Readers asked for an explanation of the Canadian power entitlement under the Columbia River Treaty. This article reviews what it is and the value it is returning to British Columbia.
From a fact sheet published by the U.S. Army Corps of Engineers and Bonneville Power Administration:
Before the Columbia River Treaty, high springtime flows on the Columbia River frequently overwhelmed the ability of the United States’ downstream infrastructure to generate power and manage flood risk. The four dams built under the terms of the 1964 Columbia River Treaty (three in Canada and a fourth in Montana) approximately doubled the water storage capacity on the Columbia River system. …Overall, the coordinated storage and regulation of flows between the United States and Canada vastly improved both hydropower production and flood mitigation in the Columbia Basin.
The increased power generation in the United States resulting from the operation of additional storage capacity created by the three Treaty dams built in Canada is referred to as the downstream power benefits. The Treaty negotiators in the early 1960s agreed that the United States and Canada would equally share these benefits, which are calculated annually…
Canada’s half of these calculated downstream power benefits is called the Canadian Entitlement…
A publication of the BC Government explains:
…Over the last ten years (2000-2010) the average annual Canadian Entitlement has been approximately 1320 megawatts capacity (about 11% of BC Hydro’s total capacity) and approximately 4540 gigawatt hours of energy.
Powerex sells the Canadian Entitlement at market value to either BC Hydro or utilities in Alberta or United States.
When the Columbia River Treaty was ratified in 1964, the Province of British Columbia sold the first 30 years of the Canadian Entitlement to a consortium of utilities in the United States for $254 million and used the money to finance the construction of the three Columbia River Treaty dams. Those agreements expired in phases (1998-2003) and the Province now receives all of the Canadian Entitlement. The Canadian Entitlement is worth approximately $120 million annually, depending on power market prices, and goes into the Province’s general revenue account.
The American sources referred to above provided further information:
The structure of the Canadian Entitlement makes it an extremely valuable commodity in the utility industry. Electricity is more valuable when it is virtually guaranteed to be available, or “reliable,” and when its delivery can be shifted to times of high demand, or “flexible.” The Canadian Entitlement offers both of these attributes.
British Columbia’s sale of 4,540 GWh of electricity brings in about $120 million a year, which is 2.64¢ per KWh. We didn’t need that power because, with ever-increasing purchases from independent power producers (IPPs), the province had and has surplus electricity.
In the last reported quarter, December 2016, BC Hydro paid an average of 9.14¢ a KWh to IPPs. Had BC replaced IPP power with the Canadian Entitlement, at 9.14¢/KWh, it would have saved $295 million in 2016.
BC Hydro’s Site C dam has a design capacity of 1,100 MW and cost of power has been estimated to be from 8.6¢ to 12¢ per KWh. Currently, new solar and wind power facilities are providing power to the world’s utilities for about half that amount and prices are trending steadily downward.
Flat demand for a dozen years, Revelstoke 6, the Canadian Entitlement and potential conservation savings mean that BC has no immediate or near-term need to construct additional generating capacity, particularly in the Peace River valley where farmland could produce food for a million people.
The Peace River Valley is one of Canada’s most fertile regions (Damien Gillis)