B.C.'S GREEN AMBITIONS FACE SOME ROADBLOCKS
Hydro grid needs upgrades, and taxpayers will be on the hook,
From small family-owned businesses to some of the largest employers in B.C., a pressing question looms: How will our electricity grid support the ambitious objectives set forth by CleanBC, as B.C.'s climate policy is known, especially when domestic supply struggles to meet existing demand?
This question, fielded by B.C. Premier David Eby during his post-budget lunch at the Greater Vancouver Board of Trade on Feb. 23, encapsulates a critical challenge at the intersection of climate action and economic sustainability.
At the Energy Futures Initiative, we're deeply engaged in exploring this question. The pursuit of clean, affordable, and reliable energy underpins the success of every business, regardless of the sector. CleanBC has made significant strides in integrating climate objectives into actionable plans, earning praise from various quarters, including the Mining Association of B.C., for listening to concerns of large employers in the critical minerals sector.
However, this progress also sparks a vital public policy debate: How do we ensure that climate action doesn't compromise the affordability, reliability and even the cleanliness of our energy supply?
Eby's nod to hydrogen as a possible long-term solution was expected and understandable. Yet, the immediacy of challenges such as inflation, high interest rates, and housing affordability demands short-term solutions alongside visionary long-term strategies. The B.C. budget's offer of a $100 electricity bill credit is a gesture toward this need, but the broader financial outlook suggests more significant challenges lie ahead.
B.C. Hydro's latest service plan, revealing a projected $55-million operating loss (before accounting manoeuvres) and a record level of electricity imports — 20 per cent of domestic demand — highlights the precariousness of our current energy situation. Importing electricity from Alberta and the U.S., where much of their electricity comes from fossil fuel combustion, not only contradicts our clean energy goals but also exposes ratepayers to potential cost increases.
The financial risks seem obvious. The B.C. budget assumes 100 per cent of normal inflows into B.C. Hydro reservoirs this year, even though the province has below average snowpacks. Additional electricity imports may be needed, which come with a cost. In the fiscal year just ending, a projected $709-million operating profit turned into that $55-million loss for B.C. Hydro. That's a negative swing of more than three-quarters of a billion dollars.
This reveals the harsh reality that our green ambitions face technological and economic limitations, regardless of politics.
The necessity of heating homes, transporting food and supplies, and keeping the lights on cannot be overstated. Ambitious electrification and emissions reduction targets are commendable, but they must be pursued within realistic timelines and with a clear understanding of the technological and economic landscapes.
Just to the south, Puget Sound Energy has proposed a 17 per cent rate increase in electricity over two years. The largest utility in Washington state says it is necessary to comply with state laws requiring a move to carbon-free or non-emitting sources of electricity.
While the B.C. government has intervened to keep hydro rates from rising more than inflation this year, the bills will be coming due as the $16-billion Site C dam nears completion. This project, while helpful, will add only
10 per cent to B.C. Hydro's capacity. Independent observers say B.C. Hydro will need 10 times this amount of additional energy to meet the objectives of the CleanBC plan.
That plan requires 90 per cent of all new vehicle sales to be electric by 2030 and works against natural gas connections to new buildings. Both measures contribute to the need for more electricity.
How much all this will cost is anyone's guess, but British Columbians will ultimately be on the hook. B.C. Hydro recently announced its capital plan between now and 2034 will ring in at $36 billion, however this number does not include the cost of Site C or generating more electricity.
To the east, Quebec Hydro estimates that working toward displacing carbon-based fuels with electricity will cost up to $185 billion by 2035. These are eye-watering numbers.
We endorse efforts to reduce emissions, but believe that ensuring a stable, domestic and affordable energy supply is required to maintain public support for further climate action. Increasing dependency on imported power, and regulatory restrictions on made-in-B.C. energy that drive up costs for individuals could backfire and threaten the long-term goals of CleanBC.
As we look to the future, let's not lose sight of the present.
The pursuit of clean, affordable and reliable energy underpins the success of every business