Today, BC Hydro announced its plans to acquire a direct 1/3 ownership interest in Teck Resources owned 493 MW Waneta Dam for $825 million by signing a non-binding memorandum of understanding with Teck.
As the BC Hydro press release states, subject to due diligence and regulatory approval, the BC Hydro purchase will secure approximately 1,000 GWh of energy per year of firm energy for BC Hydro, or enough to power approximately 100,000 homes annually. This energy, which is surplus to the needs of Teck’s nearby smelter located in Trail, BC, has historically been sold on the open market, primarily to US buyers.
“The agreement will go a long way towards helping us meet the B.C. Energy Plan goal of making the province electricity self-sufficient by 2016,” said Blair Lekstrom, Minister of Energy, Mines and Petroleum Resources. “Equally important, this agreement will provide cost-effective energy from a publicly owned asset, helping to keep our province’s electricity rates among the lowest in North America.
I don’t know if this acquisition says more about Teck’s need for cash or BC Hydro’s need for more firm power, but at $825,000 per GWh, it is a rather expensive purchase for BC Hydro and a good deal for Teck. I wonder if BC Hydro will continue to sell it to US buyers through Powerex or keep the electrons here in BC. Bottom line – BC Hydro has more firm power to use or trade.