Why BC should not plan to rely on cheap electricity imports in a post-Paris Agreement world

There are a few things in life upon which British Columbians can depend: the sun rising in the east and setting in the west; rain in Vancouver in November; the Canucks frustrating their fans; and people complaining about the price of gasoline. To this list I would like to add one more: that when given enough time in front of a microphone Dr. Harry Swain, former Site C panel chair, will complain about the mandate of his panel. One of his most frequent complaints has been that the panel was not allowed to consider imports or the Columbia River Entitlement in its assessment. Dr. Swain sees that aspect of his mandate as a negative, I, on the other hand, see it as a positive. Why you ask? Well that is the topic of this blog post.

To explain, let’s go back to a topic upon which most British Columbians can agree: that we pay too much for gasoline when compared to our neighbours to the south and the east. That is even when you eliminate our carbon tax. As I have previously described, the reason for this predicament is that BC is utterly dependent on imports from Alberta and the Puget Sound to meet our gasoline, diesel and jet fuel needs; and that dependence has cost us in spades. It is called supply and demand. We have a strong domestic demand and we have no domestic supply, thus we are left at the mercy of the market and as we all know, the market has not been kind to us in this respect. So what does this have to do with electricity and the Site C dam?

Well, in 2007 as part of its Energy Plan (2007 EP) and in the subsequent Climate Action Plan (CAP) our Provincial Government committed us to a path of electricity self-sufficiency. As described in these plans, electricity self-sufficiency was deemed a major priority. The reason for this was self-evident to the authors of those plans; but seems to be lost on the environmental activists of today. In a world where fighting climate change becomes a defining political objective ensuring we have a steady domestic supply of low-carbon electricity is exactly the reason why we have a government-owned utility. The two plans foresaw a future where we needed to use more electricity for transportation and residential uses and wanted to ensure that we had the domestic capacity to meet those needs. Recognizing that the government of the day couldn’t pay for it all the CAP foresaw that we would need to bring in external partners to meet our future electricity needs. It also acknowledged that paying a bit more to provide flexibility of supply and energy security represents sound governmental policy and not a mistake. As I wrote in a previous post: it is a feature of the system not a bug.

In reading the writings of the critics of Site C I can only marvel at how they completely miss that point in their critiques. It is as if they have never had to fill their car’s gas tank. They seem to believe that the energy market will always be over-supplied and electricity will always be cheap. As “internationally respected economist Robert MuCullough” puts it:

In 2013, B.C. Hydro estimated that Site C would cost 2.5 times then current annual market prices. As natural gas and renewable prices have continued to decline, Site C now costs 3.3 times current annual market rates.

Put another way, British Columbia rate payers could save $4.1 billion simply by buying the same amount of power from the United States — even after writing off the $1.75 billion already spent.

Now let’s look at that approach in light of current political/economic conditions. On January 1, 2017, the Province of Alberta initiated its Climate Leadership Plan. As part of that plan Alberta committed to ending coal pollution. This requires that Alberta phase out its coal power plants. On January 1, 2017 coal represented 41% of Alberta’s installed electricity generation capacity. I’m not sure about the rest of you, but I’m guessing that if Alberta is in the process of shuttering 41% of its generation capacity, it will not have a lot of dirt-cheap electricity to export.

As for Washington State, they are in the process of implementing a carbon pricing mechanism while looking to increase their zero emission vehicle fleet to 30% and simultaneously eliminating the use of electrical power supplied by coal. While Washington has been a net exporter of electricity, the vast majority of that has been to California which imported 805 trillion BTUs of electricity in 2015 (latest data available). This would be the same California that is closing its last nuclear plant while projecting increases in electricity prices. California is also starting to price carbon and currently generates 6386 Gigawatt hours of electricity from nuclear (closing) and natural gas-fired plants (whose carbon is being priced). What this means is that electricity prices are not going down in California anytime soon.

So to our east they are foreseeing a crunch on electricity while to our south Washington should just barely be able to supply its own market. To the south of Washington California is going to be desperately searching for massive amounts electricity. These are not the conditions where we, as British Columbians, want to go hat-in-hand looking for cheap electricity to import. As I have pointed out in numerous blog posts, once BC starts acting on our climate change commitments we are going to need a lot of electricity. Moreover, that electricity is not going to be cheap and irrespective of what the activists keep claiming conservation and efficiency improvements will not address this energy shortfall. As for the Columbia River entitlement, that may help a bit, but as I have demonstrated even including that power we will come nowhere close to meeting our increased demands.

To conclude I can’t seem to say this enough. The Site C dam is not a perfect project. It has real flaws but I can’t help but hearken back to what Dr. Weaver, climate scientist, said about the project:

There are environmental consequences, yes, but there are environmental consequences for everything we do and we have to stop using the atmosphere as an unregulated dumping ground.

So to the activists who are fighting Site C I ask you this: you claim that Site C is not needed because we can always import electricity from Washington/Alberta. BC’s 2007 Energy Plan was predicated on a scenario where fighting climate change meant that Alberta and Washington had no electricity to export. Now with Alberta closing its coal plants we are half-way there. Any post-Paris Energy Plan must assume that BC will not be importing electricity. To assume otherwise will leave us incredibly vulnerable to external forces. We already pay through the nose for our gasoline. Do we want to depend on the US for our electricity as well?

My answer to this question is no. I think that the 2007 Energy Plan and the Climate Action Plan represented solid evidence-based policy. The two plans acknowledged the risks and admitted that addressing those risks would be a bit more expensive than simply pretending that those risks don’t exist. It is good government policy to ensure that, when the time comes, BC has the energy it will need to meets its commitments to its populace. I do not think we can rely on the kindness of strangers. I don’t know about the rest of you, but my family’s emergency preparedness plan includes ensuring we have the provisions needed to keep my family provided. The anti-Site C activists’ emergency preparedness plan appears to be to go knocking on their neighbour’s doors asking for handouts. Unfortunately for them if and when that time comes it is likely the neighbours won’t have enough to share.

Author’s note:

I’ve written this before and write it again here. Here is my conflict of interest declaration: I don’t have any conflicts of interest with regards to this file. Neither I, nor my employer, has anything to do with the project. I don’t get paid to blog and I generate no income from this blog. I do not blog for, or on behalf of, my employer. These words are mine and mine alone and I blog in my spare time. I have no more to gain or lose, personally or professionally, from the Site C Dam than any other British Columbian.

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3 Responses to Why BC should not plan to rely on cheap electricity imports in a post-Paris Agreement world

  1. Fred from Canuckistan says:

    Exceptional.

    Such an abundance of common sense, reason and logical analysis.

    Like

  2. Douglas MacKenzie says:

    The article that refers to “the internationally respected economist” does not contain any reference to power rates, years to amortize project, etc….therefore are just unjustified claims…And it makes statements and graphs about the value of assets required per unit of production….most likely the same assets were simply recalculated at their present replacement cost….so faulty numbers as well.

    Like

  3. Pingback: Why a rushed BCUC review of Site C will be bad for our pocketbooks and our fight against climate change | A Chemist in Langley

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