Thursday, May 22, 2014

To the Minister Responsible, Re: Consideration of Site-C

Re: Consideration of Site C

by Andrea Morison, MA -  Peace Valley Environment Association

Minister of Energy and Mines and 
Minister Responsible for Core Review
Parliament Buildings
Victoria, BC
V8V 1X4

Re: Consideration of Site C

Dear Minister Bennett,

I understand that you are presently undertaking serious consideration of Site C dam to determine whether it is in the best interests of British Columbians. Our organization has undertaken considerable research on this issue and I would like to share some of the highlights with you along with some of the key recommendations of the Joint Review Panel on Site C. I trust you will find this information useful in your deliberations.

On the need for Site C

Observations/conclusions of the Joint Review Panel on Site C:

  • Given that there are significant adverse effects that would result from Site C, justification for the project must rest on an unambiguous need for the power. 
  • Alternative sources of power are available at similar costs, notably geothermal. BC Hydro should conduct more research into energy alternatives.
  • The Panel cannot conclude on the likely accuracy of project cost estimates and recommends that the costs of Site C be assessed by the BCUC.

BC Hydro has failed to fully demonstrate the need for Site C at this time.

 Additional key points

  • BC Hydro’s ‘Site C Clean Energy Project Evidentiary Update’, Table 5, pp. 12-13, states, “BC Hydro believes that the unique requirements of potential LNG customers may be better served by north coast supply.”

Energy economist Dr. Marvin Shaffer states:

BC Hydro’s analysis of future demand is based on a very serious market failure in the pricing of electricity.The average price for new industry is about $50/ MWh, but the cost of new supply, whether delivered from Site C or other sources, is $100/MWh or more. That clearly attracts more demand than economists would consider economically justified.

  • With Burrard in place, BC would have no shortfall of energy until 2033.
  • Even without Burrard, BC Hydro could meet the future energy needs of the province more cost effectively if they developed single-cycle gas thermal plants which can be built on an ‘as needed’ basis, strategically located and supply low cost energy to meet peak loads.
  • Like Burrard, single-cycle gas thermal plants could enable greater reliable use of non-firm and spot market supplies and would be far less costly than Site C. The savings would be in the hundreds of millions of dollars per year.
  • We wouldn’t be producing energy from gas turbines any more than we have to; in most years we would be using available non-firm hydro and purchases of spot-market energy, which forecasts tell us are going to be much lower costs sources of energy in the future than Site C.
  • BC Hydro didn’t provide appropriate cost comparisons to alternative sources of power in their analysis. The 1,100 MW capacity of Site C will result in an oversupply of energy for many years after it is commissioned. Clearly, if alternative sources of energy were used, they could be constructed on an incremental, as-needed basis, thus resulting in significant cost savings over time. We wouldn’t end up with a huge initial surplus of power for many years like we would with Site C.

On energy demand and cost

  • Observations/conclusions of the Joint Review Panel on Site C:
  • The Panel concludes that there are uncertainties regarding BC Hydro’s long term energy forecasts.
  • Basing a $7.9 billion project on a 20-year demand forecast without an explicit 20-year scenario of prices is not good practise.
  • The Panel recommends that BC Hydro construct a reasonable long-term pricing scenario for electricity and its substitutes and update the associated load forecast, including LNG demand and that this be exposed for public and BCUC comment in a BCUC hearing, before construction begins.

Additional key points

  • Erik Andersen, a retired economist who previously worked for the federal government as well as private corporations, has reviewed Hydro’s financial statements and reveals the following:
  • Between 2006 and 2009 domestic demand has mostly ‘flat-lined’ at about 50,000 GWhrs while BC Hydro, over a decade ago, forecasted demand to be well over 60,000 GWhrs by 2012.
  • BC Stats show that BC’s population growth rate is decreasing. During the decades of the 70’s, 80’s and 90’s, BC’s population grew by 26%, 19.3% and 20.8 %. In 2000, it shrunk to 12.3% and is expected to be 12.8% this decade. BC Stats has projected the growth rate to be +1.3% for each year beyond that to 2036. Despite this shrinking trend, BC Hydro has projected that residential accounts will increase at annual rates of between 1.3 to 1.7%. Given that BC Hydro residential customer accounts are about 2 million, meaning, on a simple average, every account has 2 people living behind the meter, then BC Hydro’s residential per capita demand is projected to increase at twice the rate that BC Stats expects the population to increase.
  • As hydro rates continue to increase, the public is likely to respond with conservation.
  • BC Hydro reported sales to “Others” is fiscal 2013 of 7,417 GWhrs. Auditors of BC Hydro’s financial report indicated that “Others” were customers outside of BC with long-term purchase contracts.
  • This is more energy than would be produced by Site C. In fact, even though Site C can supply a maximum of 5,100 GWhrs/yr, dams of this size usually only run at about half their potential.
  • Sales to “Others” were at $43/MWh, whereas Site C generated energy would be at least $100/MWh.

On the loss of valuable agricultural land

  • PVEA hired two extremely knowledgeable and highly accredited agricultural experts, each with over 40 years’ experience, to assess the value of the land in the Peace River Valley that would be lost if Site C were approved. The following key findings are critical to the decision on Site C:
  • The area of agricultural land that would be impacted by Site C is grossly under-represented. BC Hydro’s economic evaluation of loss resulting from of the construction of the Site C dam is based on 1,666 hectares of land; that only represents 13% of impacted farmland. The actual impact area is 31,528 hectares of Class 1 to 7 lands.
  • BC Hydro established a baseline for agricultural production in the Peace River Valley that is completely inaccurate: it created a utility rating system that has never been used or even heard of in the agricultural industry; and, it failed to account for the influence of the 50-year flood reserve on existing agricultural production in the Valley.
  • The productivity of the agricultural land in the Peace River Valley is unique not only in the Peace River region, but in Western Canada. It is capable of producing a variety of crops comparable to BC’s fertile Fraser Valley and in some cases the yields from the Peace River Valley are even higher than in those in southern BC.
  • As world prices for food escalate in response to inevitable climate change, population and fossil fuel pressures, the land BC Hydro plan’s to flood for Site C is our food security Plan B. It can produce fruit and vegetables for over a million people.
  • BC Hydro projects total economic activity resulting from agriculture in the Peace River Valley would total $215 million over 100 years. Even using BC Hydro’s own model, with its impoverished impact base of 1,666 hectares (5% of Site C impacted ALR) a more robust horticulture scenario suggests agricultural activities are capable of generating fully $2 billion from farm gate sales and secondary economic activity during this same time frame. This doesn’t measure values associated with human health resulting from better nutrition in Northern communities.
  • According to experts, Site C dam may have a 100-year life. The agricultural land in the Peace River Valley will support life in perpetuity.
  •  The Peace River Valley has extraordinarily high value for agriculture and the public interest is better served by allowing it to continue to sustain citizens through agricultural production rather than destroying it for power production. Power can be sourced from other alternatives; agriculture cannot. 

Given all of the above, it is clear that Site C is not in the best interests of British Columbians. I urge you to give serious consideration to the information I have provided and trust that, in considering the long term interests of the citizens of the province, you will not approve Site C.

(Please note that I can provide sources and approved references for all information provided in this letter.)

Andrea Morison, MA
Coordinator, Peace Valley Environment Association
Fort St. John, BC

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