The Northwest Transmission Line -- How a green infrastructure grant boosts mining in the North

The graceful steel spires stand at regular distances along the highway. It’s as if a giant millipede has threaded its way over the steep roadside ridges, swept out a swath of forest with its belly, and lost a long, straight leg with every step. We are pulled over on the side of Highway 37, just north of Bell 2 Lodge, looking up at the biggest power line project that BC Hydro has undertaken in decades.

The Northwest Transmission Line (NTL) is a 287-kilovolt power line that will stretch 344 km between Terrace and Bob Quinn Lake. Clearing the right-of-way began in 2012 and the project is currently two-thirds finished. Line has yet to be strung between all 1,100 of the 27-metre-tall poles. Power is slated to start flowing in May 2014.

The NTL was kick-started in 2009 when the federal government pledged $130 million from the Green Infrastructure Fund, a grant for projects that “promote cleaner air, reduced greenhouse gas emissions and cleaner water.” While BC Hydro’s website says one of the project’s goals is to “reduce greenhouse gas emissions,” it appears the project will in fact allow a vast increase in BC’s carbon emissions.

Government and industry are heralding the project as opening the mineral-rich northwest to mining and energy extraction. Imperial Metals’ controversial Red Chris project will be the first NTL customer. On the eastern flank of Todagin Mountain, the mine is next to the largest lambing population of Stone’s sheep in the world. The NTL’s second customer is AltaGas’s Forrest Kerr run-of-river hydro project, located 140 km southwest of Iskut.

Green infrastructure folly

The NTL qualified for the “green” infrastructure grant, argued Stephen Harper, on the condition that the power line be extended 93 km farther north to relieve the village of Iskut—a community of 350 people—of diesel electricity generation, thus saving an estimated 2,800 tonnes of CO2 emissions yearly, according to the Ministry of Energy and Mines.

This calculation fails to consider the huge CO2 emissions from mining companies whose projects cannot go ahead without the NTL. Imperial Metals’ Steve Robertson confirms that Red Chris mine will not proceed without grid power.

In 2008, the Pembina Institute calculated that just five of the many proposed mines the NTL would power together release 890,000 tonnes of CO2 per year—the equivalent of 316 more diesel-powered Iskuts.

If the NTL were really about relieving Iskut of diesel, there are other ways to do it. After all, Iskut will use less than one percent of the NTL’s power. In 2007, the Dogwood Initiative estimated that the village could be powered by micro-hydro systems for a mere $22 million—a far cry less than the $800 million for the NTL and its extensions.

In order to fast track construction, the province exempted the 93-km Iskut extension from an environmental assessment and a standard BC Utilities Commission review, a process intended to ensure that project costs are in the public interest.

In March, Imperial Metals agreed to build a line extension to Tatogga Lake, then sell it to BC Hydro for $52 million. From Tatogga Lake, two smaller extensions will take power 18 km east to Red Chris mine, and 16 km north to Iskut.

Trees burned

Nearly 90 percent of the trees cut to create the right-of-way for the NTL were burned.

BC Hydro reports that 495,000 cubic metres of timber were cut for the project, making it one of BC’s biggest logging operations in 2012. Of this, 56,000 cubic metres were sold and a whopping 439,000 cubic metres—equivalent to 14,000 logging trucks loads—were burned. Residents as far away as Terrace noticed the smoke.

BC Hydro cites long distances to roads and markets, coupled with the timber’s marginal quality, as valid reasons for such a large-scale burn.

Although mills in other regions have timber shortages, energy companies are not required to pay to ship timber they cut to those who need it. As a result, wood is often seen as a nuisance.

Mike Larock, director of professional practice and forest stewardship for the Association of BC Forest Professionals, is bothered by the way energy companies deal with timber. He advocates that, “Some—if not all—of the costs to cut the wood on an occupied energy footprint, and to store, transport and deliver the harvested wood to a manufacturing facility, should be borne by the energy industry to reflect good stewardship of the forest resource.”

Burning these trees also released a tremendous amount of CO2, estimated to be 338,250 tonnes by UNBC environmental engineer Steve Helle. This further thwarts the intended goal of the NTL to “reduce greenhouse gas emissions.”

BC Hydro does not see this as a contradiction. “What you are talking about (burning timber) is a one-time release. What we’re looking for with the project is long term overall reduction in the amount of greenhouse gas emissions,” NTL project manager Tim Jennings says.

Based on the estimate that connecting Iskut to the grid will reduce CO2 emissions by 2,800 tonnes a year, it will take 120 years to compensate for the CO2 released by the burn. Long term indeed.

Who will foot the bill?

NTL’s cost has exploded from an initial estimate of $404 million in 2008 to the latest estimate of at least $736 million. Of this total, AltaGas will pay $180 million, and the Green Infrastructure Fund will contribute $130 million. Including the $52 million that BC Hydro is committed to pay Imperial Metals for the extension, this leaves BC Hydro on the hook for at least $478 million

Since 99 percent of NTL’s power will be used by industry, the NTL could be seen as a massive public subsidy to mining and energy companies.

BC Hydro does not see it this way. In the face of criticism, it has scrambled to justify NTL costs. In April 2013, the company announced Tariff Supplement 37, intended to recover costs from the line’s industrial customers.

This agreement is misleading for three reasons. First, the fine print reveals that industry will pay for the basic power line, but ratepayers may foot the bill for a deluxe upgrade. Jim Quail, lawyer for COPE 378, estimates this may leave BC Hydro customers on the hook for $150 million.

Second, it will recover NTL’s construction costs, but not its extension costs. BC Hydro assures that a separate tariff is being planned for the extension. Yet, BC Hydro has already agreed to pay Imperial Metals $52 million to build the extra line to Tatogga Lake. It seems unlikely that a further deal would have Imperial Metals pay this money back to BC Hydro.

Third, besides the construction costs, BC Hydro customers will subsidize the actual electricity that the NTL will carry from expensive independent power projects.

Simon Fraser University economist Marvin Schaffer explains: “When the mines hook up to the system they will need a lot of power and that will require BC Hydro to develop or acquire more resources. BC Hydro estimates the marginal cost of new supply to be between $85 and $100 per MWh. The mines, however, will pay the standard industrial rate which is only some $40-$45/MWh. The loss to BC Hydro is in the tens of millions of dollars per year per mine.”

Not only will the NTL pave the way for open-pit mines in some of the most spectacular land in the continent while allowing these operations to increase the region’s carbon emissions by hundreds of times, the public will be footing a substantial portion of the bill. It’s not clear how the project qualifies as “green infrastructure.”