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Could Sell Energy to California Utilities : British Columbia May Build $2-Billion Dam

February 03, 1986|United Press International

VANCOUVER, Canada — Chester Johnson is tired of watching one of North America's last great natural power sources rush unbridled through British Columbia's mountains. It's like watching money flow through his fingers and into the ocean.

As chairman of the British Columbia Hydro and Power Authority, Johnson has control over the generation and supply of all electricity in Canada's westernmost province, a land mass more than twice the size of France.

British Columbia's rivers hold the potential of producing a hydroelectric capacity of more than 40,000 megawatts--enough to turn on every light bulb in California--and only a quarter of that power has been tapped.

B. C. Hydro wants to start construction on a $2-billion dam, known in planner's jargon as Site C, on the Peace River, 500 miles northeast of Vancouver.

Fixed Contracts

The provincial government wants to devote the 900-megawatt dam to long-term fixed contracts with California utilities, if the price is right. Work could begin within six months after the signing of U.S. contracts.

"Site C is just the tip of the iceberg in terms of this province's potential," Johnson said.

Until recently, B. C. Hydro had been prohibited by government policy from building beyond the projected needs of the province's 2.7 million residents.

In 1983, Site C was shelved on the advice of the British Columbia Utilities Commission because its power would not be required domestically until the next century.

But that policy was dramatically changed Sept. 17 at the official opening of B. C. Hydro's 1,800-megawatt Revelstoke dam, when British Columbia Premier Bill Bennett proclaimed that the province would pursue U.S. markets.

"In the eyes of the government, export wasn't a dirty word anymore," Johnson said. "They have changed their policy. It is an aggressive one, and I think it's good for the province."

Sudden Reversal

Bennett's sudden reversal, made without consulting the legislature or public, holds out the lure of 2,000 jobs during peak construction of Site C.

And jobs are what Bennett needs if he hopes to win another term in office. British Columbia's resource-based economy has been dogged by 14% unemployment during recent years.

Bennett's conservative Social Credit government, lagging behind the socialist New Democratic Party in polls, is expected to call an election by the end of the year.

In times of trouble, the government has traditionally used B. C. Hydro as a job-creation tool through rate subsidization or dam building.

"You've got to understand one thing. Hydro is the economic future of this whole economy, don't ever forget that," said Johnson, a long-time associate of the premier's. "As far as I'm concerned, where (B. C.) Hydro goes and what we do . . . are the critical things to the ongoing good of this province."

B. C. Hydro can also use the cash. The company's debt load totals more than $5.5 billion, and in the previous fiscal year it spent more than $500 million servicing that debt.

Despite a current energy glut, California seems eager to oblige B. C. Hydro with 20- to 25-year contracts for Site C power.

Compared to coal or nuclear power, hydro is relatively clean and inexpensive, and the Western United States has already exhausted most of its water resources.

Require New Sources

The California Energy Commission expects the state to require large new energy sources by the mid-1990s.

Eldon Cotton, assistant chief engineer for the Los Angeles Department of Water and Power, described B. C. Hydro's Site C plans as "ideal" in both timing and cost.

"All of the folks down here are basically in the same situation," Cotton said. "We have an excellent (power) base to take us into the next decade . . . but this is a very attractive project in terms of future needs."

California utilities are confident of B. C. Hydro's ability to generate electricity but uncertain about Canada's ability to deliver.

B. C. Hydro sends electricity to the United States via the transmission system of the Bonneville Power Administration (BPA), the U.S. federal agency that controls energy supplies in the four Northwest states.

Under the administration's policy, however, B. C. Hydro can gain access to the grid only when the transmission lines are not being fully utilized by U.S. utilities.

Spot Sales

Despite this policy, B. C. Hydro has gained a lucrative taste of the U.S. market. During the last nine months, it has sold a record $145 million of its surplus in spot sales to U.S. utilities.

The export price of that power averaged below 20 mills (2 cents) per kilowatt hour. Long-term fixed contracts for Site C power would range between 35 and 50 mills.

But B. C. Hydro has experienced little trouble gaining access to the BPA grid during the past year only because of abnormally low water levels in the Pacific Northwest.

Most observers believe that BPA's north-south transmission lines would have to undergo major expansion before guaranteeing Site C power long-term access to California.

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