February 20, 2009 Features & Images » Feature Story

Water War 

Inside the battle over IPPs

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It's like a scene from "There Will Be Blood."

Hundreds have descended on the aging gymnasium at the old Pemberton Community Centre. Many are there to learn about a run of river hydro project planned for the Ryan River, a remote area north of town. Others have made up their minds already.

This story's Daniel Plainview is a prospector of a different kind. His name is David Carter, and he's been developing power projects for 25 years. He's much nicer than Daniel Day-Lewis's famous character, but much as Plainview sought oil for profit Carter sees the profit-making capabilities of a wild river.

He has the unenviable task of defending the project against a mixed crowd of curious locals and vocal opponents from out of town. They wear nametags that say, "I ♥ grizzlies," and carry placards showing wild salmon - both species they fear the project threatens. They hang a banner that says, "Wild Rivers Don't Belong in Pipes - Save the Ryan." They applaud loudly for all remarks that oppose the project.

Carter tries to field questions over a huffy, buzzing audience.

"I want to save the Ryan," he says. Some in the audience scoff at him. Others confront him and ask, "How many people have to say no to make you go away?"

The Ryan is just one battle in an ongoing war on independent power producers (IPPs). Proponents say they're essential to meeting B.C.'s sustainable energy needs. Opponents plan to make a serious issue out of them come election time, just three months from now.

What is an independent power producer? In the simplest terms, it's a private company that generates electricity. There are 32 spread throughout the province that generate power through run-of-river technology according to B.C.'s Ministry of Energy, Mines and Petroleum Resources.

(That's a figure that conflicts with one cited by Energy minister Blair Lekstrom, who asserted in a recent letter to the editor that there are 46 projects up and running throughout the province.)

A run of river facility uses the natural flow and elevation of a river to generate electricity. Water from the river is diverted into a pipe or penstock and downhill through through turbines before it's diverted back to the channel's natural flow, according ot the Independent Power Producers Association of British Columbia (IPPBC).

The electricity generated by the turbines then goes into transmission lines that connect thereafter with the Western Interconnection, a power grid that stretches from northern B.C. to Alberta and south to Baja California in Mexico. The electricity generated at the run of river facility can go wherever demand is on the grid.

That isn't to say that the electricity immediately goes to consumers in the Untied States and Mexico, or even Alberta. There are tabs throughout the grid that allow consumers to tap into it.

In British Columbia's case, B.C. Hydro, a publicly-funded electric utility, acts as an intermediary between the projects and the consumers - it purchases the electricity from private producers and supplies it to businesses, homes and other consumers as needed. The producers themselves essentially only have BC Hydro for a client.

The phenomenon of independent power dates back, at its latest date, to 2002, when the provincial government released "Energy Future: A Plan for B.C." Under that energy plan, BC Hydro was directed to seek out independent producers to supply new energy.

IPP's, according to the plan, were "well positioned for power development, given (their) ability to find entrepreneurial capital, efficiently build and operate facilities and take on the associated risk."

Though the 2002 plan provided exclusive opportunities for the private sector to develop new power projects, independent power in fact dates back much earlier.

The IPP industry in fact dates back to 1989 when, Jack Davis, B.C.'s Social Credit Energy Minister of the time, instructed B.C. Hydro to put out a call for proposals for private power.

Projects were slow to start over the next decade due to changing regulatory practices and sluggish growth in the demand for electricity, as well as challenges in public perception and financing, according to the IPPBC. A freeze on exports in electricity, starting in 1992 under the new NDP government, also didn't help.

Interest grew in IPP's when Gordon Campbell's Liberal government was first elected in 2001. Its energy plan followed the next year.
B.C. Hydro would have a new wing to operate its extensive transmission system and could continue to operate programs such as PowerSmart, as well as to make improvements to existing facilities.

The call to private power has touched off what opponents call a "gold rush," meaning a drive by private companies to stake claims to B.C. rivers and put up power projects there. The process to get one established, however, is a lengthy one.

First a company must obtain a water license on a river. This can be obtained through an application to the Ministry of Environment, the Integrated Land Management Bureau (ILMB) or FrontCounter B.C., an office that streamlines the bureaucracy associated with starting small-to-medium sized natural resource businesses.

To get the license, an applicant must have a substantial interest in the land where water will be used, whether as a registered owner or leaseholder according to the application on the Ministry of Environment's website.
Waterpower projects such as a run-of-river facility need to fill applications under both the Water Act and the Land Act if they're to be situated on Crown land, which is owned by either the province or the federal government.

First you need to state whether you're going in on a land tenure alone or with a partner. Then you need to specify whether you have another license already. You have to describe the land the water will be used for and point out if it's private land. Next you need to point out the purpose of your license.

This can be a number of uses: domestic use, irrigation, and stockwatering, which can go towards raising livestock such as cows and pigs on a farm. Power companies need to fill out a separate form where they specify their anticipated power production in kilowatts, as well as maximum stream flow required.

You also need to provide measurements of the equipment you'll be using, such as an intake, penstock or turbines.

Next, the applicant must specify the source of water on which they plan to obtain a license. In cases where river sources are unnamed, the applicant can actually suggest a name for the river. It requires a letter explaining why, but licensees can nevertheless play a role in christening a river in the course of harnessing it to their needs.

Next the application asks for a list of works that could be use to divert a water source, such as intakes, ditches, pipelines and reservoirs. Among other things, the applicant needs to specify whether water will be directed to a place of use, as well as the length of pipe needed to convey it.

The final portion of the application asks you to specify how the works could impact lands other than your own.

The Ministry of Environment estimates that there are around 600 licenses active on B.C. rivers, though they can change from day to day. IPP Watch, a group that monitors water licenses, has produced a dotted map that shows water licenses for power projects on several rivers throughout B.C. Many of them are concentrated in the southwest coast area, but some are situated in the far north.

Just because there are dots on the map, however, doesn't mean they'll become power projects. It merely means that licenses have been obtained for those rivers and that they're being planned for development. The number of active licenses can likewise fluctuate from day to day.

Where private power companies are concerned, some groups in B.C. feel that they are "privatizing" B.C. rivers by acquiring water licenses even though other individuals and groups have acquired licenses on rivers for different purposes.

A search of water licenses on the Ministry of Environment's website shows over 70 categories for water licenses. "Power-general," the one that encompasses run-of-river facilities, is merely one of those.

The Western Canada Wilderness Committee (WCWC), one of the groups that is raising a provincial brouhaha over IPPs, has characterized it as a "gold rush".

The WCWC is a Canada-wide organization that was founded in 1980 as a publicly-funded wilderness preservation group. With over 30,000 members, it has assigned itself the duty of protecting the biodiversity of B.C., Canada and Earth. It claims to be nonpartisan, but it has harsh words for the Campbell government and its decision to put hydroelectricity in private hands.

Joe Foy, the WCWC's national campaign director, said in an interview that his organization initially ignored the trend towards private power but later turned its focus on it when a private project was being proposed for the Upper Pitt River, north of Pitt Meadows in the Fraser Valley.

"Anytime you start working around creeks, you are working around the critical part of a natural ecosystem," Foy said in an interview.

Though the project is now on hold, the Pitt River area was once slated for the development of seven run-of-river projects. It was expected that they would have a collective generating capacity of 280 megawatts (mW) and could help offset over 200,000 tonnes of carbon dioxide emissions per year (according to the website for Run of River Power, which is developing the project).

The project, as WCWC tells it, could put a power line through Pinecone Burke National Park, an area that the group has worked to protect since the mid-1990s.

Foy likens projects such as the Pitt River to "gravel pits."

"Each guy stakes out his own gravel pit, or river," he said. "And each guy makes the claim that his was the best, and that's what we were seeing with private power. With the Upper Pitt, that was the best, that had to go forward, but so was the Ashlu (project) the best, and that really set off alarm bells for us.

"They were rolling out in a way that would seem to be highly likely to cause environmental damage, a bit like driving at night with your headlights off."
Foy said that the WCWC began to look deeper at what was causing a perceived "rush" of private power projects. Eventually the group settled on statements by the B.C. government that the province had to be energy self-sufficient and was running out of power.

"We very quickly understood that this was a setup situation," he said. "It is now our view that this has created an artificial gold rush on B.C.'s rivers and streams."

The B.C. Energy Plan, however, doesn't exactly say that the province is experiencing an energy shortage. It says under a heading about "electricity security" that B.C.'s growing population has also upped its demand for electricity.

B.C. Hydro estimates, according to the plan, show that the demand for electricity could grow up to 45 per cent over the next two decades.
The plan thus commits B.C. to becoming electricity self-sufficient by 2016, meaning that it won't have to depend on imports of electricity. Part of that includes developing electricity generation with zero net greenhouse gas emissions - and that's precisely what run of river can achieve, according to the IPPBC.

The WCWC and other environmental groups aren't expressly opposed to run of river technology, but are concerned that the facilities themselves aren't publicly owned and are being developed ad hoc without a master plan. It doesn't make it better for the WCWC that B.C. Hydro, a publicly-owned Crown Corporation, actually buys electricity from these power companies.

"Down the road, my kids and grandkids will not own these facilities," he said. "That's a social issue that bugs us, but we believe that these private facilities are not being planned in a way that B.C. Hydro would plan... they are not being planned in a way that makes sense for our power needs."

The issue of public vs. private power isn't the only sticking point for the WCWC. The organization also doesn't think much of the electricity that these facilities generate.

"A lot of these private power projects actually produce crappy power," Foy said. "They're expensive to get, they're far back in the mountains and the power they create is kind of intermittent."

When he says intermittent, he means that run of river facilities only produce peak power at certain times of the year. B.C. rivers don't flow very quickly in the wintertime and as a result they don't produce much electricity.

The Save Our Rivers Society (SORS) feels much the same way. Founded by Sea to Sky residents Tom Rankin and Hamish Nichol, it too has concerns about the perceived privatization of B.C. rivers.

Rankin, a farmer from the Squamish Valley, has made it his goal to inform the public about the B.C. Energy Plan and its perceived drawbacks. He was first alerted to problems surrounding IPPs when Ledcor, a construction conglomerate based out of Vancouver, began developing a run of river facility on Ashlu Creek near Squamish.

Ledcor first applied for a water license on the Ashlu in 1989 but began hosting open houses in 2002 - over a decade later. Significant public opposition to the project at open houses and elsewhere led the Squamish-Lillooet Regional District (SLRD) to deny the project the zoning it needed to proceed.

Minutes from a January 11, 2005 meeting where the project was rejected cited community opposition, as well as the lack of an overall strategy for developing IPPs within the regional district and the potential impacts on grizzly habitat.

That decision was followed a little over a year later by Bill 30, a provincial legislation that amended s.121 of the Utilities Commission Act to keep local governments from preventing construction of facilities by public utilities. IPPs were included so long as they were located on Crown land, had obtained electricity purchase agreements with B.C. Hydro, Powerex or Fortis B.C., and had necessary federal and provincial authorizations.
For Rankin, Bill 30 took away the public's right to say "no" to a private power project.

"That's the last time the public was consulted on a private power project," he said. "We were just kind of dumbfounded that the government would take away our rights."

There does, however, remain some opportunity for the public to have its say on private power projects. The Environmental Assessment Office (EAO), a joint office between the federal and provincial governments, assesses any projects over 50 mW to ensure they're developed in an environmentally sustainable manner. Its assessment process provides two opportunities for public comment that includes public meetings.

(The Ashlu, which is under 50 mW, didn't actually have to go through this process but it still held public meetings.)

Rankin doesn't think that's consultation.

"A comment is a comment, it's not consultation," he said. "Consultation meant on a project that size you would first go to the local community and discuss with them the local project, and that's consultation. Consultation was completely removed by Bill 30, there is only a comment period."

With the Ashlu well into construction now the forces battling private power have turned their attention to a new project: the 145 mW power project planned for the Ryan River north of Pemberton.

The developer, Regional Power Inc., is a Toronto-based subsidiary of Manulife Financial. It already has run-of-river projects under its belt across Canada. The Wawatay Generating Station near Marathon, Ontario is a 13.5 mW facility that was completed in 1992, but Regional Power's crown jewel is the Sechelt Creek project, a 16 mW facility on the Sunshine Coast.

Completed in 1997, it's in a remote site accessible only by boat or plane.

In 2005 Regional Power won a Blue Planet Prize during a United Nations conference on climate change. The award's jury is made up of representatives from UNESCO and the International Hydropower Association (IHA) and recognizes best practices in developing hydropower on the basis of environmental and other criteria set down by the IHA.
The award drew particular attention to a salmon run that Regional Power established at the Sechelt Creek site. The spawning channel is fed by clean water from the generating station and has been credited with re-establishing a run previously decimated by human activity.

The Ryan project is a little different. It's a facility with over nine times the generating capacity and will require significant construction in order to become a reality. That construction will include burrowing a 10 km tunnel through Sugarloaf Mountain that will divert the flow of the river to the other side.

Water will flow at up to 45 cubic metres per second to a generation plant where three to five turbine generators will produce the electricity. The power generated there will then pass into a 26.5 km transmission line that will end at a substation near the Rutherford Creek power plant on Highway 99.
From there the power feeds into the Western Interconnection and can transfer electrons where needed. A purchase agreement with B.C. Hydro will allow that electricity to be transferred to power consumers.

The water generating that power will then flow back to the river and help feed a salmon spawning channel, much like the one that Regional Power designed at Sechelt Creek.

Officials with Regional Power couldn't say how much the Ryan would charge B.C. Hydro for its power, but said that power from the Sechelt Creek project costs B.C. Hydro about $0.063 per kilowatt.

The Ryan has proven to be a contentious project for a number of reasons.

Opponents of the project say it's located in a key grizzly bear recovery area, as identified in the Sea to Sky Land and Resource Management Plan (LRMP). This plan, however, identifies the entire Sea to Sky region as a key recovery area.

Beyond that, opponents of the project don't want it in Pemberton because community consultations that helped develop the LRMP recommended that the Ryan be left off limits to energy development projects and water licenses due to concerns about environmental, social, wildlife, recreation and tourism values.

Other streams recommended to be off limits included the Ashlu, Callaghan Creek and the Birkenhead River - all this, despite the fact that they already had licenses approved on them.

The recommendation, however, didn't get into the final LRMP because Nigel Protter, a Pemberton resident and representative for the energy sector as part of consultations, vetoed the list, feeling that there wasn't enough scientific data to justify those limits.

"That list was arbitrary," he said. "In the terms of reference in the LRMP that we agreed to, everybody agreed... that there would be no new parks or protected areas out of the LRMP, that was not what the LRMP was for."

David Carter, vice-president of Regional Power, is the central proponent behind the Ryan River project. At the December public meeting he fielded questions that ranged anywhere from concerns about privatization to accusations of theft.

"This provincial government has given permission to people like you to rob the people of the province of the possibility of B.C. Hydro, which we own, putting up these proposals," Save Our Rivers co-founder Hamish Nichol said at the meeting. "That profit which would go to us, as individuals, will now go into your coffers."

Carter knows there's a lot of opposition to his project but he believes fervently in what he does. His company chose the Ryan because it's situated in a heavily-logged area - activity which helped deplete its wildlife population. That's something he thinks he can help.

"Generally, what we do when we look at projects, initially we do all the preliminary work that we need to do to determine the viability," he said.

"Can it make sense, can we identify environmental enhancement? There's been a history of us doing that. Is there something about this river system that we can improve environmentally?"

Though the power produced at the Ryan would feed into a power grid that connects Canadian power with the United States (and vice versa), Carter promises that its product will be concentrated primarily in the Lower Mainland.

"A big part of the product ends up in the Lower Mainland," he said. "That is the large load centre. It's more advantageous for B.C. to have the product manufactured close to that centre."

A number of people at the Ryan's public meeting didn't much seem to care what Carter wants to do to help improve the area's ecosystem. When he tried to explain the spawning channel at Sechelt an audience member with a videocamera interrupted him and said, "We're not talking about Sechelt!"

Protter, who represented the energy sector as part of LRMP consultations, is also an advisor to Regional Power on how best to develop a power project at the Ryan through Exergetics Development Co., his consulting company. He has an answer for just about every criticism of the Ryan project.

As Protter tells it, British Columbians and others hooked up to the Western Interconnection get their power through a system of constant trade. The grid, he said, is like a network of canals that has electrons pour into it from numerous power sources throughout the canal system.

"All throughout the network are little tabs where people can just tap out as many (electrons) as they need," he said in an interview. "The system only works when it's just perfect. If there's too much water going in, it pours over the edge and you have waste."

Carter says something similar, likening the power projects along the grid to batteries feeding a vast power system. Those batteries can feed different consumers along the grid as needed at different times of the year.

In the winter, for example, B.C. has a greater demand for power because it's cold outside. Consumers need the power to heat their homes. In situations like these, B.C. homes can get their power from sources in Alberta - and that can include coal-fire generators, a markedly less sustainable power source than run of river. In summer, when rivers are high and reservoirs full, B.C. can sell clean power back to Alberta.

Ultimately, Carter feels that opposition to IPPs is concentrated centrally around the issue of public vs. private electricity. And he seems to think that those on the side of totally public power have a valid point.

"I really think that the idea of public and private really seemed to be more fundamental to the issue," he said after the Ryan River public meeting. "I didn't have an answer for that, maybe I still don't, but I wouldn't mind thinking about that."

Protter, meanwhile, thinks it would actually cost more for B.C. Hydro to develop all the province's power producing entities.

"It's inherently inefficient for a monopoly like that to build those kids of things for all kinds of reasons," he said. "If B.C. Hydro built them it would be paying more, even more than its paying the IPPs. The IPPs are cheaper because the government became convinced that the IPPs can build them and operate them cheaper than Hydro can."

Beyond providing power, IPPs can generate significant tax revenues for the communities where they're located. The Rutherford Creek project near Pemberton, for example, will bring $135,000 in annual taxes to the Village of Pemberton if it's incorporated as part of a boundary expansion.

The Ryan, a bigger project that currently lies within the SLRD, could bring an estimated $1.15 million in property taxes to the VOP if the area is incorporated into the Village.

As it stands, that money would go to the provincial government because it lies in a regional district, but the land the Ryan sits on could one day be incorporated into the Village as part of a greater boundary expansion that's currently under discussion.

Tom Rankin, meanwhile, says that it is in fact B.C. Hydro that pays property taxes for IPPs - a claim challenged by John Steil of Stantec, a Vancouver-based planning company that is overseeing Pemberton's current expansion.

"I've seen the assessments for the Rutherford Creek Power Plant and they're made out to the actual operator of the plant there," he said. "They pay taxes now to the province and the regional district, it's all on one tax assessment."
Another concern about the Ryan is that, like other similarly-designed run of river projects, it will reduce the flow of river between the diversion weir and the powerhouse.

Power producers are required to leave at least 10 per cent of mean annual discharge in the river after it's diverted, meaning average flow of the river in a year.

That has brought up questions about how the project could impact wildlife in the area, not to mention recreation as some creeks under development are used by whitewater kayakers.

"Everything mankind does impacts on wildlife," Protter said. "Everything, including this project."

The river does, however, have some insurance in Wasp Creek, which flows into the Ryan from a higher elevation.

"It's a very big drainage and it's going to flow into the Ryan anyway," Protter said. "Where it pours in is well above where any fish are."

Rankin and others who oppose IPPs, meanwhile, are steadfast in their opposition to private power. He calls Protter a "very close inside Liberal guy" who picked up water licenses when they were "dropped off the back of a truck."

"He's got a major fish on the hook," he said.

Protter, however, disputes Rankin's assertions about him owning a water license.

"I never have held a water license, ever," he said. "I don't know if I ever will, it's not what I do. I'm not a developer, (Rankin) doesn't know anything about me."

The public has one more opportunity to comment on the Ryan project. It's currently undergoing an environmental assessment and has just passed its first public comment period - the public meeting in December was part of that.

The next window for public comments will come after Regional Power submits its official application to the EAO. The application will then be evaluated for its attention to environmental standards and issued a certificate if it passes. The public gets to offer comments during a review of the application.

From there the project will be assessed over a 180-day period and finally will go to the provincial cabinet to decide whether to permit the project. If not, it will be abandoned or the cabinet will ask them to re-design it.
In the meantime, the debate over IPPs rages on and the most vocal opponents plan to make them an issue come election time.

Whether private power is the right thing for B.C. is entirely up to voters to decide. Come May 12, they'll have a chance to endorse the current energy plan or express their desire for a brand new one, should they elect the NDP to the legislature.

Either way, groups passionate about IPPs are certain to keep them in the limelight right up until then.

By numbers:
Approx. number of water licenses in B.C.: 600
Approx. number of water licenses in Sea to Sky: 84
Number of run of river projects in B.C.: 32
Licenses held by Plutonic Hydro: 40
Licenses held by Cloudworks Energy: 35
Licenses held by Regional Power: 5

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