Strategic Thoughts

bannerspacerAbout Me | Mail Me | Linksbannerspacer2

February 27, 2007

Energy Plan 2007

BC's new Energy Plan came with a timeline, but the timeline is missing one very important item; when will BC Hydro's Integrated Electricity Plan (IEP) be updated so as to be consistent with the Energy Plan? That's like having a Green Throne Speech followed by no provision in the budget for Green initiatives. Without an updated IEP, much of the Plan is just nice sounding rhetoric.

Appendices A-F to Hydro's 2006 IEP, which is currently before the BC Utilities Commission, are 628 pages long. The "Load and Resource" data for Hydro's projections are in Table E-5 (pdf page 178). Using that data you can see that Hydro projected a shortfall of 23,100 GWh (gigawatt hours) by 2020; if 50% of future needs are going to be met through conservation, as promised in the Plan, then 11,550 GWh must be saved through some form of demand management. That's 15% higher than the 10,000 GWh that a fact sheet released with the Plan says will be saved, and about 20 times more than Hydro expected to save through demand management in 2006. In today's terms, it is equivalent to eliminating 18.6% of current usage, or unplugging about 1 of every 5 Hydro customers. Perhaps that is why the Campbell government described its conservation objective as "ambitious"; we'll have to wait to see what is required to make the objective attainable.

BC Hydro president, Bob Elton was quoted by the CBC speculating about encouraging conservation by going to a two-tier rate for residential customers. One of many problems with that scheme is that residential electric meters can't handle that kind of billing. Hydro needs to provide an estimate of the cost of converting residential electric meters throughout the province.

A goal of the Energy Plan is to make BC electricity self-sufficient by 2016. BC Hydro's 2006 IEP shows that about a third of BC's electricity will come from private "IPPs" (independent power producers). That leaves the problem of what happens when contracts between Hydro and the IPPs expire in 20 or 30 years. Unlike the heritage that WAC Bennett left for future generations, the heritage of expiring IPP contracts will leave future generations with private power producers who will be free to sell to anywhere on the North American power grid at prevailing market prices. Rather than capturing those future economic rents to be used in BC, as is the case with dams on the Columbia, the future profits will go to the bottom line of dozens of private companies. The long term plan of the Campbell government appears to be the privatization of power generation. How's that for electricity self-sufficiency?

From the point of view of conservation, higher electricity prices are probably needed. In the words of the Plan: "A key demand side management tool is pricing structures to either discourage consumption overall, or shift demand to less costly periods." For decades BC industry, as well as residential consumers, have benefited from some of the lowest electricity rates in North America. It doesn't take an economist to point out that lower prices mean higher consumption. Energy Star appliances and energy efficiency standards for building codes will help with conservation, but those steps will be undermined if the policy of the government is to keep electricity rates as low as possible. Don't hold your breath waiting for a political debate on that topic, at least not before the May 2009 election. The issue shouldn't be whether we pay higher rates, but who benefits from the profits derived from higher rates and what mitigation should be put in place for low and moderate income families who will pay much more in increased electricity rates than they have saved with tax cuts.


About Me | Mail Me | Navigation | Top
2007 David D. Schreck. All Rights Reserved.