The B.C. Premier’s Office is focused the notion that B.C. Hydro can be used as a catalyst to subsidize and launch a huge lucrative electricity export trade. Their slogan 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.

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.

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.