The BCUC's Alternative to Site C

The BC Utility Commission (BCUC) released for comment what it considers to be an alternative to Site C that could meet future electricity requirements. Its alternative basically consists of a lot of wind projects, utility scale batteries and conservation measures. Based on a number of assumptions, it estimated the present value net costs that this alternative would entail (with all expenditures and export revenues discounted back to an equivalent 2018 value taking the time value of money into account). The BCUC release relates to the fourth question in the Site C terms of reference about whether there is an alternative to Site C that could provide the same benefits at equal or lower cost.

There is no explicit comparison to Site C in the BCUC release, as it does not provide a comparable Site C 2018 present value cost net of export revenues. However, BCUC’s estimates would appear to suggest that contrary to BC Hydro’s calculation that an alternative portfolio of projects would be some $7 billion in present value more costly for ratepayers, its alternative could be equal or less expensive. It will be very important for government to know exactly why there is such a huge difference in results.

In this truncated hearing process that the government established for Site C, there is very little time and opportunity to question and challenge the assumptions and analysis that BC Hydro, other parties and in this case the BCUC itself has brought forward for consideration. The BCUC has provided less than one week to comment on what it just released. This is very problematic --- particularly so in this case given the importance of what BCUC has put forward and the many questionable assumptions it has made.

The BCUC alternative relies heavily on wind power and it assumes BC Hydro could integrate some 600 MW of wind at half the integration cost per MWh that BC Hydro assumed, based on concerns expressed about BC Hydro's estimate. Whether those concerns and an arbitrary reduction of wind integration costs by 50% are valid are matters that require careful examination.

BCUC assumes that the wind projects in its alternative will provide a significant amount of dependable peak generating capacity (26% of the nameplate capacity) despite its assumption that all of the wind projects would be located in the same general area to avoid transmission system upgrade costs. But BC Hydro has to plan on the basis of what it can rely on, and it can’t rely on the wind blowing exactly when the power is needed. Overall BCUC asserts that its combination of wind, batteries and conservation measures can provide the same reliability as Site C without any technical studies to confirm what can only be described as a very questionable proposition.

With respect to the cost of the conservation measures, BCUC considers only expenditures BC Hydro would have to make for programs and incentives. It doesn’t take into account the generally much larger cost that customers themselves have to pay to achieve the energy reductions – in other words it fails to measure the full cost of a key component of its alternative to Site C.

BCUC assumes a very low export price for surplus energy and no value for surplus peak generating capacity; it completely ignores the possibility of sales and greater coordination with Alberta. And it doesn’t consider or discuss any differential between the export value of surplus from Site C and surplus from its alternative scenario. It says there will be no seasonal storage and shaping benefits from the Site C reservoir, but  ignores the shaping benefits Site C will realize from the upstream Williston reservoir  – a key reason why BC Hydro has wanted to develop Site C over so many years.

BCUC arbitrarily reduces on a prorata basis the cost of its alternative when it produces more energy or capacity than Site C and is needed for meeting domestic load. The more appropriate adjustment would have been to reduce import costs.

BCUC assumes all of the wind and battery installations will be undertaken and financed by BC Hydro. It is more likely that a large part of this would be undertaken by IPPs with higher financing costs built into their bid prices.

BCUC asserts the GHG impacts would be the same with its alternative and Site C but it did not consider the amount and social value of the displacement of thermal production and reduction of GHGs in other jurisdictions resulting from surplus sales. This displacement of thermal and reduction of GHGs would be much greater with Site C than its alternative.

Most importantly, BCUC does not address the marked differences in uncertainty and risk with its alternative as compared to what is known about Site C — uncertainties not only with respect to cost and performance but also environmental impacts, land base and siting, First Nation consultation and regulatory constraints.

Hopefully some of these issues will be addressed and corrected in the few remaining weeks of the hearing. But in any event, in the end the government will have to decide in what agency it has most confidence and what kind of future it wants for BC Hydro – to develop and enhance the comparative advantage British Columbia has had with its hydro system, or develop more wind with battery back-up and encourage more conservation as other jurisdictions moving off fossil fuels have been forced to do.