by Miriam Trevis
The Record
June 16, 2004
Following a regular meeting of the Board of Directors for Hydro on May 26th, a press release was issued which reads, "We are just as conservative about our financial obligations as we are to our obligation to serve. We examined the status of both GSX and VIGP relative to what is required to under Generally Accepted Accounting Principles (GAAP) and decided that conservative action was necessary to continue meeting GAAP."
From this information and subsequent information given at a community meeting in Nanaimo on May 27 with Bob Elton, President and CEO of BC Hydro, it appears that BC Hydro has just about given up on its Vancouver Island Generation Project at Duke Point and the related Georgia Strait Crossing project. Projects whereby Hydro planned to operate a gas fired facility using natural gas brought via a pipeline under Georgia Strait.
The press release continues, "The Board supports recording a $120-million provision for the VIGP and GSX projects to reflect the uncertainties as to the projects proceeding or the costs being recovered. The provision will be recorded against fiscal year 2004 income as part of the Board's approval of our Fiscal 2004 Financial Statements."
The provision referred to in the press release is, in fact, a write off of some of the engineering and administrative costs to date, together with the cost of turbines already purchased. When a BC Hydro spokesperson was asked why the turbines could not be returned to the manufacturer or sold, the response was vague.
Prior to this community meeting being called in Nanaimo, The Record had learned that substantial upgrading of the transmission lines from Dunsmuir (north of Qualicum) to the North Island is required. The cost of this upgrading is being passed on to the pre-qualified bidders from the North Island accepted by Hydro in its latest Call for Tenders. Green Island Energy has been advised that its portion of this cost amounts to $114 million as far as the Village of Gold River and a further $7 million down to the former mill site. No information is available at this time about what the charges are to the other pre-qualified North Island Independent Power Producers.
These new costs will now have to be absorbed into the bidding process making the previously stated bids less competitive.. It also poses the question of future industrial development on North Vancouver Island. If, for any reason, the pre-qualified bidders cannot meet these new financial requirements, will all future potential industrial developers be subjected to these same costs? According to a report completed by Dr. Mark Jaccard, former Chair of the BC Utilities Commission, the answer is yes. His report notes "BC Hydro intends to penalize the north island low-emission projects by assigning the cost of the transmission upgrades to these projects. Such policies may stop any future industrial development on the central and north island."
When asked why these costs were now being passed on to the pre-qualified bidders from the North Island. Mr. Elton responded by saying "that is a challenge for the pre-qualified bidders who are a long way from the grid. I won't comment further because the decision will be made by the BCTC" (BC Transmission Corporation).
Efforts to discuss
these issues further with BC Hydro and Green Island Energy were unsuccessful
at press time but will be followed up in subsequent editions of The
Record.
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