Saturday, August 16, 2008

When You Drill A Hole In The Barrel...

Noni Mausa writes:

From Thursday's news...

Alberta approves private power line to U.S.
Edmonton Sun, Aug 14 2008

CALGARY -- Alberta's energy regulator has approved a proposed private power line into the United States that would import and export electricity outside the provincial power grid.

The proposed 230-kilovolt line would run almost 350 km from Lethbridge to a substation near Great Falls, Mont.

The project had already received approval from the National Energy Board last year and tentative approval from the Alberta Energy & Utilities Board.

Final approval was conditional on Montana Alberta Tie Ltd. establishing a way to resolve disputes with affected landowners along the power line's route.

Opponents of the line may still have their day in court, however.

Last month, a group of landowners was granted leave to appeal the project's approval.

Yeah, like that's going to happen. Landowners in Alberta are legendary for the amount of control they have when it comes to moving oil and energy across their farms and backyards. /irony. However, let's set that aside.

I searched in vain within this article, and a few other articles in the news, for some idea as to where the power itself was coming from. I wondered whether this was a dedicated line stemming from some new power station also being independently built in Alberta.

Nope. According to Oilweek Magazine, here:

we discover...

...If built, the line will be the first so-called "merchant" power transmission line between Alberta and Montana.

The line will operate more like a toll highway than a traditional utility-built, rate-based line.

The company plans to sell space on the line to shippers wanting to move power between Canada and the U.S. at market rates.

And it claims the line will increased capacity and improve power system reliability at no extra public cost....

Since the Canadian power grid is all one circulatory system so far as I know, this means this new private power line will be acting as a conduit for power generated all over Canada.

Ahem. Power generation often creates pollution. Electricity is non-polluting. So one problem here is that Canadians will get the peel while America gets the banana.

Another problem is that the USA is a lot larger than Canada, and could gobble up an awful lot of power -- power which the Great White North might need for itself -- and raise or otherwise affect the price here at home. When you drill a hole in a barrel, all the water runs out, not just the water nearest the hole.

Speaking of which, the Oilweek article says that the power will move back and forth along this merchant export line. (With electricity, it really cannot work well any other way). If I recall correctly, this was one of the reasons that Enron was able to scam so much money before their greediness finally brought them down. Right hand sold to left hand, and left hand to right hand, and then the cumulative "sales" were listed as 2 kilowatts when they should have been listed as zero kilowatts, thus artificially raising the apparent demand and the real price for the power. As I recall, the taxpayers of California ended up paying billions for that shell game.

I'm not saying that this merchant export line will necessarily cause any of these problems. Manitoba Hydro, a Crown Corporation, makes out like a bandit in selling to the USA and uses those sales to keep Manitoba power rates the lowest in North America.

However, we have evidence hot off the economy griddle to show that, as surely as we need to watch a box of chocolates on the coffee table within easy reach of the Labrador retriever, we will also need to keep a sharp regulatory eye peeled for certain obvious problems which might arise from this "merchant line".


Dave adds:

Say Powerex twenty times really really fast. Then you can peruse the convoluted relationship between British Columbia Transmission Corporation and Powerex which will leave you with the impression that Powerex has nothing to do with the distribution of power to the good citizens of British Columbia.

Then you can go into the wayback machine and find Powerex, (which has nothing to do with the distribution of power to the good citizens of British Columbia), and see the name of BC Hydro's wholly owned subsidiary pop up in some really yicky correspondence from a truly dirty corporate entity, the likes of which intentionally ripped-off as many people as it could while strong-arming their own employees to fund their favourite moron into the preferred seat of power.

In the end, of course, Powerex, (which has nothing to do with the distribution of power to the good citizens of British Columbia), was exonerated of any wrongdoing and pointed the finger at ALCAN, one of those Independent Power Producers (IPPs) from which Powerex purchased electricity and exported to... oh yes, California. (Which refused to pay the exorbitant price and left the good citizens of British Columbia holding the empty bag).

ALCAN claimed innocence, of course, but was eventually found at fault and had to pay Powerex US $110 million from claims arising out of the ENRON fiasco in a deal which, no matter how hard I try, I cannot understand.

ALCAN, which has enjoyed a long term sweetheart power generation deal with the Province of British Columbia, decided to take its voltage and go home. As an IPP, it sold electricity to Powerex which, because Powerex has nothing to do with the distribution of power to the good citizens of British Columbia, exported to the western North American power grid outside British Columbia.

Who suffers? Why the good citizens of British Columbia, of course.

When ALCAN announced that, effective 2009, it was terminating its long term electricity supply agreement with Powerex, (which has nothing to do with the distribution of power to the good citizens of British Columbia), it hit the BC Hydro Integrated Electricity Plan (2004) like a battle-axe because of this assumption:
"BC Hydro assumes that these projects will continue to supply electricity upon the expiry of their current contracts."
Oh... oops! That leaves BC Hydro scrambling to make up for a loss of about 140 MW of power which the 2004 Integrated Electricity Plan had slated for delivery to the good citizens of British Columbia. Even though the deal appeared to have been between ALCAN and Powerex, (which has nothing to do with ....), the people most likely to suffer from the shortfall of electrical power are... the good citizens of British Columbia. Because the line between Powerex and BCTC, (which has everything to do with the distribution of power to the good citizens of British Columbia), seems to have become less defined than the clear statement at the end of this document.


So, Noni's notice of this is worth the watch. At the very least, it'll be just as good as a Roman Polanski movie.


Off subject, sort of. Noni Mausa has agreed to join the ranks of the Ink Stained Wretches and will be making direct posts as soon as I get the administration done.

No comments: