When the new Site C dam begins generating power in 2025, it will produce a major surplus of power that, without a significant increase in domestic sales, would require an initial 10% to 12% increase to power bills, according to 小蓝视频 Hydro's recent rate requests to the 小蓝视频 Utilities Commission (小蓝视频UC).
But 小蓝视频 Hydro is banking on a significant increase in industrial power sales that would mitigate the rate impact to 8.7% over the first two years — 3.28% in 2024-25 and 5.42% in 2025-26 — according a recent analysis by Richard McCandless, a former senior provincial government bureaucrat who does public policy analysis on his blog, .
McCandless bases his analysis on 小蓝视频 Hydro’s three-year rate request and responses to questions posed by the 小蓝视频UC and intervenors.
The project’s estimated capital cost has increased twice in recent years, from $8.6 billion under the 小蓝视频 Liberal government, to $10.7 billion under the John Horgan government and, more recently, again to an estimated $16 billion.
小蓝视频 generates and uses roughly 59,223 gigawatt hours (GWh) of power annually. 小蓝视频 Hydro’s own generating assets – mostly hydroelectric dams – generate 49,591 GWh, and the utility buys another 14,737 GWh from independent power producers (wind, run-of-river, biomass) for a total of 64,328 GWh, although about 5,000 GWh hours is lost through transmission (line loss).
Site C dam would add another 5,100 GWh annually to 小蓝视频’s power generating capacity.
小蓝视频 Hydro’s domestic power sales have been flat for a decade, McCandless notes in his analysis, and 小蓝视频 Hydro often sells surplus power through its trading arm, Powerex.
With the closure of pulp and paper mills – one in Mackenzie in 2021 and, more recently, Powell River – 小蓝视频 Hydro continues to lose big industrial customers.
But it is hoping, and planning, to make up for that loss with new industrial customers, notably the natural gas and nascent LNG sector. 小蓝视频 Hydro has been investing in new transmission lines to bring power to Northeast 小蓝视频, where 小蓝视频's natural gas sector is concentrated.
“小蓝视频 Hydro currently produces a large surplus of electricity, which is sold (exported) by Powerex,” McCandless notes. “In 2020/21, the surplus was approximately 8,000 GWh (gigawatt hours).”
The new hydroelectric dam will have six generating units of 850 GWh each, which will be turned on one at a time every two or three months over a period of about one year, starting with the first one around December 2024.
According to McCandless’ analysis, 小蓝视频 Hydro is planning to add 6,000 GWh of new domestic sales.
“By creating new demand for 小蓝视频 Hydro’s clean power, the rate request assumes that a significant portion of the new power generated from Site C will be sold domestically for higher prices than would be obtained in the spot (trade) market,” McCandless writes.
“This allows 小蓝视频 Hydro to forecast a lower rate increase ...compared to what the increase would be if all the new power were exported.”
As a result of the increased domestic sales, 小蓝视频 Hydro hopes to mitigate rate hikes to all customers in 小蓝视频 It is projecting rate hikes of 3.28% in 2024-25, 5.42% in 2025-26, zero in 2026-27 and 1.8% in 2027-28.
So what happens if the new industrial customers don’t show up on time? 小蓝视频 Hydro will just act as though they did, and push the increased costs off into the future.
“If the 小蓝视频UC accepts the high GWh forecast in 小蓝视频 Hydro’s rate proposal and the actual sales are less, 小蓝视频 Hydro will book the shortfall as revenue and defer the shortfall to the Load Variance Deferral Account,” McCandless notes. “Shortfalls are thereby transferred to future ratepayers and 小蓝视频 Hydro preserves its net income.”
