INDEPENDENT POWER PRODUCTION, ACCOUNTABILITIES AND DISTRIBUTED GENERATION (2007)

BC is blessed with an abundance of natural resources and should be able to achieve self sufficiency based on its abundant resource base with a rigorous planning and policy effort. The utilization of this resource in a sustainable, responsible manner is important, and is conducted by balancing environmental, economic and social costs. As natural gas prices rise and energy shortages increase it is crucial that we foster supply-side additions from supplementary energy sources using a portfolio approach to further mitigate medium to longer term risk. Distributed generation had made economic inroads in various markets around North America and alternative forms of electric generation such as wind, run of river hydro, biogas, biomass, solar and tidal have proven successful in various global markets. There is fundamentally no reason why British Columbia should not be in a leadership position with respect to self sufficiency using the private sector and in creating a world-class renewables sector.

Run-of-the-River Independent Power Projects (IPP’s)
BC is blessed with an abundance of rivers and waterways. As the province expands into alternative energy sources, many of these waterways are being tapped into for the production of “green” energy. The Chamber believes that run-of-the-river hydro generation provides one viable option in the portfolio mix of generation options that British Columbia should develop. BC Hydro has estimated that the generation potential from run-of-the-river generation in BC to be in excess of 2,700 megawatts. The Chamber believes many of these projects should be developed with proper consideration given to environmental issues, First Nations’ issues and competing demands for use of BC’s rivers and streams.

Some rivers and creeks are able to integrate run of the river IPP’s with little or no impact to the surrounding area or other businesses. They produce power with minimal negative community impact and The Chamber supports these kinds of initiatives.

Other proposals have significant negative impacts such as limiting or even potentially eliminating recreational use, as well as environmental and social concerns. As well, there is concern that numerous smaller IPP’s in one watershed may have the cumulative negative impact of one large-scale hydroelectric project.

Many outdoor recreation tourism businesses, including rafting, fishing and kayaking companies, depend on key rivers for their livelihood. They need access to the select rivers for put in and take out, require a minimum water level for the boats, as well as free-flowing water in order to provide an exceptional experience for their paying clients. If the clients have a superb experience, they will come back as well as tell their friends and family, all of which will have a positive impact on the community and on the province.

The key is to have a sustainable balance between rivers that are able to provide alternative energy through IPP’s and rivers that are maintained for other uses.

The challenge is that there are no regulations or strategy as to which rivers or waterways should be designated for potential project use and which ones should be restricted from use due to other higher values. Land Resource Management Plans (LRMP) in various regions attempted to tackle this challenge and although a majority found an amenable solution, there was not always consensus in the group (as was the case in the Sea to Sky LRMP). As well, nobody knows the threshold level for carrying capacity within a region. There are no regulations or monitoring systems when dealing with the cumulative impact within a region or across the entire province. The challenge with respect to developing a specific strategy is that it is not known with any precision which run-of-river IPP’s appear to be viable and which ones might be developed in the near term, medium term or longer term.

For example, the Squamish Chamber of Commerce was requested to support a proposed run-of-river IPP for the Ashlu River. A number of questions came up during the discussion and unfortunately there were no clear answers. How many projects are proposed for the region – in the near future and long term? Is it ten or three hundred projects? What is the carrying capacity of a drainage system regarding projects and sustainability? How do we balance the needs of other user groups and environmental concerns in a watershed with the potential impact or development of one or more IPP’s? Unfortunately, there is much speculation involved when trying to determine how many projects may be proposed for a specific river system, thereby making it extremely difficult to develop a strategy around this uncertainty.

The Squamish Lillooet Regional District, the proponent wanting to develop the project, and the community groups opposed to the project, each allocated considerable resources to dealing with the proposed Ashlu Creek project planning process.

Any proposed IPP needs to take into consideration the various social, economic, recreational and environmental impacts that the construction and operation of a facility may have on the neighbouring areas and the community at large. Ultimately, it is the project proponent that must have knowledge of how many current and how many proposed projects exist for a specific river system and must be accountable for assessing the environmental, economic and technical impacts of its particular project in light of existing and potential incremental projects.

Proposed IPP’s should also be accountable for ensuring each project has knowledge of other projects and in keeping with all planning processes including the LRMP. If rivers have already been identified through recognized planning processes as suitable for run-of-the-river IPP’s they should be available for development following existing regulatory and stakeholder approval processes. As well, if rivers have been identified in local planning processes as having higher values (recreational, social, environmental, etc.) than creating an Independent Power Project, then the provincial and regional planning process needs to be respected and these rivers become listed as restricted for Independent Power Project development.

Green power and alternative energy programs can be extremely beneficial to local communities and the province as a whole if managed properly. However, they need to be balanced with other community uses and their long-term environmental impact needs to be understood more completely.

BC’s Electricity Liquidity has Disappeared
BC has been a net importer of power in six of the last seven years and, within three to five years, domestic demand will exceed the installed capacity of existing power plants. The province will then be forced to default to spot market purchases from the US and Alberta during peak periods. Those purchases are 4 to 10 times more costly than power produced in BC. Neither domestic customers nor the economy can afford that sort of exposure.

The Chamber supports BC Hydro’s recent Request For Proposals (RFPs) for green power and “non-utility” generation. It represents a positive step toward distributed generation through micro and small supply-side additions and we encourage BC Hydro to swiftly undertake its next request for proposals. The Chamber would note, however, that BC Hydro’s RFP process is cumbersome, unnecessarily complicated, time-consuming and expensive which combines to minimize the private sector’s ability and willingness to participate. While The Chamber believes steps have been taken to enhance opportunities for IPP’s, the process for securing contracts, and the terms and conditions of the contracts themselves, could be dramatically improved. The Chamber is aware of several strong balance sheet companies that have chosen not to focus on opportunities in British Columbia largely due to the lack of commercial terms included in BC Hydro’s RFP process or the resulting purchase contracts.

The Chamber is concerned with the process that ultimately resulted in the cancellation of the Duke Point project on Vancouver Island. There is a long history of failed attempts to build generation on Vancouver Island to assist with on-Island electric reliability, the unfortunate reality is that neither BC Hydro’s Vancouver Island Generation Project, nor the Duke Point gas-fired project will be proceeding. The High Voltage Direct Current (HVDC) submarine cable system is reaching the end of its useful life and will be de-rated for planning purposes in 2007. BCTC has an application before the BCUC to replace the existing 138KV submarine cables with a 230KV submarine system with a target in-service date of October 2008. It appears that Vancouver Island could be at considerable risk over the next few years if weather and the reliability of the existing and proposed submarine cables create a worst case scenario. The Chamber believes it would be prudent to have the private sector develop generation on Vancouver Island to create a greater level of self sufficiency for Vancouver Island electricity consumers.

BC should be the Powerhouse of the Western Seaboard
The electricity industry in BC is an untapped frontier, one that can assist the province on the road to economic expansion. To demonstrate the potential, one need look no farther than Washington State, where new generation projects – fuelled by natural gas from BC – valued at approximately US$2 billion are approved or under construction. Next door in Alberta, prices have dropped and stabilized, and 30+ new power projects worth over $6 billion are under construction or ready to proceed.

This is the kind of investment that strengthens local economies, creates jobs and increases tax revenue to help pay for government services like healthcare and education. Looking forward, there is no reason why BC couldn’t become the powerhouse of the western seaboard, much like Hydro Quebec in the east and Manitoba Hydro in the mid-west. This potential is real.

All of these factors are interdependent: ensure BC establishes a portfolio of generation sources to mitigate medium to longer term price and fuel exposure, reduce the province’s reliance on ex-BC generation, position BC as the power house of the western seaboard. The opportunities are upon us.

THE CHAMBER RECOMMENDS

That the provincial government:

1. promote the development of distributed generation projects providing that proposed plants meet the federal and provincial environmental regulations for air and water quality;

2. establish a policy that encourages the development of distributed generation;

3. ensure BC Hydro is developing practical plans to integrate various energy forms into its hydro-based system;

4. direct Land and Water BC to create and make public a “rivers inventory” of existing and proposed water licences across the province to ensure such information is available to IPP’s and planning authorities from around the province; and

5. ensure that run-of-river IPP project proponents properly consider competing uses of specific river systems where they wish to site their projects and to ensure all environmental permitting considers all competing uses and that the views of all stakeholders and First Nations have been integrated into the project approval process. This will require the IPP proponent to engage local stakeholders, including river users that operate commercial businesses on rivers, in the planning process from the early stages.