Power Supply Questions

3.15 Power Supply 

The project description does not state who will pay for the proposed transmission line from the tap-in point (Valleyview?) to the mine site. 

1. Will KGHM pay for it, or will BC Hydro simply consider it an extension of the grid, thus requiring the taxpayer to pay for it, as has happened with other mining projects in BC? 

2. BC Hydro does not have a surplus of energy. New energy acquired by BC Hydro from private power producers will cost something in the range of 12.4 cents per Kwh according to the government's own Review of BC Hydro released last August (and possibly higher today) Site C, if it were to go ahead, might reduce that cost, but still in the 8.0 to 9.0 cent per KwH range. BC Hydro does not have a surplus of its own cheap hydro based energy. Hence, to supply new mines it will have to acquire additional energy at the prices just noted. 

3. The Abacus Feasibility study cites the cost of power to the project of 3.5 cents per KWh. If this is the cost of BC Hydro energy to Ajax, why should the taxpayer subsidize the proponent’s energy costs? If you take this subsidy and apply it against the tax collected under the BC Mining Act, the subsidy is greater. 

Power Cost and Requirement Comparisons to Other Proposed Copper Mines 

The Technical report and Preliminary Assessment of the Harper Creek Project near Vavenby, B.C. states that the power cost for this mine will be 0.049 cents Kwh (page 18-65). Total annual power consumption for this mine is calculated to be 553 Gwh. For the Prosperity Mine, total power consumption will be 693 Gwh. For Ajax, total annual power consumption will be 472 Gwh, which the proponent states will cost 0.035 cents Kwh. 

Together these three mines will consume 1,721 Gwh. Estimated annual power generation from the proposed Site C project will be 5,100 Gwh, which according to B.C.Hydro would provide electricity for 450,000 homes. Given that there is approximately 38,000 dwellings in Kamloops, total residential power consumption in Kamloops is about 430 GW a year, which is less than the power Ajax will be using. These three mines alone will consume 33.7% of the power to be generated by Site C. The cost of power from Site C is estimated to range between 0.087-0.095 cents kwh. 

The B.C. Government has established a policy in perpetuity that established industrial users are entitled to below cost power under the provisions of the B.C. Hydro Power Legacy and Heritage Contract. 

1. Is the low cost of the power Ajax is stating it will pay due to the provisions of this contract? 

2. Will all future large industrial users be entitled to below cost power under the provisions of this contract? 

3. If the cost of new power in B.C. is at least 0.087 cents/kwh and Ajax is going to pay 0.035 cents kwh, then the subsidy to Ajax from other Hydro users is 0.052 cents kwh. Based on the stated annual power consumption of 472 Gwh, the power subsidy to Ajax will be approximately $24.5 million a year, or about $15.30 for each of B.C. Hydro’s 1.6 million residential customers. 

What is the economic impact on the B.C. economy of this loss of discretionary spending power by B.C.residents?