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Sechelt Creek Hydro Project

On a Friday in early September, I was given a blanket and sixteen quarters to witness the celebration of a small hydro-electric power project on Sechelt Creek, and the sight of twenty thousand pink salmon spawning in the lower reach of the creek and an artificial spawning channel. Why does this matter?

The case for developing renewable energy in BC has been fraught with controversy, particularly since the early 2000s and the energy policies of the government which required BC Hydro to acquire new power from the private sector and to acquire enough power to meet load in “critical water” years, when water flows reduced BC Hydro’s own generation to their lowest levels.

British Columbians were presented with the spectre that hundreds of power projects would pepper the BC landscape, with hydro developments on all available streams. The public was further alarmed at the prospect that park boundaries might be changed to suit power developments and that developments might be allowed where they would harm fish and their spawning grounds.

People were further annoyed when their regional governments tried to limit hydro developments in their areas, only to have the province step in and curtail the regional governments’ powers.

The “self-sufficiency plus insurance” requirement that the government imposed on BC Hydro required it to plan to acquire some 7,500 GWh per year of power more that it would have had it been allowed to plan based on average water years. Then construction inflation occurred in the pre-2008 boom economy. New power developments at $100 plus per megawatt-hour looked outrageous beside the $20 per megawatt-hour cost of BC Hydro’s existing generating facilities, whose capital costs had long since been paid off.

Some people attributed the high cost differential to private, versus public, development (rather than the fact that BC Hydro developed the most cost-effective hydro sites first), and this led to conflict drawn along lines of political philosophy.

BC Hydro has not completed on the self-sufficiency plus insurance mandate, because the mandate was modified to an average year requirement in 2012. (Hydro currently has an average year expected surplus of about 5,000 GWh/y, which will be gone in six to ten years.) Nevertheless, the government’s renewable energy policies are tarnished with the perception of being very costly to BC Hydro.

This has been made worse by the current extremely low cost of imported electricity from the United States, due partly to US subsidies for the development of renewable energy, and partly to the recent success of natural gas fracking technology, which has driven the price of natural gas and natural gas generation to spectacular lows. Now, surplus power produced by BC Hydro will need to be sold at a politically embarrassing loss, as happened this spring.

In short, renewable energy has developed a bad reputation among some sectors of the BC public.

At the same time, BC Hydro’s infrastructure costs are rising steeply, putting strong upward pressure on rates. The old “heritage” dams that produced power at such amazingly low prices are now needing major upgrades, which will need to be done at today’s construction prices and paid for in today’s dollars.  For example, the John Hart Generation Facility near Campbell River is now being upgraded with a new power house and seismically secure penstock system at an expected cost of $1.1 billion.

Increasing demand in all parts of the province – but especially in the north-west, where major industrial developments are forecast – is driving the need for $2.4 billion in “growth capital” expenditures, and in total, Hydro’s most recent Service Plan forecasts the need for $7 billion in capital expenditures over the next three years.

Power acquisition has also played a role in Hydro’s rising costs, though significantly less than these capital costs: hundreds of millions rather than billions.

In any case, major rate increases loom. Last year, the government shut down BC Hydro’s rates application in a pre-election move to minimize an immediate rate increase. Now safely past the election, Energy Minister Bill Bennett admits that rates must go up, but government is working hard to minimize this.

Following a government directive, BC Hydro’s newly submitted Integrated Resource Plan (IRP) now includes a cut list for power contracts, as a cost-reduction measure, and several projects that are under development are being eliminated due to non-performance. Developed projects are also under pressure. Until recently, BC Hydro expected to renew all its hydro power contracts that were expiring in the next five years. Now Hydro says it will probably only renew three quarters of them. 

Industry is actively advocating measures to cut electricity costs, including the promotion of gas-fired generation and the slashing of environmental standards. Pulp and paper industries are particularly anxious to keep prices down. Many are barely viable with the current rates.

In this context, is there any room for a modest run-of-river project, whose contract with BC Hydro is up for renewal in 2017?

The Sechelt Nation answered a resounding “yes!” in its Sechelt Creek Celebration on September 6th, dubbed “Honouring the Vision of the shíshálh Elders.”

The project, developed by Regional Power, came into production in 1997, after consultations and design that saw the creation of a 400 meter spawning channel to parallel the existing stretch of spawn-able river, which was also left intact.

Fish counts back then were in the hundreds. This year, a record of 20,000 salmon were counted – mostly pinks – swarming in the pools and spawning channels.

Truly an event to celebrate, and the shíshálh Nation celebrated in traditional fashion, with ceremonial songs and prayers, speeches, and guests who were formally called upon and given ceremonial blankets and symbolic handfuls of quarters to serve as witnesses, following ancient cultural protocol. The developer’s executive VP David Carter received particular recognition for his sensitivity to the needs of the community, which enabled the productive coexistence of fish habitat and power generation.

Price will likely be a big factor in determining whether BC Hydro agrees to renew its contract with the Sechelt Creek Hydro Project. If social license counts for anything, these developers have clearly won that point.

Another benefit: 16 megawatts worth of power generation that needs no fuel source other than the rain, and emits no greenhouse gases.