California Proposition 23 spells death to B.C.'s 'clean energy powerhouse'

The B.C. Premier’s Office has locked its smallish collective brain onto the notion that B.C. Hydro can be used as a catalyst to subsidize and launch a huge lucrative electricity export trade. Their slogan (slogans substitute for analysis these days) is “A Clean Energy Powerhouse.”  B.C.’s energy policy, as reflected in the new Clean Energy Act, is premised on the belief that privately-developed run-of-river hydroelectricity can provide a large new export business, cashing in on premium prices for non-polluting electricity sales into the huge California market.

Under the Act, BC Hydro must act as the purchaser of three distinct tranches of power from private-sector Independent Power Producers (“IPPs”):

1.   Power for domestic use (relying on IPP power as at least a partial substitute, at inflated prices, for increasing BC Hydro’s own generation)

2.   Surplus power that falls between what we really need in any given year and the artificially-high “self-sufficiency” target, which can only be dumped at a loss on the export spot market

3.  Development for export where BC Hydro would buy power over and above “self-sufficiency” from IPPs and export it under contract.  The Crown utility will act as a wholesaler/export agent for the private generation corporations.

Tranches 1 and 2 both have the effect of increasing domestic electricity rates in order to subsidize IPP profits.

Tranches 2 and 3 both rely on the presumption that we can market our IPP power as “green” energy and therefore at a premium price, mainly to California.

This strategy has hit a roadblock, created by California’s environmental standards. They classify any run-of-river project rated above 30 Megawatts as non-green. That captures all of the hydroelectricity BC Hydro is buying from IPPs. Spot prices for this stuff are projected in the $35-40 range per MWh over the coming few years, but we will be paying IPPs as much as $120 per MWh. We’ll have to dump the surplus on the spot market for a huge loss.

It is noteworthy that Gordon Campbell was -- guess where?? -- the day the Chief Electoral Officer announced the HST petition had met the threshold requirements? You got it, in California, lobbying them to change their rules for B.C. power exports.

Things could get even worse. There is a proposition on the California ballot for November which would suspend that state’s clean energy laws until unemployment drops below 5.5%. That could be several years. If this passes, our surplus IPP power will have no chance of gaining a premium price. There will be no market in California for high-priced “clean” power.  That means that many of our river systems will be destroyed in order to transfer hundreds of millions of dollars from B.C. households, straight into the pockets of IPP shareholders, in return for junk electricity.