 per cent growth by 2020.

It's not perfect — the best gas-powered plants still emit about 40 per cent of the green house gases (GHGs) of a coal-based generator — but staring at the bogeyman of global warming, it's a significant step.

How dirty will it be?

High voltage power lines spread out from Ontario Power Generation's Nanticoke Generating Station. Ontario will shut down 11 of its coal-fired plants by 2014. ((Frank Gunn/Canadian Press))

The electricity sector is far off track from meeting its share of Canada's Kyoto emissions commitments (try the emissions calculator  to see just how far, and experiment with ways to minimize them). The sector emitted 117 million tonnes of GHGs last year, down from a peak of more than 130 Mt in 2003. But that level is still well above the 89 Mt the industry would have to trim to by 2012 to be in line with the Kyoto protocol.

"It was pretty clear that there wasn't going to be an effort made to meet that target," the Pembina Institute's Tim Weis says. "It wasn't an unrealistic goal; we were just too slow to go get going."

Looking ahead, though, the emissions picture gets somewhat better.

The federal government has set its own goal of cutting GHGs 17 per cent from 2005 levels by 2020. Under that scheme, power plants would have to cut back to 102 Mt in emissions in the next nine years, and they may be able to achieve it.

Ontario will shut down all 11 of its remaining coal-fired units by 2014, while Alberta and Saskatchewan are exploring new (though still unproven) ways of stashing their coal plants' carbon dioxide underground. Add to that Ottawa's plan to put strict emissions caps on coal-fired power plants, and the sector could hit the federal government's milder GHG target.

If it doesn't, Canada will have a hard time achieving any emissions-reduction objectives. Electricity generation accounts for a sixth of the country's GHGs, the second-largest source after transportation.

"The government needs to lead, whether at a federal or provincial level," Weis says. "Anywhere you've seen major reductions, whether in Europe or Ontario, it's all happened because the government has taken the initiative to make it happen."

Hydroelectric Energy Advantages and Disadvantages « Green World Investor

Hydro Power is one of the largest sources of energy accounting for roughly 20% of the worldwide demand of electricity and for well resourced countries it accounts for majority of the energy.For Paraguay 100% of the electricity comes from hydro power and lot of it is exported as well.Compared to other sources of Energy, Hydroelectric Power is one of the cheapest,non Carbon Emitting,non Polluting,Mature Energy Sources.Hydro Power plants have been developed to almost full potential in developed countries because of their superior characteristics and many more are being constructed by developing countries like China and India.However Hydro Power like all other thins in life suffers from disadvantages as well.The failure of a Hydro Dam can result in massive losses of human life and cause widespread devastation.Large Dams have always been controversial leading to displacement of people and ecology.They have also been cited as the reason for earthquakes due to large land changes.Here is a list of the advantages and disadvantages of Hydro Power

Hydroelectric Energy Advantages

No Fuel Cost - Hydro Energy does not require any fuel like most other sources of energy.This is a huge advantage over other fossil fuels whose costs are increasing at a drastic rate every year.Electricity prices are increasingly rapidly in most parts of the world much faster than general inflation.Price shocks due to high fuel costs are a big risk with fossil fuel energy these days
Low Operating Costs and little Maintenance - Operating labor cost is also usually low, as plants are automated and have few personnel on site during normal operation.
Low Electricity Cost – The Electricity produced from Hydro Power is quite low making it very attractive to construct hydro plants.The payback period is estimated to be between 5-8 years for a normal hydro power plant.Hydro Plants also have long lives of between 50-100 years which means that they are extremely profitable
No Greenhouse Gas Emissions/Air Pollution – Hydroelectricity does not produce any GHG emissions or cause air pollution from the combustion of fossil fuels unlike coal,oil or gas.This makes them very attractive as a source of cheap,non carbon dioxide producing electricity.
Energy Storage – Pumped Hydro Storage is possible with most of the hydro power plants.This makes them ideal storage for wind and solar power which are intermittent in nature.Hydro Dams can be modified at low costs to allow pumped storage.
Small Size Possible - Hydroelectricity can be produced in almost any size from 1 MW to 10000 MW which makes it very versatile.Small Hydro Plants are being encouraged by government as they cause less ecological affects than large hydro plants.Even micro hydro plants are possible
Reliability - Hydro Power is much more reliable than wind and solar power though less than coal and nuclear as a baseload source of power.Hydroelectricity is more or less predictable much in advance though it can decrease in summer months when the water is low in the catchment areas.
High Load Factor - The Load Factor for Solar and Wind Energy ranges from 15-40% which is quite low compared to Fossil Fuel Energy.Hydroelectricity on the other hand has a load factor of almost 40-60% .
Long Life - Hydro Plants has a very long life of around 50- 100 years which is much longer than that of even Nuclear Power Plants.The long life implies that the lifecycle cost of a Hydel Power Plant becomes very low in the long term
Hydroelectric Energy DisAdvantages

1) Environmental, Dislocation and Tribal Rights - Large Dam construction especially in populated areas leads to massive Tribal Displacement,Loss of Livelihood and Religious Infringement as potentially sacred Land is occupied by the Government.

2) Wildlife and Fishes get Affected - The Fishes are the most affected species from Dam Construction as the normal flow of the river is completely changed form its river character to a lake one.Submergence of land also leads to ecological destruction of the habitat of land based wildlife.

3) Earthquake Vulnerability – Large Dam Construction has been linked to increased propensity of Earthquakes.Massive Earthquakes in China and Uttarakhand in India were linked to the building of Massive Dams in these countries

4) Siltation When water flows it has the ability to transport particles heavier than itself downstream. This has a negative effect on dams and subsequently their power stations, particularly those on rivers or within catchment areas with high siltation

5) Tail Risk,Dam Failure - Because large conventional dammed-hydro facilities hold back large volumes of water, a failure due to poor construction, terrorism, or other cause can be catastrophic to downriver settlements and infrastructure. Dam failures have been some of the largest man-made disasters in history.The Banqiao Dam Failure in Southern China directly resulted in the deaths of 26,000 people, and another 145,000 from epidemics.

6) Cannot be Built Anywhere - This disadvantage of Hdyro Energy is present with other forms of Energy as well.Some forms of Energy are just better suited to some places.For example you can’t build a nuclear plant on top of an earthquake prone region,you can’t build a wind farm near the Dead Sea etc.Hydro Energy can only be built in particular places though enough of those places exist globally

7) Long Gestation Time - The time to construct a large hydro power project can take between 5-10 years which leads to time and cost overruns.