IPPs to cost BC Hydro almost $1 billion annually by 2014 

Province to review 32 per cent rate increase

BC Hydro's investment in green energy is expected to cost it almost $1 billion by 2014.

In a Revenue Requirements Application filed with the B.C. Utilities Commission that is expected to garner the power authority a 32 per cent rate increase from 2012 to 2014, BC Hydro indicates that it will be spending progressively more on electricity generated by Independent Power Producers (IPP's) in every year that the rate increase occurs.

However BC Hydro is currently in discussions with the provincial government about ways to mitigate the impacts of a rate increase. Rich Coleman, Minister of Energy and Mines, told media this week that his department is conducting a review of the rate increases, with terms of reference to be set on April 1.

A number of BC Hydro's expenses actually come as a result of initiatives propelled by government policy and attempts to get the private sector more involved in production of electricity. Private sector involvement comes in the form of independent power producers, projects that sell their electricity to BC Hydro.

In the 2010 fiscal year, BC Hydro spent $567.4 million on electricity from independent power producers. Those purchases climb to $781.8 million in 2013 and finally to $939.8 million in 2014.

Asked for comment, a spokesman with BC Hydro declined to explain the increases. He said only that parties involved with hearings before the B.C. Utilities Commission in the coming weeks would address the increases and that the power authority would address concerns at that time.

BC Hydro says in the application that the majority of the cost increases between 2013 and 2014 are attributable to projects that were extended electricity purchase agreements (EPA's) under the 2009 Clean Power Call. Several new projects approved through that process are expected to come online between 2012 and 2014.

Independent power producers reach electricity purchase agreements with the power authority under various requests for proposals such as Clean Power Calls and the Standing Offer Program.

Programs such as these have resulted in facilities such as the Fitzsimmons Creek run-of-river project in Whistler and the Rutherford Creek run-of-river project near Pemberton.

The Upper Lillooet cluster, a series of run-of-river facilities being pushed by Creek Power Inc. on streams surrounding the Lillooet River north of Pemberton, is among the projects that obtained an electricity purchase agreement under the 2009 Clean Power Call. It is currently undergoing an environmental assessment and must obtain a certificate from the Environmental Assessment Office before it is allowed to operate.

But the 2009 Clean Power Call isn't the only place where costs are rising for BC Hydro when it comes to purchases from IPP's. In fact, costs are rising for BC Hydro on every single call to solicit green energy from the private sector except for the 2002 Customer-Based Generation program.


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