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Why so big on hydroelectricity? It's more affordable, more reliable

Image of BC Hydro's Cam Matheson
Cam Matheson, a VP with BC Hydro's transmission and distribution group, says the big up-front costs of building a dam are offset by the fact they last 100 years and have relatively low operating costs.

'You pay a lot up front to build it... but it lasts for 100 years'

When Cam Matheson joined BC Hydro 16 years ago, he found himself in a large-scale utility that was looked at as a model of success. Vast reservoirs and immense generating stations built in the 1960s, 70s and 80s delivered a cheap supply of low-cost electricity that could switch on or off in minutes. The system gave BC Hydro a natural advantage over utilities elsewhere in North America.

While other utilities were paying high prices for electricity generated by coal and nuclear plants, BC Hydro was using its natural, renewable resources to generate power.

Storing water behind dams was like putting money into a savings account — leaving more water to generate power when British Columbians and our neighbours most needed it.

Today, the advantages that Matheson observed when he joined BC Hydro remain. Reservoirs on the Peace and Columbia rivers provide the backbone of one of the least expensive and most nimble electricity generating systems in North America.

Matheson notes that there are only four utilities on the continent like this — BC Hydro, Manitoba Hydro, Hydro Quebec, and Seattle City Light.

"That same group of four is at the bottom for North American utilities in terms of retail pricing," said Matheson, a VP with BC Hydro's transmission and distribution group. "It's not a coincidence. With a hydroelectric system you pay a lot of capital up front to build it, which is financially the biggest issue. But once you've done that, well, the assets last for 100 years. You get tremendously low operating costs for an incredibly high value asset.

Aging system is fully paid for, but needs some work

A notable difference from the start of Matheson's career is that many of those BC Hydro assets — major generating stations, dams and transmission lines — are now 30 to 50 years old.

They've been fully paid for, and cost very little to operate, but need upgrades and refurbishing. By contrast, a similarly aged generating station relying on a fossil fuel such as coal, or nuclear power, would be ready for the scrap heap.

In his role as a vice-president, Matheson now leads about 200 engineers and other professionals in a group managing BC Hydro's power transmission and distribution systems, as well as a group that connects both industrial customers and independent power producers to the system.

"The things I find most interesting about working here are the diversity of challenges, the value of the BC Hydro system, the quality of the people and serving the public," Matheson said.

Rates are going up, but remain among continent's most affordable

Ultimately, his group's job is ensuring B.C. has a reliable source of power at the lowest possible cost. That means planning for about $4 billion worth of upgrades:

  • Replacing the oldest dams, refurbishing or extending the generating capacity of others
  • Extending the system into new areas of the province to support economic development
  • Extending supply connections into and around the Lower Mainland as the population grows.

Those projects are nudging BC Hydro's rates up — about $8 a month for an average customer after April 1, 2014, with lesser increases in subsequent years. But even as the work proceeds, B.C. consumers will remain at the lower end of the North American electricity market as long as its system is dominated by large storage reservoirs and dams.

Other green energy sources such as wind power and run-of-river hydro complement BC Hydro's advantage by offering smaller scale power generation.

"There are two big advantages to building wind and run-of-river projects. They don't emit air pollution, and their environmental footprint is relatively benign," Matheson said.

BC Hydro's own generation is supplemented by electricity purchased from independent power producers in the province, including several wind power projects, to meet customers' annual needs. In the past year, run-of-river and other independent power producers provided about 18% of total domestic supply.

Cutting wasted power the best plan of all

Matheson adds that there's one strategy that beats even hydroelectricity when it comes to managing the cost of the system — cutting back on consumption.

Conserve more power and there's less pressure on BC Hydro to invest money in expanding the system.

One of the greatest challenges for any utility is that it must have enough supply to meet peak demand — even if that peak happens only once a day, such as dinner on a cold winter day — or only for a few weeks each year. Customers have to pay the full cost for building those peak services, even if they sit idle most of the time.

"We must be the only business in the world that is trying to convince customers to use less of our product," Matheson said. "If you can get consumers to change their behaviour so they are using less electricity during critical peak times, you've saved everybody a tonne of money."

Thanks to Power Smart's various residential and business initiatives, British Columbians are now saving the equivalent amount of electricity to meet the annual needs of more than 440,000 homes. And that peak demand isn't quite as high as it could be.