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The Great Green Shakedown

Why your hydro rates are going up, and who's responsible

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EPA's are subject to confidentiality agreements in order to protect the proponent against disclosure of financially sensitive information, according to Jim Scouras, BC Hydro's director of energy procurement.

"The non-disclosure obligations protect them from the disclosure of confidential, commercially-sensitive information which can undermine their competitiveness," he says. "From the BC Hydro perspective they prevent the sharing of sensitive price information (or other terms) which can disrupt the competitive procurement process."

While protecting the business interests of a proponent, the confidentiality clause also means that no one except for BC Hydro and the proponent knows precisely how much ratepayers are paying for electricity from a private project.

The essential function of independent power producers is to help meet BC Hydro's growing demand for electricity, as well as provide a buffer supply when demand is higher than anticipated... but that can also be sold on the open market.

Whether intended for domestic use or export, the cost of private electricity is escalating for BC Hydro, which forecasts in its application that the costs of energy from IPP's will grow from $567.4 million in 2010 to $939.8 million in 2014.

The majority of these cost increases are attributed to "considerably higher" deliveries from projects approved under the Clean Power Call issued in 2008.

BC Hydro has essentially locked itself into more and more consumption of electricity from IPP's through the Heritage Contract, a provincially-mandated agreement between the Crown corporation's Generation and Distribution departments.

Adopted in 2003, the contract sets out an amount of electricity to be produced by Heritage Assets such as the Revelstoke and WAC Bennett Dams.

The agreement sets 49,000 GWh of electricity per year as the maximum amount of power from Heritage Assets that can be used for domestic needs - that means residential, commercial and industrial customers within British Columbia.

The agreement guarantees that domestic energy needs will be met through low-cost sources like the WAC Bennett Dam... up to a point. The Heritage Contract also means that any demand for electricity beyond 49,000 GWh has to be made up by the private sector.

In years when domestic demand reaches above 49,000 GWh, any surplus electricity from Heritage Assets is sold on the market and IPP's make up the balance.

In 2008, for example, total domestic sales reached 53,299 GWh. Heritage assets actually produced 52,140 GWh in that year and could, theoretically, have been used to meet domestic energy needs.

Instead, because of the Heritage Contract, any GWh of electricity from Heritage Assets that brought domestic consumption above 49,000 GWh was sold on the open market. That's 3,140 GWh that could have been used by British Columbians. Instead it was sold for $31.9 million.

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