An old expression says, “You scratch my back and I’ll scratch yours.” The maxim doesn’t require rewards for scratching be equal and, often, they are not.
According to Elections BC, AltaGas Ltd. and associates contributed a little more than $70,000 to the BC Liberals. It’s been money well spent.
AltaGas is a conservatively managed energy infrastructure company that has been overly depressed by the current commodity price environment. It recently completed hydro projects in BC, which alone could represent the majority of the valuation at current levels and have favourable 60 year inflation indexed contracts with the BC government.
Those contracts are for power generated at:
- Forrest Kerr Hydroelectric Facility (NW BC)
- Volcano Creek Hydroelectric Facility (NW BC)
- McLymont Creek Hydroelectric Facility (NW BC)
- Bear Mountain Wind Park (NE BC)
The company reports it sold 1,300 GWh of electricity to BC Hydro in 2015. The province pays $97,000 – $309,000 per GWh cost for onshore wind power and $93,000 to $500,000 for run of river power. At $110,000 per GWh, AltaGas’ revenue from BC Hydro would be worth $143 million in 2016.
Over 25 years, rising 1.5% p.a. for inflation, contracts to supply 1,300 GWh a year would be worth about $4.3 billion.
Now, here’s an interesting twist. While BC Hydro is buying power for its grid from AltaGas for roughly $143 million, under the provincial policy of selling cheap power to large industrial users, AltaGas could buy the same volume of electricity from BC Hydro for about $75 million. Of course, AltaGas provides gas processing and natural gas liquids extraction services in northeast British Columbia and consumes substantial amounts of electricity. There is no public record of the volume of power delivered to AltaGas operations.
At the start, I mentioned mutual back scratching. Besides the ‘Om the Bridge’ sponsorship offered Premier Clark, here is another favour provided BC Liberals by AltaGas. This is from the same BNN article linked near the top.
…Douglas Channel LNG project represents only $100 million of potential capital expenditure and is more of a publicity exercise than a material game changer.
Imagine that. Is it possible the LNG program promised by BC Liberals is, and always was, an electioneering fantasy?