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BC Government orders provincial Commission to stay course with green power initiative
Posted December 15th, 2009
The Energy Daily (online)
In a complicated political situation, the government of British Columbia has asserted its authority over the provincial utility commission and affirmed a green power initiative dubbed the “Clean Power Call,” despite and commission’s finding that utilization of a large natural gas-fired plant would be less costly to ratepayers.
The CPC directed BC Hydro, the provincial utility, to seek bids from renewable generators for 6,000 megawatts as a way of supporting the many wind and run-of-river hydro projects being launched in the province.
BCUC said, however, that the CPC was based on flawed power consumption projections and that BC Hydro could more cheaply meet future demand by more frequently running its existing 950 MW Burrard gas plant.
But in an unusual regulatory power play, British Columbia Minister of Energy, Mines and Petroleum Resources Blair Lekstrom overruled a decision by the British Columbia Utilities Commission (BCUC) that stalled implementation of the Clean Power Call (CPC) and directed the power generator, BC Hydro, to halt most usage of the gas-fired plant in favor a massive solicitation for new renewable energy plants under the green initiative.
Lekstrom issued a statement October 28 quashing a surprising July 27 order by the BCUC that cast enormous uncertainty on billions of dollars in potential CPC contracts, delivering a body blow to many fledgling renewable developers seeking to solidify financing for projects.
The action by BCUC also put BC Hydro officials in an exceedingly difficult spot—caught between fealty to a high-profile political initiative by provincial leaders and legal obligations to provide BC Hydro customers the lowest possible power prices.
The tension was evident in the recent demotion of the utility’s long-time chief executive officer, Bob Elton, who was quietly removed by BC Hydro’s board earlier this month. The board said Elton will be “transitioning to a new role as special advisor to the BC Hydro Board and executive chair of Powertech,” a BC Hydro clean energy consulting and testing subsidiary.
Lekstrom also made clear in his statement that the provincial government did not intend to allow any further interference with the CPC. In a message sent as an “order of the lieutenant governor” of British Columbia to BCUC October 28, he said, “The province has clarified its intention to the BCUC to end BC Hydro’s reliance on the Burrard Thermal Generating Facility for energy needs.
“Effective immediately, Burrard will no longer be used for planning purposes for firm energy. It will only be used for up to 900 megawatts of emergency capacity.”’
BCUC has consistently said it is unable to comment on the criticism coming from provincial officials because it is a small agency with no public affairs staff. However, the move is clearly unusual because BCUC is an independent agency, and provincial political leaders rarely intervene in such a public and heavy-handed way in the decisions of state and provincial utility commissions.
In addition, under provincial law, BCUC is supposed to approve BC Hydro’s long-term power procurement plans, such as the CPC, because of the generator’s status as a near-monopoly crown corporation.
In the wake of BCUC’s July rejection of the CPC, BC Hydro pledged to proceed with the solicitation using a different tack—bringing each proposed contract with renewable independent power producers (IPP) separately to BCUC for approval under Section 71 of provincial utilities law, under which BCUC determines whether energy supply contracts are in the public interest.
Ironically, in ruling on those contracts, BCUC is supposed to consider how the contracts will fit in “the most recent long-term resource plan filed by the public utility”—in this case, the one that BCUC rejected in July.
But other factors that the BCUC must consider in reviewing energy supply contracts include “government’s energy objectives.” Lekstrom has left little doubt those objectives embrace the CPC and not the Burrard gas plant.
Advocates of public power are infuriated at Lekstrom’s decision and believe the primary objective of the CPC is to privatize the province’s power industry and set it up as an export giant to serve power hungry California.
Lekstrom’s order was “a very unusual decision,” said Melissa Davis, executive director of BC Citizens for Public Power. “The BCUC did it’s job,” she noted. “It suggested that BC’s need for additional power has been grossly exaggerated, and that BC Hydro’s long-term acquisition to purchase private power is not in the public interest.”
Renewable power generators, however, were understandably relieved by Lekstrom’s declaration backing the CPC. And in a further sign of the provincial government’s determination to proceed with the CPC, Lekstrom’s statement was accompanied by an announcement from BC Hydro that it had narrowed down the 68 proposals it has received since launching the CPC in 2008.
BC Hydro has eliminated 21 proposals that were withdrawn or fell short on certain requirements. The generator said it has identified 13 proposals as most cost-effective and ready to move forward in negotiations. It has placed 34 proposals in a sort of limbo, inviting backers to re-propose them under more cost-effective terms.
Of the 47 projects that are still alive, 36 are hydro generators—mostly run-of-river technology—10 are wind farms and one proposes to generate electricity by recovering waste heat.
Among the notable projects still under consideration is a 396-MW wind farm that would be the first offshore Canada, proposed by NaiKun Wind Energy Group Inc. NaiKun said earlier this month that it cannot disclose whether its project is among the 13 deemed most cost-effective or among the 34 given another chance to state their financial case.
But another major project developer—Plutonic Power Corp.—felt no such restrictions and announced that its two run-of-river hydro proposals are in the group of 34. In partnership with GE Energy Financial Services Co., Plutonic Power is developing the largest project under the CPC, a proposed 1,024-MW run-of-the-river plant in Bute Inlet.
The CPC directed BC Hydro, the provincial utility, to seek bids from renewable generators for 6,000 megawatts as a way of supporting the many wind and run-of-river hydro projects being launched in the province.
BCUC said, however, that the CPC was based on flawed power consumption projections and that BC Hydro could more cheaply meet future demand by more frequently running its existing 950 MW Burrard gas plant.
But in an unusual regulatory power play, British Columbia Minister of Energy, Mines and Petroleum Resources Blair Lekstrom overruled a decision by the British Columbia Utilities Commission (BCUC) that stalled implementation of the Clean Power Call (CPC) and directed the power generator, BC Hydro, to halt most usage of the gas-fired plant in favor a massive solicitation for new renewable energy plants under the green initiative.
Lekstrom issued a statement October 28 quashing a surprising July 27 order by the BCUC that cast enormous uncertainty on billions of dollars in potential CPC contracts, delivering a body blow to many fledgling renewable developers seeking to solidify financing for projects.
The action by BCUC also put BC Hydro officials in an exceedingly difficult spot—caught between fealty to a high-profile political initiative by provincial leaders and legal obligations to provide BC Hydro customers the lowest possible power prices.
The tension was evident in the recent demotion of the utility’s long-time chief executive officer, Bob Elton, who was quietly removed by BC Hydro’s board earlier this month. The board said Elton will be “transitioning to a new role as special advisor to the BC Hydro Board and executive chair of Powertech,” a BC Hydro clean energy consulting and testing subsidiary.
Lekstrom also made clear in his statement that the provincial government did not intend to allow any further interference with the CPC. In a message sent as an “order of the lieutenant governor” of British Columbia to BCUC October 28, he said, “The province has clarified its intention to the BCUC to end BC Hydro’s reliance on the Burrard Thermal Generating Facility for energy needs.
“Effective immediately, Burrard will no longer be used for planning purposes for firm energy. It will only be used for up to 900 megawatts of emergency capacity.”’
BCUC has consistently said it is unable to comment on the criticism coming from provincial officials because it is a small agency with no public affairs staff. However, the move is clearly unusual because BCUC is an independent agency, and provincial political leaders rarely intervene in such a public and heavy-handed way in the decisions of state and provincial utility commissions.
In addition, under provincial law, BCUC is supposed to approve BC Hydro’s long-term power procurement plans, such as the CPC, because of the generator’s status as a near-monopoly crown corporation.
In the wake of BCUC’s July rejection of the CPC, BC Hydro pledged to proceed with the solicitation using a different tack—bringing each proposed contract with renewable independent power producers (IPP) separately to BCUC for approval under Section 71 of provincial utilities law, under which BCUC determines whether energy supply contracts are in the public interest.
Ironically, in ruling on those contracts, BCUC is supposed to consider how the contracts will fit in “the most recent long-term resource plan filed by the public utility”—in this case, the one that BCUC rejected in July.
But other factors that the BCUC must consider in reviewing energy supply contracts include “government’s energy objectives.” Lekstrom has left little doubt those objectives embrace the CPC and not the Burrard gas plant.
Advocates of public power are infuriated at Lekstrom’s decision and believe the primary objective of the CPC is to privatize the province’s power industry and set it up as an export giant to serve power hungry California.
Lekstrom’s order was “a very unusual decision,” said Melissa Davis, executive director of BC Citizens for Public Power. “The BCUC did it’s job,” she noted. “It suggested that BC’s need for additional power has been grossly exaggerated, and that BC Hydro’s long-term acquisition to purchase private power is not in the public interest.”
Renewable power generators, however, were understandably relieved by Lekstrom’s declaration backing the CPC. And in a further sign of the provincial government’s determination to proceed with the CPC, Lekstrom’s statement was accompanied by an announcement from BC Hydro that it had narrowed down the 68 proposals it has received since launching the CPC in 2008.
BC Hydro has eliminated 21 proposals that were withdrawn or fell short on certain requirements. The generator said it has identified 13 proposals as most cost-effective and ready to move forward in negotiations. It has placed 34 proposals in a sort of limbo, inviting backers to re-propose them under more cost-effective terms.
Of the 47 projects that are still alive, 36 are hydro generators—mostly run-of-river technology—10 are wind farms and one proposes to generate electricity by recovering waste heat.
Among the notable projects still under consideration is a 396-MW wind farm that would be the first offshore Canada, proposed by NaiKun Wind Energy Group Inc. NaiKun said earlier this month that it cannot disclose whether its project is among the 13 deemed most cost-effective or among the 34 given another chance to state their financial case.
But another major project developer—Plutonic Power Corp.—felt no such restrictions and announced that its two run-of-river hydro proposals are in the group of 34. In partnership with GE Energy Financial Services Co., Plutonic Power is developing the largest project under the CPC, a proposed 1,024-MW run-of-the-river plant in Bute Inlet.