The BC Conservatives’ energy proposals will accelerate a shift that started belatedly under the NDP. And more use of natural gas could well be part of the plan.
Introduction
On Saturday, the NDP’s nine year reign came to an end. I will not miss the disdain with which the NDP treated independent energy regulation, its short-sighted leadership of BC Hydro, and its hypocrisy when it came to climate issues.
The BC Conservatives were elected with a large majority, giving them a clear mandate for change. So what changes can we expect for the energy sector? The party’s pre-election plan provides some clues, but there’s a lot left unsaid.
Over the next few weeks, Just and Reasonable will examine the plan’s energy proposals from different perspectives. What do the Conservatives say they will do? What are they not saying, and what should we make of that? And how do we hold them to account over the next four years? (I think we can safely assume they won’t be calling a snap election any time soon.)
This week: How will the Conservatives deal with BC’s electricity shortages.
It’s hard
Government-owned BC Hydro has had a difficult time of it over the last few years. A prolonged drought led to reduced hydroelectric generation, and forced it to spend $2.1 billion on electricity imports in three years. Hopefully the drought is now behind us, but thanks to the NDP’s stewardship the province is still going to be short of electricity in the years ahead.
The NDP’s CleanBC climate plan was announced in 2018. But it wasn’t until four and a half years later that BC Hydro acknowledged it wouldn’t have enough energy for the anticipated growth in electric vehicles, heat pumps and other electrification. CleanBC’s noble ambitions had been running ahead of BC Hydro’s ability to deliver; putting the cart before the horsepower, you might say.
But even reining in CleanBC wouldn’t be sufficient to solve today’s electricity shortage.
BC Hydro has known for several years that it does not have sufficient generation to serve new mining and LNG clients on the province’s north coast. The shortages have become considerably worse since the artificial intelligence boom, so much so that the NDP was forced to ration electricity sales to data centres.
The utility has run two competitions for private sector companies to build mostly wind generation to try and plug the gap. BC Hydro finally called for proposals to add reliable generation too, but we don’t know what was proposed or when it might be available.
The situation got more serious this year, when BC Hydro admitted that, despite the new wind energy, it might not have enough reliable power to meet peak load.
My generation
The incoming government clearly recognizes this problem, and claims it will “make British Columbia more self-sufficient in electricity and address the backlog of requests for job-creating connections to the grid”. Good.
Its plan proposes to “expand domestic generation from every available source”, including BC Hydro’s plans to upgrade existing hydroelectric plants. The new government also promises to give every type of renewable energy its “place on the grid”, so long as it is as “reliable and affordable and environmentally friendly as the alternatives”.
What’s left unsaid is the role natural gas might play in BC’s electricity generation mix in future. Reading between the lines, it’s possible that usage will increase under the Conservatives.
Their plan talks about ending “prescriptive power rules” and allowing industry to “choose appropriate supply”, but without providing specific examples. I expect in practice this means allowing industrial customers to use more natural gas, either as a source of heat or to generate their own electricity. No other source of energy is likely to be both available and cost-effective in the short to medium term.
There’s also a proposal to “restore choice in energy for home heating and cooking”. This probably means new housing will be allowed to connect to natural gas, and existing homes running on natural gas can keep using it. This proposal would likely lower the demand for additional electricity generation, for example for heat pumps.
Both of these proposals increase customer choice in energy, but are not going to help reduce greenhouse gas emissions.
Maybe the most intriguing proposal to expand generation is to allow private generators to sell electricity directly to “off-grid projects such as mines”. This could allow businesses to expand their electricity supply without waiting for BC Hydro to resolve its backlog. If they pay a higher rate for their electricity, it shouldn’t affect the cost of electricity to BC Hydro’s customers. This is less radical than allowing private generators to serve on-grid customers via BC Hydro’s transmission facilities, but it’s a good start.
Meet the new boss; same as the old boss
While the Conservatives will doubtless be vilified in some quarters if they increase the use of gas in the province, this is not exactly a revolutionary proposal. They plan to move further and faster, but in the same direction that the NDP was heading before calling their disastrous snap election. Consider these examples.
Earlier this year, BC Hydro was forced to extend contracts to buy reliable power from two private sector gas generators. It later doubled down by buying one of the two companies.
It might have been smarter to plan for this rather than be forced into it by circumstances. FortisBC Inc., the electric utility in the southeast of the province, already anticipates building two gas generators in the early 2030’s to meet growing demand, a plan approved by the BCUC in 2022. I’m sure BC Hydro would eventually have come around to a similar conclusion even under an NDP government.
The idea of giving industrial customers the choice to use gas isn’t a 180-degree turnaround either. The NDP approved the Ksi Lisims LNG facility last year allowing it to use gas until BC Hydro can provide power to the site. And the electricity for the new Ridley Island Energy Export Facility at Prince Rupert will be generated using natural gas.
And as for slowing down the energy transition, the Conservatives’ plan for the CleanBC program to be “repealed” isn’t that radical. The NDP had already shut down the Climate Action Secretariat and reassigned staff, some apparently to work on LNG and pipeline activities. There are still CleanBC expenses that could be cut, but spending money we don’t have to transition to electricity we can’t generate probably doesn’t make sense right now anyway.
The NDP, who started their nine-year reign with a strong climate agenda, did finally acknowledge that the economy needed to be a higher priority. If the Conservatives stick to their plan, they will also be prioritising the economy over climate, but with less hypocrisy.
We won’t get fooled again?
Last week’s election gave the Conservatives a mandate for change with a huge majority in the Legislature. They have made boosting the economy one of their highest priorities. A good thing too, considering that they’ve inherited an annual budget deficit of $13.8 billion and multiple debt credit rating downgrades.
Economic growth will require more electricity as soon as possible, whether to power extractive industries such as oil, gas and mining, or the use of new technologies such as artificial intelligence. I hope the incoming government can bring a fresh perspective, taking advantage of the strengths of BC Hydro and those of the private sector.
It’s likely the new government will be less concerned about the effects of economic growth on climate than the NDP professed to be. But this is a trade-off that the previous government ignored for too long, no doubt struggling with internal conflicts between the party’s environmental and labour factions. If the Conservatives are less divided on this question, they may be able to act faster and more effectively.
Just and Reasonable will continue to shine a light on energy policy and regulation under the new regime. Hopefully we can look forward to a new era of honesty, transparency and integrity, as well as an economic turnaround.