Gold plated power

Gold plated power Open letter to John Culvert, author, associate professor of political science at Simon Fraser University and boardmember of BC Citizens for Public Power (Power to the People): When I first heard John Culvert expose his numerous fictiona

Open letter to John Culvert, author, associate professor of political science at Simon Fraser University and boardmember of BC Citizens for Public Power (Power to the People):

When I first heard John Culvert expose his numerous fictional perils of independent power production on CBC morning radio I said to my wife, “That sounds vaguely familiar, the speaker is either working for the NDP or Alberta Power.”

It appears he is unwittingly working for both.

I attended the public presentation on Friday night. After more than an hour of overhead slides portraying Culvert’s supposedly “well-researched” information, I was waiting for him to break out into a commercial for Alberta Power, Canadian Utilities, BC Hydro or some other monolithic public/private utility.

Culvert spent most of his time comparing old established paid-off large utility power projects (built in the period 1950 through 1970) with newer, smaller and, yes, usually greener independent power projects.

In some cases the apples-to-oranges comparison was not as obvious as in others, but it still pervaded his presentation. The large public and private utilities have been doing this very same presentation at electrical rate hearings for decades. The utilities have enjoyed a cost-plus monopoly at electrical ratepayers’ and taxpayers’ expense for decades and are terrified of losing their pipeline of “liquid gold.” The only thing missing on many of Culvert’s slides was the Alberta Power or Canadian Utilities logo on the lower right hand corner.

Of course, the new smaller projects are more expensive than the older large projects; everything is more expensive today than it was in 1950 to 1970. The old projects were very large in scale, located on the best hydro sites, and developed with little regard for the environment. Are these the kinds of projects we should be continuing to build today?

Let’s look at our local example, Mayo B: at a cool $160 million Mayo B will add a maximum of 10 megawatts (10,000 kilowatts) to the Yukon’s electrical grid. That’s about $1,600 per kilowatt of capacity, much more than independent hydro or wind. Sure, some of the estimated $160 million includes transmission lines, but it doesn’t include one of the most expensive parts; the dam and associated civil works; because they are already there. What would it cost if Yukon Energy had to build a hydro project from the ground up? What if the original cost estimate is exceeded? This was the case for the Whitehorse fourth wheel or the Aisihihik power plants. Is this Culvert’s recipe for saving ratepayers’ and taxpayers’ money?

Culvert is against the utility offering independent power producers contracts, which guarantee a minimum amount of power purchase (“take or pay”). All utilities have the same contract, if they overbuild; ratepayers still have to pay the capital and operating costs of the idle facilities. The only difference is that if an independent builds a hydro project that is late, over budget or fails, the ratepayers do not have to pay the bills.

In another slide he showed coloured dots on the coastline and Rocky Mountain areas of BC illustrating the location of dozens of independent, small-scale hydro projects under application or already operating. The audience was supposed to be aghast. All I could think of was “what has BC Hydro been doing over the past 60 years, why didn’t they develop at least some of these smaller projects?”

The reasons are obvious: BC Hydro, like other large utilities, is not as cost competitive as independent power producers for these smaller projects. For decades, large regulated electrical utilities have been paid based on how much they spend and add to the electrical rate base. This is direct and costly disincentive for the utilities to exercise thrift and innovation. They have for decades been bringing in “liquid gold” by “gold plating” their hydro projects and jacking up the value of their rate bases.

When asked if there were any types of independent power projects that were good, Culvert’s answer was that of an out-of-touch, tenured academic Ð a simple black and white “no.” You heard that right; according to Culvert, all forms of independent power including small hydro, wind, and photovoltaic are bad for the consumer because they allow the private producer into the utility’s coveted monopoly.

Culvert did not appear to be aware that many utilities already in existence are private companies, including our very own Yukon Electrical Company. The Yukon Electrical Company already has its “thin edge of the wedge” into the Yukon’s power grid.

It supplies almost all of the electrical distribution and customer billing as well as provides power to almost all of the rural communities.

Yukon Electrical was the first utility in the Yukon and supplied power to Whitehorse from their McIntyre Creek power plant in the early 1900s. It would appear Culvert’s warnings are about 100 years too late for us.

I expect that the only ones pleased with Culvert’s little presentation is Alberta Power and other private/public utilities who want to keep independents out of their monopoly. These are the exact type of multinational companies Culvert says he is dead set against.

I can only hope that someday, before I die, the Yukon will finally have an effective independent power production policy and I can help develop one of these locally based, environmentally friendly projects in the Yukon instead of having to go to other jurisdictions, like BC.

Randy Clarkson P.Eng., co-owner/operator Fraser Microhydro Station