May 23, 2014

Cheap Power for Jobs (Except it Ain’t Cheap)


It has a nice political ring to it — “power for jobs”. That is what Glen Clark wanted to do with the Columbia River Treaty power that was returned to the province in the late 1990’s. And that is what Vaughn Palmer argues B.C. should do today with the hydro power we have or could have from the Columbia River dams or presumably from elsewhere in the system.

Palmer suggests that if we were to offer hydro power to electric intensive industry at a very low rate, we could have our own carbon fibre production just like Washington State. Cheap power could kick start new industry and new ‘green’ jobs.

I suppose that could make sense if we had cheap power available for sale. The problem, of course, is that we don’t. All the cheap power we have (or could have even with renegotiated Columbia River Treaty obligations to store water for the Americans) is needed to meet our existing and forecast requirements. If we attract new industry with the offer of cheap power, we will sooner rather than later have to develop new sources of supply like Site C. And Site C is expensive, more than double in cost than the cheap rates Palmer’s carbon fibre producer would want to pay (or Glen’s aluminum smelters would have paid).

Cheap power for jobs is an industrial strategy based on subsidizing energy use. It never made sense with oil and gas (think methanol) and it doesn’t make sense with electricity.

Of course, the more Machiavellian observer will note that if we build Site C before it is needed to meet our existing and forecast requirements, then we will have surplus available for sale, and that surplus could be logically sold at a very low rate.  After all, if the Site C surplus is not used to attract new industry it would simply be sold in the export market at a low spot market price. You could fix one bad decision with another.

I suppose, but as Seth Meyer would say: ‘Really’… is that what our industrial strategy is going to be. Really, are we going to make one bad decision so it can be fixed by another.



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