Mar 9, 2010

More Please!!!


Every now and again you read something so outrageous you have to laugh. So it is with the report recently released by BC Citizens for Clean Energy: A Triple Legacy for Future Generations.

The essence of this lobby group’s proposal is that the government should develop an export policy for green energy targeting up to 17000 MW of exports by 2016, an amount greater than the size of BC Hydro’e entire existing hydroelectric system. Then it wants to target for more than double that amount of exports by 2036. And the legacy they offer if this is done:

  • secure supply of renewable energy
  • substantial reductions in climate change impacts
  • the elimination of B.C. tax-supported debt within 15 years or less and eventually even the elimination of the provincial sales tax (or presumably the provincial component of the impending HST).

The promised legacies are, of course, nonsense. Committing all that energy potential to export won’t enhance B.C.’s security of supply.  It is the export of privately-developed, privately-owned power this group wants government to promote. BC Hydro couldn’t use that power itself when the power is committed to export; it would  just be the conduit making the development and exports happen.

Nor will the export sales substantially reduce climate change impacts. It will be the greenhouse gas targets adopted in the U.S., Canada and elsewhere that will determine how much GHG emissions will be reduced and potential climate change impacts avoided. Greater green energy exports from B.C. may affect how U.S. targets are met, but they certainly won’t determine what those targets are.

As for the elimination of B.C.’s tax-supported debt — that is so fanciful one hardly knows what to say. The facts are exactly the opposite. The export plan BC Citizens want the government to implement would be a financial disaster.

The key element of the plan is that BC Hydro or its trading subsidiary Powerex would buy all of the power IPPs can develop in the province (after streamlined environmental review), paying high enough prices so the projects could be financed, built and profitably operated. BC Hydro would then provide all the back-up, shaping, and transmission services needed to be able to sell the power to export customers and receive whatever price it could negotiate.

Notwithstanding the heroic (but grossly incomplete and fundamentally flawed) numbers put forward by BC Citizens, there is no reason to believe BC Hydro could do this at a profit, let alone the multi-billion dollar annual profit BC Citizens suggest.  The amount BC Hydro would have to pay the IPPs to develop all of these green energy resources, plus the transmission and other costs it would incur and alternative trading opportunities it would forego would in all likelihood greatly exceed the amount it could get from the export sales, even with whatever renewable and other green energy credits it could secure.

Maybe BC Citizens just got the sign wrong. Silly mistake — it would be a loss of billions, not a gain that BC could expect.

BC Citizens reasonably ask the question: if we export lumber, non-renewable minerals and metals, why shouldn’t we export green energy. That however is not the issue here. The issue is why should government force BC Hydro to buy power it doesn’t need (in extraordinarily excessive amounts), supply all of the services the IPP sellers don’t have, and take all of the market risk of exports.

If the numbers are so good, why don’t the IPPs buy the services they need and export the power themselvers. After all, that is what the forest and mining firms do, and pretty well everyone else who exports goods or services from B.C.

BC Citizens aren’t looking for an energy export policy that is in the broad public interest. They are looking for a government handout of breathtaking proportions, covered by the green umbrella that apparently can make even the most outlandish proposals seemingly more palatable.

IPPs already have a lot with the costly policies in the BC Energy Plan. What their lobby group is telling us in this report is that they want more — a lot more!

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