BC Hydro and Ajax Power Usage

Posted by Stop Ajax Mine on October 7th, 2012 11:14am

UPDATED: We've updated some of our calculations to try determine the real tax revenues based on the subsidy we've calculated the mine will receive.

There has been a lot of discussion about the amount of power the Ajax mine will be using and how this affects us in Kamloops. Here's the facts we know: 

1. The Ajax mine is estimating that it will use 470,538,348kWh/year (from page 228 of the Ajax Mine Feasibility Study), at a rate of $0.035/kWh USD (or $0.0343/kWh CDN as of October 7th, 2012) from BC Hydro. http://www.ajaxmine.ca/pdfs/Ajax_Feasibility_Study_43-101.pdf

2. We pay for our power in a 2 step process. The first 1,350kWh we use is at a rate of $0.068/kWh CDN, and after that we pay $0.1019/kWh CDN.  Note that this has increased since our previous infographic was released earlier this year. https://www.bchydro.com/youraccount/content/residential_bill.jsp

Why do we pay 2-3 times as much as the Ajax mine for power? You could argue that they're a huge purchaser of power and should get some kind of bulk or wholesale rate. However, if the mine was to be given a wholesale or bulk rate, shouldn't that rate still be one of which BC Hydro will be able to make a profit? You could argue that large industry uses more power than everyone else but does large industry make up the majority of economic activity in BC? Do large industry employ more people than all the small businesses in the Province of BC? Do large industry need rebates for power to make more money, or would small businesses benefit from such subsidies a lot more? 

Please read this:  http://www.bchydro.com/energy_in_bc/projects/site_c/faqs.html#10

From the link above: 

"B.C. is growing and so is our demand for electricity. BC Hydro forecasts that the province's electricity needs will grow by approximately 50 per cent over the next 20 years, as our economy expands and our population increases."

Because of our increased electrical needs, we need to build more dams and eclectrical generation facilities. One of which is "Site C" which is cited in the link above. The key point from this link is below: 

"Site C is seen as cost effective, as the cost of energy, at $87-95 per MWh, compares favourably with other benchmarks for clean energy." 

$87-$95 per MWh translates to $0.087-0.095/kWh (interesting that they don't just mention this price in kWh to make it easier for people to understand)... does this mean BC Hydro operates this site at a loss of $0.0527/kWh to generate power used by this mine - and that is "seen as cost effective" by BC Hydro?!

If we pay up to $0.1019/kWh for our power and BC Hydro makes a profit on what we pay, they then lose money on all the power they sell to mines and other large industry - does that mean we the taxpayeres are subsidizing industry like the mine?! Let's try calculate how much we are subsidizing them.

The mine will use 470,538,348kWh/year at a cost of $0.0343kWh which totals $16,139,456 in revenue to BC Hydro... however if that amount of power costs BC Hydro $40,936,836 to generate... our subsidy is what pays for the difference of $24,797,380 PER YEAR! 

How viable would the mine be if they were not receiving a subsidy of nearly $25 million per year!?

The mine is estimating that they will be paying $550 million to the Federal and Provincial Governments, as well as another $210 million for the BC Mining Tax Act over the lifespan of the mine (http://www.ajaxmine.ca/economic.html). We're not sure how much of that will be sent to the province vs. the federal government, but considering the entire amount of $760 million to be paid as taxes to the provincial/federal governments, that's $33 million per year to be shared by the provincial and federal governments... when you subtract the subsidy they are given, that's $8,246,098 / year to be paid to the federal and provincial governments... how are those taxes split up between the federal and provincial government? As a point of reference, if the provincial government took 75% of those tax dollars, we, as a province, would just break even. That means if the federal government takes more than 25% of those tax profits our provincial government is losing money on this mine. If that's the case how can anyone explain the economic benefits of this mine? 

Perhaps that $25 million per year of our tax dollars could be re-invested back into our communities? What could we do with that money? Remember, the tax revenue for our city from the mine will represent $55.82/person/year. 

To summarize, can the mine and/or BC Hydro answer the following questions:

A) If the mine was to be given a wholesale or bulk rate, shouldn't that rate still be one of which BC Hydro will be able to make a profit? 

B) In relation to Site C, does BC Hydro operate this site at a loss of $0.0527/kWh and is that "seen as cost effective" by BC Hydro?!

C) How viable would the mine be if they were not receiving a subsidy of nearly $25 million per year!?

D) How much of the total taxes paid by the mine will be paid to the provincial government, and federal government? 

E) If that $25 million per year of our tax dollars was re-invested back into our communities? What could we do with that money?

After we get answers to these questions, perhaps we'll have a better understanding of the real economic benefit of the mine. 

Comments

Mike on 2012-10-11 12:47:20

Hi, I am wondering if you can tell me who or what accredited qualified persons contributed to these estimates? I am not bashing this page what so ever just looking for some information of which to base my view. Thanks

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