By: Cassidy Olivier
Bill Bennett, Minister of Energy and Mines and Minister Responsible for Core Review, speaks about Site C Clean Energy Project during a press conference at the Legislative Press Theatre in Victoria, B.C., Tuesday December 16, 2014. CHAD HIPOLITO / THE CANADIAN PRESS
It cost B.C. Hydro $17.5 million last year to ask eight Independent Power Producers of biomass energy to turn off production because their power was not needed, a sizeable figure that B.C.’s energy minister said actually resulted in millions of dollars in savings for ratepayers.
During estimate debates this week, Bill Bennett, the minister of energy and mines, said it would have cost B.C. Hydro about $26 million to buy the unneeded power from the biomass projects, meaning, he claimed, ratepayers realized savings of about $8.6 million.
Hydro critic Adrian Dix, however, framed the accounting differently, suggesting during the estimates debates that Hydro actually paid millions in contract penalties to the IPPs, which are all connected to pulp mills, to not produce electricity at a time when overall rates are going up.
“They talk about offsetting savings and so on, but what this shows is these are incredibly lucrative contracts and that Hydro has mismanaged the system,” Dix said in a follow-up interview.
“B.C. Hydro is paying $17.5 million not to take power.” Bennett stressed during the estimate debates that the amount paid to the IPPs do not represent penalties. He said these specific IPP contracts allow Hydro to “essentially turn down” electricity during times of low demand, such as the spring, when it can also be purchased more cheaply from other sources.
“If they can acquire the electricity someplace else for less month, they can turn down the biomass IPP and say: ‘We’re not going to pay your electricity rate now. We’ll pay your fixed costs’ — I think they’re called deemed charges,” said Bennett. “Typically, that happens during the spring freshet, when there’s all this water rushing down rivers and into reservoirs and so forth, and there’s all of this really cheap electricity available. That’s when Hydro would avail themselves of their option under these contacts to turn down power.”
Earlier this week, B.C. Hydro said it could not release details of the contracts, including the names of the biomass projects that were “turned down” in 2015, due to confidentiality. In total, 300 gigawatt-hours out of a supply of 18,000 gigawatt hours from IPPs were not purchased, said Hydro.
However, during estimates, Bennett named the eight projects that were “turned down.”
They are: PGP Bio Energy Project (Canfor Pulp Ltd., Prince George); Armstrong Wood Waste Co-Gen (Tolko Industries Ltd., Armstrong); Powell River Generation (Catalyst Paper, general partnership, Powell River); Cariboo Pulp and Paper (Cariboo Pulp and Paper Company, Quesnel); Harmac Biomass (Nanaimo Forest Products, Nanaimo); Kamloops Green Energy (Domtar Inc., Kamloops); Howe Sound Green Energy (Howe Sound Pulp and Paper Corporation, Port Mellon); NWE Williams Lake WW (Atlantic Power Preferred Equity Ltd., Williams Lake).