Victoria, BC: BC’s clean energy producers say that the electricity they produce costs less, if not the same, than new electricity produced by BC Hydro, while providing good, fair and long-term value for money for BC’s ratepayers.
That was the message delivered September 7 by the Clean Energy Association of British Columbia (CEBC) in response to the recent Review of BC Hydro panel report.
“While we appreciate and support the work of the BC Hydro Review panel, British Columbians need apples to apples comparisons when it comes to the price of clean energy, a critical commodity for our economy and quality of life,” said Paul Kariya, CEBC’s Executive Director. “BC’s clean energy producers provide good, fair and long-term value for money for BC’s ratepayers. The reality is that new electricity generation costs more than old electricity, whether it is from clean energy producers or BC Hydro.”
According to the panel report, clean energy producers contract with BC Hydro at a price of $124/MWh, which is an “all-in estimated cost” in today’s dollars for a premium, fixed price clean electricity product over 20, 30, or even 40 years. The average plant gate price payable to clean energy producers is about $100/MWh.
However, the actual average price paid for electricity from clean energy producers over the past 20 years is $64/MWh, CEBC said, as noted by BC Hydro in the utility’s 2010 Annual Report.
By locking clean energy producers into long-term contracts, BC Hydro can hedge against market fluctuations and eliminate price uncertainty for ratepayers, the organization observes, so that clean energy assets being built today will become tomorrow’s low-cost heritage assets. The cost of their electricity in 20, 30 or 40 years will be much lower than the cost of power from new generation capacity that will be procured at that time, CEBC said.
CEBC has a number of specific recommendations relating to the report. For example, it is also cautioning the province on the panel report’s recommendation that the definition of self-sufficiency be changed from critical water to average water for planning purposes. The CEBC, however, feels it may be time to look at eliminating the 3,000 GWh insurance requirement, as per the panel’s recommendation.
“Market conditions have fundamentally changed,” Kariya said. “We fully support the need to keep costs down for the ratepayer, and believe it may be prudent to consider the elimination of the 3,000 GWh of insurance in the self-sufficiency definition. However, it is crucial for ratepayers and our economy to continue to define self-sufficiency based on critical water, not average water.”
Maintaining the definition at critical water will not produce any short-term rate increases, and will result in long-term cost savings for the ratepayer, CEBC said. Conversely, redefining the definition of self-sufficiency from critical to average water creates significant economic risks for the province, and in particular specific industries the government intends to grow, such as natural gas production, LNG exports, mining and the green economy, it contends.
The primary alternative to generating electricity from BC resources – through BC Hydro or clean energy producers – is importing it from the United States through the spot market. However, BC Hydro’s own Mid-C price forecast (in real 2010 $US/MWh) from April 2011, predicts the spot market will rise 50 per cent by 2020 and 100 per cent by 2028.
“An increasing reliance on the spot market is not a sustainable long-term environmental solution,” said Andrew Weaver, one of the world’s foremost climate scientists and University of Victoria Professor of Earth, Ocean and Atmospheric Sciences. “Spot market power is dirty power from coal plants and runs contrary to BC’s climate action objectives.”