CRIT­ICS FEAR NAT­U­RAL GAS USERS WILL PAY FOR LNG PROJECTS

NDP critic says ratepay­ers could end up sub­si­diz­ing pipe­lines and liq­ue­fac­tion plants for ex­port

The Province - - Front Page - KENT SPENCER kspencer@the­p­rovince.com twit­ter.com@kentspencer2

For­tisBC’s nat­u­ral gas cus­tomers could fund as much as $1.56 bil­lion of LNG projects out of their own pock­ets be­cause the B.C. gov­ern­ment al­lowed the com­pany to by­pass a reg­u­la­tory re­view which might have dis­al­lowed it.

“Peo­ple will be pretty cranky when they find out,” said NDP re­sources critic Bruce Ral­ston. “Or­di­nary in­di­vid­u­als heat­ing their homes are pay­ing for these projects.

“It’s good for the com­pany, but is it in the in­ter­ests of B.C.ers? There is no ben­e­fit to ratepay­ers,” he said.

The com­pany has ap­proval to in­clude the up­front costs of its LNG in­vest­ments as part of the “reg­u­lated base,” mean­ing gen­eral cus­tomers’ util­ity bills, even though LNG does not di­rectly ben­e­fit them.

The gov­ern­ment’s or­der-in-coun­cil last De­cem­ber al­lowed For­tisBC to pro­ceed with ma­jor projects with­out the cus­tom­ary re­view by the B.C. Util­i­ties Com­mis­sion, which de­cides whether rate cap­i­tal ex­pen­di­tures are ap­pro­pri­ately ap­plied to the gen­eral cus­tomer base.

En­ergy Min­is­ter Bill Ben­nett pro­vided the ra­tio­nale on Jan. 23, say­ing that eco­nomic de­vel­op­ment needs “cer­tainty that will sup­port fi­nal in­vest­ment de­ci­sions.”

“Our goal is to … make it eas­ier for LNG pro­po­nents … to ac­cess and use nat­u­ral gas,” said Ben­nett.

Critic Eoin Finn said it was “dis­turb­ing” that cus­tomers could have to pay for a $520-mil­lion pipe­line from Co­quit­lam to Wood­fi­bre on Howe Sound. The pipe­line is for Wood­fi­bre LNG, an ex­port plant which awaits a fi­nal in­vest­ment de­ci­sion from In­done­sian bil­lion­aire Sukanto Tan­oto.

“The public didn’t ask for the Wood­fi­bre line and shouldn’t have to pay for it,” said Finn. “This is public pain for pri­vate gain.”

Mark Jac­card, for­mer head of the B.C. Util­i­ties Com­mis­sion which over­seas public util­i­ties, said the gov­ern­ment’s de­ci­sion was puz­zling.

“One must ask why the B.C. gov­ern­ment elim­i­nated this pru­dent over­sight un­less they were afraid that the com­mis­sion would find these in­vest­ments too risky,” said Jac­card. “The com­mis­sion’s role is to make sure that one group of cus­tomers is not sub­si­diz­ing an­other.”

David Haslam, a spokesman for the En­ergy Min­istry, said in an email the “full costs of ex­pan­sion” will be cov­ered by a “nat­u­ral gas trans­porta­tion tar­iff” for a new class of in­dus­trial cus­tomers.

“Wood fi­bre will pay an ini­tial rate of 77 cents per gi­ga­joule over a pe­riod of 25 years. The rate will be high enough to cover the mar­ginal cost of ser­vice as­so­ci­ated with the project,” he said.

For­tisBC said in a state­ment that ex­ist­ing gas cus­tomers as­sume no fi­nan­cial risk from LNG projects.

“To the con­trary, cus­tomers will ac­tu­ally ben­e­fit from the de­vel­op­ment of these projects,” For­tisBC vice-pres­i­dent Dou­glas Stout said in an email.

“The rate these large in­dus­trial cus­tomers will pay both re­cov­ers the cost of the in­fra­struc­ture up­grades, and in fact, pro­vides an ad­di­tional ben­e­fit that will lower nat­u­ral gas de­liv­ery rates for all For­tisBC nat­u­ral gas cus­tomers.

“In ad­di­tion, long-term con­tracts will be in place which pro­vide fi­nan­cial se­cu­rity to mit­i­gate risks to B.C. nat­u­ral gas cus­tomers.”

For­tisBC has al­most one mil­lion nat­u­ral gas cus­tomers in B.C.

Ex­pan­sion be­gan last Oc­to­ber with con­struc­tion of a $440 mil­lion stor­age tank and liq­ue­fac­tion fa­cil­ity at For­tis’s Til­bury Is­land site in Delta.

Barry Perry, pres­i­dent of par­ent com­pany For­tis Inc., said on May 5 that $1.12 bil­lion worth of up­com­ing projects have re­ceived ap­proval from the B.C. gov­ern­ment, but they are con­tin­gent on fi­nal in­vest­ment de­ci­sions. The projects in­clude:

A fur­ther $400-mil­lion ex­pan­sion at Til­bury;

The $520-mil­lion pipe­line to Wood fi­bre;

A $200-mil­lion in­vest­ment to ex­pand the coastal gas trans­mis­sion sys­tem “in sup­port of these projects,” said Perry.

The Na­tional En­ergy Board has ap­proved up to 120 tankers per year de­liv­er­ing LNG via the Fraser River.

WAYNE LEI­DEN­FROST/PNG

New Demo­crat MLA Bruce Ral­ston, seen here Wed­nes­day at For­tisBC’s Til­bury Is­land LNG project in Delta, has taken aim at ex­empt­ing the project from reg­u­la­tory re­view.

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