Alberta Premier Rachel Notley said her government is pulling out of talks to buy as much as C$500 million annually in electricity from neighboring British Columbia amid a dispute over Kinder Morgan Canada Ltd's Trans Mountain oil pipeline expansion.
The action is in retaliation for a move by British Columbia to limit increases in the transportation of oil sands bitumen in the province which would threaten the C$7.4 billion pipeline project. The scuttled power purchases do not include separate talks to buy electricity from the province-owned BC Hydro and Power Authority's under-construction and over-budget Site C hydro project which is expected to add to a glut of electricity in Canada's westernmost province. During a press conference in Edmonton, Alberta, Notley said the action "is just a first step. In the coming days and weeks there may be more."
"We have formally suspended all talks to do with the purchase of electricity from B.C. through existing interties," Notley said at the Feb. 1 news conference. "These are purchases that, had these discussions been completed, would have contributed up to [C]$500 million per year to British Columbia and they do not include discussions related to Site C, which we will have more to say about later."
BC Hydro had been on a building spree that saw it add generating capacity to several existing hydroelectric sites along the Columbia River, partly in anticipation of demand from more than a dozen massive LNG projects that were proposed for the province's northern coast. None of the plants has advanced beyond the planning stage and most have been shelved. The province considered scrapping the 1,098-MW Site C project, which carries an estimated price tag of more than C$10 billion, but decided the financial risk of shelving the plant was too great despite adding to the capacity glut. British Columbia had promoted a plan to boost power exports to Alberta to use some of the surplus. Alberta's grid operator said recently that it planned to restore the aging intertie between the two provinces to accommodate the exchange.
British Columbia's plan to limit bitumen imports was posted in a package of proposed regulations. The rule has not been formalized and the province is holding consultations, with a report expected by the end of February. Prime Minister Justin Trudeau said separately on Feb. 1 that the federal government, which has constitutional authority of inter-provincial energy transportation and exports, will see that the pipeline gets built.
Alberta has a financial interest in seeing oil sands exports increase as it sells oil it receives from producers in royalties. "We are prepared to do what it takes to get this pipeline built — whatever it takes," Notley said.
