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Feature - Divide and Conquer

Private energy companies given free reign to run our rivers for "green" hydro generation

"Snow is our life blood here."

Whistler-Blackcomb’s Arthur DeJong summarises Whistler’s key symbiotic relationship. Without the snow, business dries up, nest-egg properties crack apart, the people don’t come.

DeJong might be Whistler-Blackcomb’s greenest suit. I’m talking to him about the glaciers and he’s boiling it down to the bare bones:

"Glaciers are Nature’s best indicator of global warming. And the big picture issue is global warming."

One major project in deJong’s in-tray is the development of an independent power source for the highly energy consumptive mountain operation.

"If we are committed – and we are – to being sustainable, we must tackle the energy crisis first," said DeJong.

Falling into place as Whistler-Blackcomb’s allies in the war on global warming are Whistler’s hardest working river, the Fitzsimmons, a deregulating hydro industry, and a strategic partnership with Ledcor, the second biggest construction company in Canada.

Ledcor Power Inc. is also the proponent behind the Ashlu and Sigurd Creek run-of-the-river projects north of Squamish, which will generate a combined total of 220 gigawatt hours of electricity – enough to energize 25,000 homes.

You don’t post annual revenues in excess of $1 billion, as Ledcor did in 1999, without having your finger on the pulse. And run-of-the-river hydro is where it’s at.

The Coast Mountains region between North Vancouver and Lillooet is dotted with mountain-fed rivers that have gained the attention of independent power developers, eager to capitalize on B.C. Hydro’s green power production targets.

As DeJong says, "Hydrology is nature’s gift to us here."

The B.C. government has set a target to generate 50 per cent of all new power using clean energy sources. Seventy-six local rivers and creeks have water diversion proposals in the works.

Run-of-the-river hydro utilizes the downhill incline and velocity of a river to generate energy. Water is diverted through a pipe into a powerhouse turbine system at a high speed, then redirected back into the river anywhere between one and ten kilometers downstream.

The Liberals’ energy policy courted controversy when it contracted out B.C. Hydro’s non-core services to Bermuda-based Accenture. But B.C. Hydro’s New Era make-over doesn’t stop there.

According to the Ministry of Energy, B.C. Hydro’s "new generation activities will be limited to facilitate new opportunities for independent power producers to meet growing demand in both domestic and export markets." Deflecting the capital costs of power generation to the private sector is a global trend that the World Bank has been supporting in Africa, Eastern Europe, Central and South America and Asia.

The next phase of deregulation came on May 29, with the creation of the B.C. Transmission Corporation, a government owned agency that will operate and manage B.C. Hydro’s transmission assets. Access to the transmission grid will allow independent power producers to link directly to B.C. customers and the massive U.S. export market.

And Californians are positively frothing at the bit.

Although support for the deregulation and privatization of B.C. Hydro assets is shaky, individual independent power projects (IPPs) are largely enjoying public support because they are green and sustainable. On a case by case basis, they come up smelling pretty rosy in comparison to large scale damming and fossil fuel operations. After all, we all use electricity.

Critics, however, suggest being "green" isn’t so black and white. Stuart Smith, River Projects Coordinator for the Whitewater Kayaking Association of B.C. is looking at the big picture:

"I have a background in ecology. The raw fact is that one run-of-the-river is way more environmentally friendly than a big dam. But are 100 Rutherford IPPs, or twenty of them, more environmentally friendly than one Daisy Lake dam? It’s just not a clear question. And what about the things we just don’t understand – the impact on the frogs, the bugs, the water life, the moose or ducks?

"There are a lot of unknowns and the pace we are moving at doesn’t allow us to monitor the impacts. This thing is happening way too fast."

B.C. Hydro is playing the green card, having made a voluntary commitment to meet at least 10 per cent of new electricity demands through green energy by 2010, buying power from designated IPPs.

It’s also an issue of economics. The development of run-of-the-river comes at no cost to B.C. Hydro or taxpayers – the IPP proponent even pays the cost of modifying the transmission lines, as Edmonton IPP Epcor Power Development Corp discovered when they bought Miller Creek.

Their predecessors’ undertaking to the Pemberton community to hook Miller Creek’s power to the grid via pre-existing poles proved technically impossible and Epcor and B.C. Hydro representatives felt the full wrath of an angry public, which rapidly concluded that none of the protagonists in the run-of-the-river game can be trusted.

The full-house community meetings alerted village staff and SLRD representatives to a depth of feeling that had bubbled to the surface.

In response, they put a moratorium on IPP developments and hired consultant Jane Newlands to look at the issue.

Meanwhile, the Miller Creek run-of-the-river project was constructed and is currently being investigated by the Department of Fisheries and Oceans for the deposit of deleterious substances into the creek. The powerlines were upgraded.

And the community is now facing down another IPP on the Ryan River.

Robbie Stevens, a member of Pemberton Residents for Responsible Development, says, "The Ryan is the next one on the block. Miller Creek IPP went unnoticed until the hydro line situation arose. The Ryan project hasn’t even figured out their power line routing, so they’re going to go ahead with the project and figure out the routing later.

"But, in my opinion, the biggest conflict here is that one of B.C. Hydro’s four Green Energy criteria was that local values will not be compromised," said Stevens.

"We had the nine SLRD Board members unanimously vote against the Ryan IPP, but the process is going ahead, so how exactly are B.C. Hydro valuing local public involvement?

"It would be nice to see this project stopped, to show we actually live in a democracy. But it’s such a demand driven model, rather than being conservation focused. It’s a macro problem in a micro setting. The environmental ramifications are huge. And the irony is that tourism is the number two industry in this province."

Stuart Smith echoed this sentiment:

"It’s ironic that there is such a huge focus on run-of-the-river development in this region and yet it generates huge sums from tourism, more than anywhere in western Canada, more than Banff," he said.

The SLRD report identified the proliferation of power lines as a key issue for the region, particularly given our dependence on tourism. The government’s response? Amend the existing legislation to allow IPPs to hook into the existing transmission lines without public consultation or regulation by the B.C. Utilities Commission.

B.C. Hydro is offering businesses green power certificates, a coup to those seeking LEEDs (Leadership in Energy and Environmental Design) accreditation, by crediting one megawatt hour of "green" electricity to them. An electron is an electron, so it’s not as though you can actually distinguish the environmental halo of the electrons you are buying from the grid, but, as B.C. Hydro says on its website, "Consider the public relations benefits of being able to announce that you are purchasing enough Green Power Certificates to offset the impacts of 100 per cent of the electricity used by one of your offices or facilities, or one of your plant processes."

n some circles, that’s called greenwashing. But it’s sold a lot of power in a deregulated Californian market, despite there being no way to trace whether your energy actually came from a nuclear or diesel facility.

To meet the surging demand for power south-of-the-border, B.C. Hydro is negotiating Electricity Purchase Agreements (EPA’s) with qualified IPPs, and there’s no shortage of contenders. Seventy submissions were received at the most recent call, ( with seven times more generation potential than B.C. Hydro was even seeking), of which 30 projects were pre-qualified. Amongst these are Ledcor’s plans for Ashlu Creek, Sigurd Creek and Fitzsimmons Creek, and Cloudworks’ plans for Mkw’alts (or Ure) Creek at Mt Currie, Rutherford Creek, and the Ryan River joint venture on Pemberton’s Ryan River.

Cloudworks principal John Johnson acknowledges the importance of securing an EPA:

"You can’t finance a project unless you have your EPA, unless you’re a big enough company to be able to speculate," he said.

But the EPA is only one layer of bureaucracy for a budding micro-hydro developer. Another piece of vital paperwork is the land tenure and water licence, which is the stage where fish stewards and kayakers start to make noise.

Land tenure and water licences are issued by Land and Water British Columbia (LWBC), which was born out of the Whistler Land Corporation. Established in 1983 to develop and market Crown land in the Village of Whistler, LWBC has been through several incarnations before coming back around to something eerily resembling its genesis – an agency putting BC up for sale.

LWBC’s "Guide for Waterpower Projects" helps clarify its role for proponents:

"The environmentally-sound development of Crown land and water resources presents a significant opportunity for the Province to stimulate and diversify the economies of B.C.’s rural and coastal communities. In order to do that, LWBC focuses on sectors that have the most potential to achieve these goals, and waterpower projects have such potential.

A waterpower project requires a water licence under the Water Act , and tenure under the Land Act for any component of the project situated on Crown land. As part of LWBC’s commitment to accelerate economic development in key sectors, the corporation is committed to reducing the regulatory burden and providing clients with a more streamlined process. Applications for a waterpower project will be processed through ‘one window’ with the water licence and Crown land tenure applications adjudicated concurrently."

Stuart Smith makes note of LWBC’s facilitative role: "LWBC just took a 90 degree turn in policy. Formerly, they would only issue the water licence when all the other regulatory approvals were in place. Now, they don’t," he said.

"Now a proponent can get their water licence and tenure from LWBC without having secured any other approvals, the zoning, the federal approval, the environmental and fisheries impact information. So they have a permit to take the water out and nothing else is in place, and no one is watching them to ensure that they go and get those other approvals. It’s like letting someone in your house and just hoping they’ll have the sense to take their shoes off instead of walking all over your carpet. Once you have tenure and a water licence, it’s not easy for the province to take them back."

Impacts are only considered on an individual, site-specific basis. The fact that neither B.C. Hydro or the LWBC are providing any overarching regulation or plan, nor scrutinizing projects for merit in any way, is precisely the issue identified by Jane Newlands, consultant for the SLRD.

Industry insiders argue that there are natural limitations to the proliferation of micro-hydro developments.

John Johnson of Cloudworks Energy explains:

"What you have to understand is that B.C. Hydro is the only buyer for this power and, as of the moment, there is only one more call for next year and only two to three projects will be accepted. Few will meet the social economic and environmental hurdles required to make something of their application. Unless something changes with B.C. Hydro, that’s all that are going to be actually being developed. We have 19 applications and we’re hoping that four of them might be realized."

Now that B.C. Hydro has created a separate entity to handle transmission operations, more opportunities might be opening to IPPs.

"Up until now (B.C. Hydro) didn’t want anyone messing around with their lines," said Johnson. "They didn’t want the risk that someone could endanger their responsibility to provide power to B.C. But now there is a supply shortage looming. The landscape has changed, and they have to allow others to transmit energy, otherwise they lose their U.S. energy export licence which is very important to them."

The wild card is the newly created entity B.C. Transmission Corporation, which could potentially enable IPPs to deal directly with export customers, bypassing B.C. Hydro altogether.

And this open season on BC rivers is what is most frightening to river-watchers like Stuart Smith.

"There is this myth touted by everyone that not all 76 water licence applications will proceed. But that is a myth. LWBC give the water licences and the land tenures and LWBC has no mechanism to say no to a project. They will hear all applications and can only ask for mitigation.

"The Kayaking Association spent two years hounding the provincial government to come up with a big scale development plan, but there is none, so LWBC just takes them in the order they receive them. There are 20 to 25 in the works right now.

LWBC is mandated to make money by issuing licences and handing out development permits. It has no environmental mandate. It’s a business for the province and IPPS generate a lot of cash.

"Then you compound that with the changes in regulatory structure on energy, and we’re going to see the independents able to sell their power through the B.C. Hydro grid to private customers, in California, in Mexico…energy on the grid becomes a commodity," said Smith.

"B.C. Hydro, which used to limit things through the EPA process and by buying all the electricity, now has no opportunity to put the reins on. Currently, the developer needs an electricity purchase agreement, so there’s no mechanism for the developer to directly get the energy out. But that will change soon. BCHydro is stepping out of the regulatory role," Smith said.

"In six of the last ten years, BC was a net exporter of power and BC Hydro made a lot of money. The IPPs work well for them. B.C. Hydro makes money storing water in a reservoir. Meanwhile, local needs are met during the day from the local IPPs and B.C. Hydro can keep its store in the dam until California has a shortage and then sell it to them at five times the price."

Arthur DeJong is confident that even IPP naysayers would support the Fitzsimmons run-of-the-river project:

"We have a decade of study on the river as we use it for snowmaking. There are no powerlines – they’re all underground. It is an industrial river. The road is already in to the potential penstock (intake). The power station would be located where our snowmaking facilities are currently located, and the fish values in the upper Fitz are marginal at best."

Unfortunately, there is simply no mechanism to evaluate the merit of an IPP, its operator, or a project’s likely impact on the ecology of the watershed.

As Opposition member and BC Citizens for Public Power supporter Joy McPhail said when debating the Transmission Corporation Act in the legislature, "The environment erodes when profits increase."

Live rivers are being harnessed to become working rivers. With the deregulation of B.C. Hydro, IPPs stand to make a lot of money.

Nobody knows what impact a hundred run-of-the-rivers will have on the ecosystem, but the primary concern seems to be to ensure that the emerging fossil fuel crisis doesn’t have an impact on our personal energy consumption.

So baby, leave the lights on for me, because there are plenty of rivers in my backyard, and it’s all green, green, green, so my eco-guilt is washed clean.