Zapped also criticizes inflation protection mechanisms in EPAs with IPPs which, in some cases, provide the applicable PIP with a comprehensive consumer price index (CPI). This includes the 60-year EPAs for the Forest Kerr, Volcano and McLymont Creek hydroelectric projects, for which Zapped explains that the estimated impact of inflation risk over the next 20 years could result in an additional cost of $1 billion and an increased inflation risk on the rest of the EPA`s terms, which is about $7 billion. Instead of entering into bilateral negotiations with IPPs, Zapped recommends that BC Hydro develop a single commercial proposal that will be submitted to all IPPs when the PPI is renewed. Although the province is facing an expected excess of energy until some point in the 2030s, Zapped BC Hydro recommends renewing all EPAs if it can, under the EPA, align energy prices with mid-C rates and rely on Powerex Corporation (BC Hydros electricity marketing subsidiary) to make excess electricity to mid-C councils. Zapped links the financial impact of EPAs, IPPs, following the government`s instructions criticized in the report, are estimated at $16.2 billion over 20 years – the period during which Zapped estimates that bc Hydro probably does not need all of the energy purchased – with an estimated annual impact of $808 million per year , or about $200 per year for residents over that period. In addition, Zapped states that, even as energy requirements increase, bc Hydro will lose an additional $6.8 billion to taxpayers, who are below BC Hydro`s contract prices to pay for IPPs for this energy. Although Zapped notes that there is no quick solution to the problems identified there, he believes that these problems can be solved when EPAs expire by re-adapting EPAs on the basis of market prices. In the case of EPAs, which relate to projects with intermittent energy, Zapped recommends that BC Hydro propose to renew EPAs only at current “Mid-C” rates (the price at which energy is traded at the Mid-Columbia Electricity Trading Centre) and for terms of only five to ten years. This would be a significant departure from the EPO renewals to date by BC Hydro, which Zapped states considered a cost of service and a performance of PIP when setting prices. BC Hydro BC Government Tariff Power hydroelectricity Energy BC Utilities Commission BCUC Standing Offer Program SOP Clean Energy Association of BC CEBC Zapped Independent Power Producer IPP Ministry of Energy, Mines and Petroleum Resources Clean Energy Act Site C electricity purchase agreement EPA The Response aims to re variable assertions made in a recent released report commissioned by BC`s Minister of Energy , Mines and Petroleum Resources, Zapped: A Review of BC Hydro`s Purchase of Power from Independent Power Producers (“Zapped”). In Zapped, author Ken Davidson strongly criticizes BC Hydro`s purchase of electricity from IPPs and directly blames government policy, legislation and guidelines that conclude Zapped that they have pushed erroneous energy practices. To the extent that a PIP cannot cover its operating costs at the mid-C rate, Zapped recommends that BC Hydro incorporate possible liquidation scenarios into its commercial agreements with IPPs and proposes to acquire, at a pre-defined percentage of the initial costs, assets and projects in default that do not result in third-party sales.
Swift Power Corp., an independent hydroelectric and river company based in Vancouver, B.C. has been awarded a long-term power purchase contract (EPA) from BC Hydro for the Dasque Cluster hydroelectric project. The response also criticizes Zapped`s use of mid-C rates to calculate the amount for which Zapped claims that BC Hydro overpaid the energy it has declared ready to buy with IPPs under EPA and asserts that volatile spot prices such as mid-C are not used by the distribution companies or other industrial players involved to build new power generation projects. , because they do not provide the guaranteed return on capital that is required to finance a project