November 9, 2005

Expanded or Revised Energy Plan

Energy, Mines and Petroleum Resources Minister Richard Neufeld's November 3rd announcement that a revised energy plan will be finalized by the end of 2006 didn't receive much media attention. The announcement alternated between describing the upcoming revisions as the "expanded energy vision" and as the "expanded energy plan". The government news release described the changes in terms of building on the B.C. Energy Plan "with a greater emphasis on conservation, efficiency and innovation". Those who find it a little difficult to understand why the plan that was finalized in November 2002, after much criticism from BC's industrial power users, has to be updated after just three years won't find many answers in the only paragraph in the news release that contained any detail:

The news release said that the new energy vision will be informed by the anticipated BC Hydro Integrated Electricity Plan. That provokes the image of a dog chasing its tail. BC Hydro's Service Plan, updated September 2005, includes 10 references to the province's Energy Plan. Is Hydro informing the revised plan, or is the plan directing Hydro? Hydro's Service Plan describes its "Integrated Electricity Plan" in a sidebar that says:

The phrase "investment decisions coming out of the IEP" may be a little confusing since the Campbell government's Energy Plan specifically forbids BC Hydro from investing in new generating capacity; all new generating capacity is to be developed by the private sector, hence the term "acquisition" decisions. The catch 22 is that the capacity that is acquired from the private sector will be released to the open market in 20 or 30 years at which time BC will be in the same kind of mess that California finds itself in. Whether electricity in 2030 is produced by a run-of-the-river project in BC or by a gas powered plant in Washington State or Texas, BC will be buying a substantial portion of its power on the open market. Energy Minister Neufeld frequently reminds British Columbians that the province has been a net importer of electricity for several years, but the data from Hydro's service plan indicate that any net imports are marginal and are done primarily to make a profit through the electricity trade by taking advantage of the storage capacity in our dams. That will change as BC becomes increasingly reliant on the open electricity market.

It is possible that the announcement of the intent to revise or update the Energy Plan that is a signal that the 20 year supply and demand projections for electricity in BC will be revised. A decision on Site C would require substantial revisions to the supply side of Hydro's 20 year outlook, and incorporating the consequences of a restructured forest industry into the demand side could be important. Hydro's industrial customers represent 33% of the corporation's load demand. The Service Plan shows a negative growth rate for load demand for large industrial users over the next three years. When the predictions found in the Pearce report on the Coastal forest industry are combined with predictions for the devastation of lodge pole pine forests in the Interior, there might be a need to further lower load demand forecasts. Admitting that would mean dealing with the real economic challenges that face BC. It is probably easier to sugarcoat the bitter truth with language about "conservation, efficiency and innovation". BC does face challenges in meeting Kyoto commitments that require progress with respect to conservation, efficiency and innovation, but an honest revision of the Energy Plan has to deal with Site C and with the implications of significant downsizing of the forest industry by the year 2020.