BC Hydro pulls plug on projects

Two independent renewable power production projects on the North Island appear to have escaped initial cost-saving cuts by BC Hydro.

Two independent renewable power production projects on the North Island appear to have escaped the first round of cost-saving cuts by BC Hydro, though additional cuts are forecast as the crown corporation continues a review of it contracts in the coming months.

BC Hydro has cancelled or deferred four electricity purchase contracts with independent power producers, and the total may reach 20 by the time a review of projects is complete, Energy Minister Bill Bennett said Thursday.

Bennett said the review is part of a broader effort by BC Hydro to meet his instruction to “spend less money,” as he leads an effort to reduce costs across all government operations.

BC Hydro proposed cutting power purchase contracts, identifying 20 project proponents that were not meeting their contract obligations due to financing, regulatory or other problems. That non-performance gives BC Hydro legal authority to delay or terminate contracts.

The four contracts cancelled or deferred last week were not named by BC Hydro or the Ministry of Energy and Mines, citing legal constraints.

Two major power-producing projects are expected to come on-line on the North Island in the coming months — the Cape Scott Wind Farm on the northern tip of Vancouver Island is scheduled to commence test transmissions this month, and the Kokish River Hydroelectric Project near Beaver Cove is scheduled to come online early next year.

“I haven’t heard anything about our project being cancelled, and I think I’d have heard by now,” said Chief Bill Cranmer of the ‘Namgis First Nation, which is partnering with Brookfield Energy on the Kokish River project in a joint venture called the Kwagis Power Limited Partnership. “We have a multi-year contract with BC Hydro. We’ll be delivering power by January or February, and we’re right on schedule. We’re pretty excited about it nearing competition.”

BC Hydro has contracts with 81 operating projects, mostly run-of-river hydroelectric, and another 47 are under construction or seeking permits after receiving purchase contracts.

One of those is the Cape Scott Wind Farm, which is nearing completion and scheduled to begin contributing energy to the grid in October.

Brian Arsenault, project manager for the Cape Scott Wind Farm, could not be reached for comment this week. But BC Hydro earlier this year expanded the carrying capacity of its North Island transmission lines, adding infrastructure that will allow power to flow both to and from the North Island and opening the door for Cape Scott Wind Farm to share its renewable energy with the island and the province.

The Wilderness Committee applauded the announcement of the cancelled or deferred projects, but called for Bennett to name the projects affected while continuing to cut costs by “cancelling many more unneeded contracts with private hydro-power producers.”

Joe Foy, the Wilderness Committee’s national campaign director, singled out the Kokish River project on a short list of private power projects the organization opposes on environmental and financial grounds.

“The Kokish River on Vancouver Island, the Upper Lillooet north of Pemberton and Kwoiek Creek in the Fraser Canyon are three examples of major private power projects in the works that risk great environmental and financial damage to our province,” Foy said Friday in a written release. “These contracts need to be rejected and the projects stopped dead.”

The $200 million Kwagis Power project is expected to generate 42 megawatts of power when complete, though it is depended on water flow levels. Rather than a dam and reservoir, the project diverts part of the Kokish River into an intake structure for power generation. When the river’s level is low, water will not be diverted to power production, project proponents say.

BC Hydro released its latest draft resource plan last week, which estimates the province has enough electricity supply to meet growing demand for the next 10 years. Bennett said he is skeptical about that forecast, with population growth and industrial demand from new mines and natural gas development in northern B.C., but it gives the utility some breathing room.

“I’m a real fan of the clean energy industry, but obviously we don’t want to be agreeing to buy more power than what we need,” Bennett said.

BC Hydro has been criticized in recent years for running up billions in deferred debt, as it completes major expansion and seismic upgrading of its network of dams. A new power line to northeast B.C. has run over budget, and the NDP opposition has accused the government of forcing BC Hydro to buy private power at inflated rates through contracts running as long as 40 years.

Bennett said he has asked for a detailed analysis of the cost of private power compared to new sources such as the proposed Site C dam on the Peace River or adding turbines to BC Hydro dams on the Columbia River.

B.C.’s Clean Energy Act requires BC Hydro to be self-sufficient in electricity by 2016, based on an average rainfall year to replenish its hydro dams. The requirement is to minimize the import of power generated by burning coal or natural gas.

With files from Tom Fletcher, Black Press.