western issues update 7 / 27 / 01 below is the weekly western issues update sent to tim earlier . if you have any questions , please feel free to contact me ( x 39510 ) .
executive summary
bc hydro
british columbia energy politics
bpa developments
forestry issues
smelter update
bc hydro
the crown jewel in bc government ' s arsenal , bc hydro is in a holding pattern until they can name a new chair to head up the corporation . brian smith was replaced with interim chairman robert fairweather , but we do not expect fairweather to have a long tenure - the word is gordon campbell and company are seeking a replacement to fill mr . smith ' s shoes as early as mid - august . we expect key changes to occur in hydro ' s executive and board of directors following the appointment of the new chair . although senior management at bc hydro is relatively comfortable with the company ' s financial position and competitiveness , they will be pursuing a strategy of expanding generation capability through new dams and oil / gas exploration , pending environmental approvals . as a part of bc hydro ' s move to look for additional generating capacity , they are turning to a pair of mega - projects that were scrapped a decade ago . bc hydro has commissioned new technical review studies of the 900 mw site c hydroelectric project near fort st . john and the 2 , 000 mw coal - fired hat creek project near kamloops .
in terms of a rate hearing , we do not expect bc hydro to conduct a rate hearing until the new chairman is appointed . it will be difficult to get rates raised , although with the government budget deficit looming there will be considerable pressure to begin looking this direction . another key revenue challenge for bc hydro will be responding to the recent price caps imposed by ferc on western power markets and potential power purchase refunds to california ( though their contributions are not immense , they are still significant ) .
bc energy politics
things have really heated up in victoria now that the new campbell administration is settling in . earlier , we reported that the office of the premier had taken control of all the agencies and political staffing decisions . with 77 of the 79 elected members of the bc legislature , sources close to the premier indicate change will be " fast and furious " to offset any local coverage from volatile media . the bc government ' s primary focus will be to stimulate the economy while trying to restrain government spending . to that extent , they have instituted an across the board 25 % stimulus tax cut and will have to deal with the deficit issues that that cut entails . one of the ways they are looking to balance things out is to outsource crown assets and look for other areas to generate revenue - new sources of government revenue through oil and gas exploration and energy will be a top priority .
minister of energy and mines , richard neufeld , will be one of the main drivers behind the current fast - tracking of the offshore oil and natural gas exploration . there is a great deal of pressure on the bc liberals to balance this budget and they will be looking at ways of delivering revenue sources through oil and gas exploration permitting as a short - term solution . neufeld has reviewed the backhouse report ( northern development commission ) regarding the need for continued local public input and has basically tossed it aside - the report had not gone far enough to please the liberals . other things on the minister of energy ' s agenda :
? oppose sumas 2 power project & phase out burarrd thermal ( sumas has been a serious bone of contention between washington state and canada )
? with core review , protect bc hydro and all of its core assets , including dams , reservoirs , and power lines under public ownership
? restore independent bc utilities commission , to re - regulate bc hydro ' s electricity rates
? maintain the longstanding ban on bulk water exports
? encourage mineral exploration
? promote clean and renewable alternative energy sources
? review and make recommendations regarding allocation of funding that has been frozen for the " power for jobs " initiative
bpa
senator patty murray moved last week to drop the review provision on the senate bill , which would have opened up an additional $ 2 billion for bpa borrowing authority . if senator murray is successful , the measure could have a substantial impact on bpa financial solvency .
with the exception of the approximately $ 5 million spill over the dalles and bonneville dams , bpa has already foregone a major summer spill to protect endangered salmon species .
representatives of four northwest governors ventured to washington dc last week to express concerns over the new hydro biop and how it will be implemented . states were concerned about their lack of input in the implementation process - a plan being developed by action agencies and spearheaded by bpa . the plan has been put on hold pending a review headed by interior department lawyer ann klee . idaho and washington representatives showed concern that the biop could be overturned in court - they were concerned that the nmfs underestimated the risk of extinction of snake river stocks and that it was illegal to rely on off - site mitigation to help satisfy the hydro system ' s esa obligations . while the administration has said it plans to double past expenditures to implement the biop , nobody at the meeting could come up with just what the previous biop costs were - for now , the salmon plan is pure lip service .
smelter curtailments
kaiser : faced with declining aluminum prices , which have decreased 9 % from last year , kaiser is in a difficult position due to the fact that they are maintaining a level of infrastructure and personnel - readiness which will allow them to restart 4 - 3 / 4 ' s lines of their operations on the fly . should this curtailment last longer than a year , it would be cost - prohibitive for them to continue incurring that infrastructure expense . kaiser has gone on the record to say it is still open to signing load a curtailment agreement with bpa , but it is unclear at this time whether bpa foresees a benefit in signing an agreement considering short - term and perceived mid - term electricity price decreases . we are continuing to monitor this situation as it develops , although an agreement in the short - term seems doubtful .
alcoa : recently mentioned in the press , canada ' s newfoundland government and u . s . aluminum giant alcoa inc . announced thursday they would conduct a feasibility study to possibly revive the stalled lower churchill hydroelectric project in the remote labrador region . the generating station on gull island could produce up to 2 , 000 mw of electricity . costs of the project are estimated at some c $ 4 billion ( $ 2 . 6 billion ) , far below the c $ 10 billion originally thought . with a 16 % drop in net income due to slackening global aluminum demand and higher energy prices , alcoa has suffered along with the rest of the aluminum industry to find cheaper , less volatile sources of electricity . along with their ongoing negotiations with bc hydro , it appears alcoa is making a determined push to work with the canadians to play all sides of a competitive electricity market .
forestry issues
there are a number of fuel management projects which are going on right now in the bitterroot national forest .
ecosystem management burn - burnt fork ecoburn - completed 7 / 01
fuels reduction - sheafman fuel project - completed
fuels reduction - darby ranger district
* trapper overlook - 10 / 01 expected decision date
* como restoration - 9 / 01 expected decision date
* como campground - 9 / 01 expected decision date
fuels reduction - sula ranger district
* springer memorial fuel hazard reduction project - completed
multi - forest ecosystem management burn - west fork ranger district
* salmon river canyon project - ongoing , preparing supplemental draft
fuels reduction - sula ranger district
* sam billings camp ground fuel reduction - completed
steep creek fuel reduction - 10 / 01 expected decision date
western issues update 7 / 27 / 01
below is the weekly western issues update sent to tim earlier . if you have any questions , please feel free to contact me ( x 39510 ) .
executive summary
bc hydro
british columbia energy politics
bpa developments
forestry issues
smelter update
bc hydro
the crown jewel in bc government ' s arsenal , bc hydro is in a holding pattern until they can name a new chair to head up the corporation . brian smith was replaced with interim chairman robert fairweather , but we do not expect fairweather to have a long tenure - the word is gordon campbell and company are seeking a replacement to fill mr . smith ' s shoes as early as mid - august . we expect key changes to occur in hydro ' s executive and board of directors following the appointment of the new chair . although senior management at bc hydro is relatively comfortable with the company ' s financial position and competitiveness , they will be pursuing a strategy of expanding generation capability through new dams and oil / gas exploration , pending environmental approvals . as a part of bc hydro ' s move to look for additional generating capacity , they are turning to a pair of mega - projects that were scrapped a decade ago . bc hydro has commissioned new technical review studies of the 900 mw site c hydroelectric project near fort st . john and the 2 , 000 mw coal - fired hat creek project near kamloops .
in terms of a rate hearing , we do not expect bc hydro to conduct a rate hearing until the new chairman is appointed . it will be difficult to get rates raised , although with the government budget deficit looming there will be considerable pressure to begin looking this direction . another key revenue challenge for bc hydro will be responding to the recent price caps imposed by ferc on western power markets and potential power purchase refunds to california ( though their contributions are not immense , they are still significant ) .
bc energy politics
things have really heated up in victoria now that the new campbell administration is settling in . earlier , we reported that the office of the premier had taken control of all the agencies and political staffing decisions . with 77 of the 79 elected members of the bc legislature , sources close to the premier indicate change will be " fast and furious " to offset any local coverage from volatile media . the bc government ' s primary focus will be to stimulate the economy while trying to restrain government spending . to that extent , they have instituted an across the board 25 % stimulus tax cut and will have to deal with the deficit issues that that cut entails . one of the ways they are looking to balance things out is to outsource crown assets and look for other areas to generate revenue - new sources of government revenue through oil and gas exploration and energy will be a top priority .
minister of energy and mines , richard neufeld , will be one of the main drivers behind the current fast - tracking of the offshore oil and natural gas exploration . there is a great deal of pressure on the bc liberals to balance this budget and they will be looking at ways of delivering revenue sources through oil and gas exploration permitting as a short - term solution . neufeld has reviewed the backhouse report ( northern development commission ) regarding the need for continued local public input and has basically tossed it aside - the report had not gone far enough to please the liberals . other things on the minister of energy ' s agenda :
? oppose sumas 2 power project & phase out burarrd thermal ( sumas has been a serious bone of contention between washington state and canada )
? with core review , protect bc hydro and all of its core assets , including dams , reservoirs , and power lines under public ownership
? restore independent bc utilities commission , to re - regulate bc hydro ' s electricity rates
? maintain the longstanding ban on bulk water exports
? encourage mineral exploration
? promote clean and renewable alternative energy sources
? review and make recommendations regarding allocation of funding that has been frozen for the " power for jobs " initiative
bpa
senator patty murray moved last week to drop the review provision on the senate bill , which would have opened up an additional $ 2 billion for bpa borrowing authority . if senator murray is successful , the measure could have a substantial impact on bpa financial solvency .
with the exception of the approximately $ 5 million spill over the dalles and bonneville dams , bpa has already foregone a major summer spill to protect endangered salmon species .
representatives of four northwest governors ventured to washington dc last week to express concerns over the new hydro biop and how it will be implemented . states were concerned about their lack of input in the implementation process - a plan being developed by action agencies and spearheaded by bpa . the plan has been put on hold pending a review headed by interior department lawyer ann klee . idaho and washington representatives showed concern that the biop could be overturned in court - they were concerned that the nmfs underestimated the risk of extinction of snake river stocks and that it was illegal to rely on off - site mitigation to help satisfy the hydro system ' s esa obligations . while the administration has said it plans to double past expenditures to implement the biop , nobody at the meeting could come up with just what the previous biop costs were - for now , the salmon plan is pure lip service .
smelter curtailments
kaiser : faced with declining aluminum prices , which have decreased 9 % from last year , kaiser is in a difficult position due to the fact that they are maintaining a level of infrastructure and personnel - readiness which will allow them to restart 4 - 3 / 4 ' s lines of their operations on the fly . should this curtailment last longer than a year , it would be cost - prohibitive for them to continue incurring that infrastructure expense . kaiser has gone on the record to say it is still open to signing load a curtailment agreement with bpa , but it is unclear at this time whether bpa foresees a benefit in signing an agreement considering short - term and perceived mid - term electricity price decreases . we are continuing to monitor this situation as it develops , although an agreement in the short - term seems doubtful .
alcoa : recently mentioned in the press , canada ' s newfoundland government and u . s . aluminum giant alcoa inc . announced thursday they would conduct a feasibility study to possibly revive the stalled lower churchill hydroelectric project in the remote labrador region . the generating station on gull island could produce up to 2 , 000 mw of electricity . costs of the project are estimated at some c $ 4 billion ( $ 2 . 6 billion ) , far below the c $ 10 billion originally thought . with a 16 % drop in net income due to slackening global aluminum demand and higher energy prices , alcoa has suffered along with the rest of the aluminum industry to find cheaper , less volatile sources of electricity . along with their ongoing negotiations with bc hydro , it appears alcoa is making a determined push to work with the canadians to play all sides of a competitive electricity market .
forestry issues
there are a number of fuel management projects which are going on right now in the bitterroot national forest .
ecosystem management burn - burnt fork ecoburn - completed 7 / 01
fuels reduction - sheafman fuel project - completed
fuels reduction - darby ranger district
* trapper overlook - 10 / 01 expected decision date
* como restoration - 9 / 01 expected decision date
* como campground - 9 / 01 expected decision date
fuels reduction - sula ranger district
* springer memorial fuel hazard reduction project - completed
multi - forest ecosystem management burn - west fork ranger district
* salmon river canyon project - ongoing , preparing supplemental draft
fuels reduction - sula ranger district
* sam billings camp ground fuel reduction - completed
steep creek fuel reduction - 10 / 01 expected decision date