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Possible Cuts Loom for Sustainable Energy Projects That Support B.C. First Nations

BC Hydro and other sustainable-energy projects are in jeopardy as the province reconsiders its commitment to buying electricity produced by First Nations, by way of mulling cost cuts.

It was a day that former Hupacasath First Nation chief councillor Judith Sayers would not soon forget. In 2005, the Hupacasath partnered with the city of Port Alberni, British Columbia, and Synext International to form the Upnit Power Corporation, which secured a 20-year contract with BC Hydro to supply power for up to 6,000 homes.

The project was poised to create badly needed jobs and income for the frequently cash-strapped, 250-member nation. Upnit would also eliminate the greenhouse emissions of the equivalent of 8,000 cars.

“It was a step forward for our nation and was an amazing day for us,” said Sayers, the driving force behind the enterprise. “We silenced a lot of naysayers who didn’t believe that we could do this on our own.”

But the deal, and potentially others like it, has been in jeopardy since August. That was when BC Hydro changed the ground rules by issuing a report that calls for cost-cutting measures to avert an eventual 32 percent energy-rate hike.

The measures include changing the requirements for clean-energy self-sufficiency. Currently, provincial law mandates that British Columbia must achieve such self-sufficiency by 2016. To meet that goal, BC Hydro will have to build new power projects and buy millions of dollars worth of power from independent power producers (IPPs) like Upnit.

But if the requirements for being self-sufficient were loosened, as the provincial government now proposes, then BC Hydro could hold off on building new projects. It would not have to obtain additional energy sources until after 2016. And—most unhappily from the indigenous point of view—BC Hydro could buy power that is cheaper than what First Nations can provide, the August report concluded.

A decision on the possible revisions was pending at press time.

Tribes have a large stake in the future of IPPs, which are private-sector firms that use alternative means to generate their power. Upnit, for example, uses an initiative called run-of-the-river, which relies on water from a diverted creek to produce energy after it falls over a vertical drop. (IPP power can also be produced by solar, wind or biomass technology.)

Increasingly, First Nations are becoming involved in the IPP sector to create jobs, generate revenue and create clean energy, according to Clean Energy BC, an advocacy group for alternative energy producers. In 2010, 60 First Nations attended a clean-energy conference hosted by the organization. In 2011, that number increased to 125 tribes.

“That is a strong indicator of the level of interest in clean-energy projects,” said Loch McJannett, vice president of operations at Clean Energy BC.

And yet, said Sayers, the British Columbia government never made First Nations part of its current self-­sufficiency review. Legislators considered cost-­cutting only, she said, adding that one section in the review even calls for BC Hydro to scale back its consultations with First Nations as a way of cutting so-called soft costs.

“They never considered the impact of this on First Nations; they didn’t even talk to any First Nations about this,” Sayers said.“I was totally blown away when I heard they were contemplating this.”

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According to Sayers, one tribal group was recently close to signing a treaty that was based heavily around power generation. Now, she said, if the BC Hydro decision goes through, “they’ll have to go back and renegotiate the treaty that they spent almost 20 years negotiating. If British Columbia amends the definition of self-sufficiency, then they’d better be prepared to do some serious consultations with First Nations.”

Among the groups that would be most affected by a change in plan would be the Tseshaht First Nation of Port Alberni. In July, it announced its intention to build a 2.8-megawatt run-of-the-river project on the Franklin River. The tribe lacks a contract with BC Hydro to sell its power to the corporation. However, it is eligible for a standing offer that, if accepted, will enable it to enter into a purchase agreement at a fixed price.

But with the decision to change the definition of self-sufficiency pending, that option is up in the air.

Nonetheless, the Tseshaht is pressing ahead with its planning until it hears otherwise, in part by advancing its project on the political front. It has sent letters to the provincial government and is participating in lobbying efforts by local aboriginal ­organizations.

Other Nuu-chah-nulth tribes—the Huu-ay-aht, Tla-o-qui-aht, Uchucklesaht and Ehattesaht—have or are planning their own projects.

IPPs are far from a sure thing, and their attrition rates have been as high as 30 percent, McJannett said. The most common reasons for failure are funding issues, not surviving the stringent government permissions process and partnerships with First Nations, depending on the model that is used.

“The project parties have to work for mutual advantage from the outset, and if that’s not addressed then the project won’t work,” McJannett said. “If the agreement model differs on principles and values then the parties will find themselves in a cul-de-sac, and they won’t move forward. The project time line also has to work for both parties.”

Upnit still has 14 years left on its initial contract. If self-sufficiency requirements were loosened, BC Hydro would not have to buy power from such parties as the Tseshaht First Nation once that contract expires. Although the Tseshaht could still sell power to BC Hydro, it would have to compete with other producers to do so.

British Columbia Energy Minister Rich Coleman was not available for comment. But in an interview with Black Press legislative reporter Tom Fletcher, Coleman spoke of meeting with representatives of Clean Energy Association of BC. He said they warned that cutting back on domestic power supplies may lead to British Columbia’s importing more electricity and indirectly promoting further development of more North American coal and natural-­gas power plants.

Coleman believes that Clean Energy BC’s concerns are premature. Projected population growth and new industrial customers will generate a 40 percent increase in electricity demand over the longer term, he said, leaving enough room for independent producers.

Meanwhile, the shifting political ground could be treacherous.

“I don’t think they were expecting the backlash they got, so they [BC Hydro and the provincial government] may come back with a compromise position,” said Sayers, now an adjunct professor of law and business at the University of Victoria. “It’s not just IPPs that will be damaged, but relationships with First Nations as well.”