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Water Licenses for Power by John Calvert (Oct 11-06)

Water Licenses for Power by John Calvert (Oct 11-06). Water Licenses for Power. Approximately 400 water power licences awarded by Government Most in past 4 years To qualify you must: Be a BC Resident Be a BC Registered Company Be first in line at registry office.

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Water Licenses for Power by John Calvert (Oct 11-06)

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  1. Water Licenses for Powerby John Calvert (Oct 11-06)

  2. Water Licenses for Power Approximately 400 water power licences awarded by Government Most in past 4 years To qualify you must: Be a BC Resident Be a BC Registered Company Be first in line at registry office

  3. Sites Well Researched by Govt 1983 Ministry of Energy Study 2000 – 1st Major BC Hydro funded study 2002 – 2nd Major BC Hydro funded study Sites identified by Government studies Sites evaluated for energy potential Sites assessed in terms of capital cost Sites assessed in terms of cost per Megawatt Hour, including transmission

  4. Low Public Fees for Water Power Licenses Two general categories: Small projects (up to about $12 million annual revenue) - $5000 Larger projects (over 10 MW - $10,000 Annual Renewal fee $200 Licenses awarded 40 years – renewable Crown land on which power plants are built is normally sold to proponent

  5. Payment Structure for Run of River Power Plants Water rental fee to Government Currently just over $1.08 per Megawatt hour BC Hydro pays $87 Megawatt hour to purchase private energy Public receives much less than 2% of value of resource in water rentals from private power producers

  6. Payment Structure for Run of River Power Plants • Capacity Charge based on power output • Capacity Charge normally amounts to about 1% of the revenue stream of a project • Several other minor charges but very small • In sum, BC Gov’t gets about 3% of revenue from most private power projects

  7. BC Government’s Energy Plan Forbids BC Hydro from building new public energy projects Ban is completely arbitrary – no evidence it is in the public interest Requires BC Hydro to purchase all new energy needed by province from private power developers With growth in energy use, more and more must be purchased by BC Hydro to meet future needs

  8. Value of Water Licenses BC Hydro 2006 Tender Call Decision Agreed to purchase up to 7,100 Gigawatt hours, annually, from private energy interests – huge amount This is about 11 percent of what we now use in BC Contracts run up to 40 years Contracts inflation protected BC Hydro pays property taxes on new Power Plants that sell to it

  9. Value of Water Licenses BC Hydro’s purchase price from private developers is very high $87 MWh delivered to lower mainland Market price currently about $50 MWh US Energy Dept says price at BC Border will remain at about $50 until 2017 and rise slowly afterwards But we are going to pay the much higher price and index it to inflation Some contracts do not expire until 2051

  10. Value of Water Licenses 2006 Tender Call commits BC Hydro to $15.6 billion in future energy purchases from private interests Gov’t FOI response acknowledges that BC Hydro has already committed $13.4 billion to purchase private energy Gov’t numbers include previous contracts, but may not include all that BC Hydro has agreed to pay

  11. Value of Water Licenses

  12. BC Hydro Contracts Fund Private Energy Developer Projects Holders of Licenses normally wait until BC Hydro accepts a bid for their energy Commitment from BC Hydro allows them to borrow to build the project Hydro revenue stream provides funds to pay loan & make profit for shareholders At end of contract, private developers own project – ratepayers own nothing Ratepayers exposed to future price increases

  13. No Energy Security Gov’t opened transmission grid to help private exports Once BC Hydro contracts expire, developers free to export Hence no security of energy supplies To keep energy in BC, we will have to pay US market prices in future Projects being ‘flipped’ to foreign owners NAFTA protection for US companies purchasing BC water power plants

  14. No Environmental Planning Projects evaluated on project by project basis Owners of water licenses want their projects approved quickly to get money flowing But this approach to planning ignores the cumulative impact of numerous projects on a river system or valley Planning not driven by community and environmental values Rather projects pushed forward by their owners regardless of impacts

  15. Communities Excluded From Benefits Power Projects are capital intensive $50 million project may create only 3 or 4 full time jobs in a community Yet may produce $7 or $8 million in revenue each year Projects can result in other uses of river system being curtailed Community bears cost, but gets almost no benefits Province gets almost no benefits either

  16. BC Ratepayers to Pay High Price for Water Licence Privatization Guarantees an end to BC’s competitive advantage in cheap public energy Ratepayers are being exposed to huge rate increases down the road Public gets no assets for all the money it spends on electricity purchases Public gets no energy security Water licences likely to be acquired by foreign energy companies as local investors cash in on huge windfall gains

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