Why are First Nations being pushed out of the clean energy market?

Eric Plummer, July 21, 2020

A proposed hydro project on the Ditidaht’s Little Nitinaht River is one example of First Nations exploring the economic potential of harnessing power from their territorial waters, but some fear pending legislation could push such opportunities out of the market. (Barkley Project Group photo)

Victoria, BC — 

Legislation being tabled in Victoria has Nuu-chah-nulth leaders and clean energy advocates concerned that the province is writing First Nations out of the electricity market for the sake of buying from producers outside the province.

An amendment to B.C.’s Clean Energy Act passed first reading in the provincial legislature June 23, with debate to follow this summer. Changes to the law seek to broaden the definition of clean energy beyond power from renewable sources. If the amendment is passed, B.C.’s objective of energy “self sufficiency” will be struck out of the act, as would the current requirement that the province remain a net exporter of electricity.

The Nuu-chah-nulth Tribal Council argues that this could open the province up to “brown imports from Alberta or the U.S.” where power is still generated from non-renewable sources like coal.

The legislation could also push First Nations out of the power market, says the NTC, including numerous Nuu-chah-nulth communities on the west coast of Vancouver Island that are developing capacity to harness more stream power from the region’s heavy rainfall.

“[E]very step the B.C. government takes in clean energy is away from B.C. First Nations ability to develop power now and in the future,” said NTC President Judith Sayers in a statement. “They are not listening to Nuu-chah-nulth’s desires to create clean energy for economic purposes.”

Clean Energy BC, an industry advocate for renewable sources, fears that the proposed changes to Bill 17 could put independent power producers out of business – part of a provincial movement to increasingly rely on large scale dams like Site C as well as government-subsidized producers south of the border.

“By trying to fix problems created by previous governments, Victoria is instead making a bad situation much, much worse,” states Clean Energy BC.

Eliminating self sufficiency

B.C.’s Ministry of Energy, Mines and Petroleum Resources said that the province has a surplus of electricity, and does not expect to buy “any substantial new energy” from external sources until the 2030s. Meanwhile, over 120 independent producers will supply approximately one quarter of B.C.’s energy supply through $50 billion in financial commitments.

“Eliminating the self sufficiency requirement will help keep rates affordable by giving BC Hydro more flexibility over the long-term to source clean generation from wherever it is most affordable,” said the ministry in an email to Ha-Shilth-Sa. “Some of the least expensive energy available is clean and renewable production that exceeds local needs in other jurisdictions and can be acquired in the export market.”

The reliance on power generated elsewhere is particularly evident on Vancouver Island, where just 35 per cent of electricity consumed is produced in the region. For some coastal First Nations entering the power market became more challenging when the province’s Standing Offer Program was suspended in 2017, cutting out an opportunity to develop small-scale projects with the capacity to sell electricity back into the grid.

This affected the Ditidaht’s plans to harness power from the Little Nitinaht River, a proposed 4.5-megawatt project that saw nearly $2 million of investment from various levels of government and the First Nation. By selling power to BC Hydro, the Little Nitinaht River initiative was expected to bring in nearly half a million dollars in annual revenue for the First Nation.

But in recent years the province has highlighted the high cost of buying from independent producers – bringing higher rates to the hydro bills British Columbians are burdened with.

“We can generate power from our dams for around $33 per megawatt hour, the average wholesale electricity market price is around $30 to $40 per megawatt hour, and the average contract price for power from independent power producers is around $100 per megawatt hour,” wrote a BC Hydro spokesperson in an email to Ha-Shilth-Sa.

Sayers disputes these rates, noting that the average IPP price is actually $87.52 per megawatt hour, while energy from dams is more expensive.

“BC [Hydro] makes selective use of numbers to make it look good and IPPs look bad. Apples to donuts,” she said, adding that provincial utility’s numbers don’t consider the expense of building large-scale dams like Site C, which would cost approximately $130 per megawatt hour.

Site C and power from California

Currently being constructed on the Peace River in northeastern B.C., downstream from the W.A.C. Bennett and Peace Canyon dams, Site C would create a 9,330-hectare reservoir. When completed, it would become the B.C.’s fourth largest energy producer, but an expected cost of $10.7 billion makes Site C by far the province’s most expensive infrastructure investment.

BC Hydro has stated that once it’s operational in 2025, Site C will provide a renewable source of energy for a century, with a relatively low amount of greenhouse gas emissions.

“New resources are required to meet long-term electricity needs in B.C.” states the Site C Clean Energy Project website. “BC Hydro’s long-term energy planning process has found that Site C provides the best combination of financial, technical, environmental and economic development attributes, compared to other electricity-generation options.”

But Sayers sees that as part of a movement to push independent power producers out of the electricity market.

“They cannot defend getting rid of self sufficiency,” said the NTC president. “Why does BC want to depend on Alberta and [the] US for power when we can make it here?”

The province’s power utility contends that the best approach is to rely on the network of high-voltage transmission lines that connect B.C. with other utilities in Alberta, Washington State, Oregon and California. BC Hydro does this though its trading subsidiary, Powerex. Currently the province sells more power than it purchases, said BC Hydro.

“Powerex will export electricity, when our system has more power than we need to meet demand in B.C., and when market prices are high,” said a BC Hydro spokesperson. “This provides additional revenue and helps keep our rates low.”

BC Hydro points to the affordability of renewable sources like solar power generated in California, which have dropped in price in recent years. According to the California Public Utilities Commission, the cost of independently-produced wind and solar power dropped from 18 to 3 US cents per kilowatt hour from 2007 to 2019.

“Just like with any other product, the price of electricity will fluctuate depending on the amount of supply and demand,” noted BC Hydro. “Solar generation is highest during mid-day and often there is so much that it can lead to low prices. Powerex will often purchase power during these times at a much lower cost, and sometimes they’re even paid to take the excess of electricity.”

But these American independent power producers benefit from tax incentives to make them competitive in the energy market – unlike small-scale producers in B.C.

Sayers stresses that the pending changes to the Clean Energy Act go against B.C.’s commitment to foster self determination among First Nations. This was part of the purpose behind the Declaration on the Rights of Indigenous Peoples Act, which was signed in Victoria with fanfare in November.

“There has been no consultation and cooperation on an Act that affects First Nations people, in fact it was a surprise this amendment was done,” said Sayers.