The chief executive officer for SaskPower took an informal tone to the podium last Wednesday evening as he addressed about 120 members and guests of the Estevan and District Board of Tourism, Trade and Commerce.
Robert Watson, who joined SaskPower a little over a year ago, having accepted a transfer from his former position as head man at SaskTel, indicated that with a federal election campaign now in the works, expected federal regulations associated with capture and sequestration of carbon dioxide in thermal power production plants will, once again, be put on hold.
The expected regulations were supposed to have been revealed by the federal government in April, but that is obviously not going to happen as Parliament is now prorogued, pending the outcome of a late spring election.
But with the first phase of a retrofit on Boundary Dam Power Station's No. 3 unit already underway, Watson hinted that the province and SaskPower may just proceed with the complete $1.2 billion project anyway. He noted that the new generator for Unit 3 is being built at an additional expense to accommodate carbon dioxide capture features and ensuing C02 sequestration capabilities. About $360 million is already being expended on the 120 megawatt power project in the first phase of construction.
The federal government has provided $240 million toward the project with that being sent to the province over three years ago.
Watson stopped short of saying the carbon capture aspect of the project will move ahead for sure, but that since the expenditures had been made to accommodate it, the refusal by a senior government to not go ahead with a clean coal/environmentally friendly configuration didn't seem likely.
Watson also suggested that SaskPower might also show initiative in moving forward with a pilot project component at nearby Shand Power Station. He said since an earlier proposal for a partnership with Montana to explore more clean coal technology, including sequestration and use of C02 as an enhanced oil recovery agent, has been cancelled by senior governments, SaskPower may proceed with their own testing facility that could attract private industry power producers wanting to test various components of experimental projects in a commercial-sized venue.
Watson told the group that Units 1 and 2 at Boundary Dam are being shut down and decommissioned within the next few years, only because they are now considered too small to rebuild efficiently.
The CEO noted how the demand for power has been growing substantially and steadily in the province over the past few years, fuelled by huge growth in the potash and oil sector as well as through population increases.
He said that 54 per cent of the province's power still comes from coal-fired plants but within 10 years, thermal units will provide just 35 per cent while renewable sources such as wind and perhaps solar, co-generation and biomass plus more growth in natural gas plants and hydro will provide the rest.
"SaskPower hasn't told the story that needs to be told," he said.
With revenues of $1.7 billion and profit of over $100 million, the company won't be seeking rate increases this year. That's because natural gas prices remain low and SaskPower uses more gas than SaskEnergy does."
He said river levels are high, which translates into full hydro power production, and management at all the plants has done a great job of saving money on operating costs.
Watson said with 2,800 employees, and the need for more, the pressure is on the company to find more good, well educated and trained people to take on leadership roles since 500 SaskPower people will be retiring within the next couple of years.
"We have the highest percentage of power growth in the world. We'll be doubling our current power production rate within 10 years," he told the group.
While there may be no rate increases requested this year, he said new power coming on stream will no doubt cost more, including the power that will come from independent producers, but the costs won't exceed what one would expect under a normal business plan.
"Our thriftiest power production is still coal, but we have to clean that up and Boundary Dam's No. 3 will be carbon capture ready and when it's completed, it will be the first," he said.
He said SaskPower feels that a test facility at Shand Power Station could be made commercially viable by first building the testing plant and then letting industries from around the world test their products for a fee.
Watson noted that delayed investment in support systems, especially transmission capabilities, means SaskPower will have to spend $10 billion on transmission and its side agencies alone.
The new potash mine being built by BHP Billiton near Jansen is already asking for a huge transmission line the largest that SaskPower can deliver.
With increased growth in uranium mining and the continual need to keep power running to 100 to 150 oil drilling rigs every day, there was a need to keep the customer continually in the communication loop, Watson said.
Advanced metering for all SaskPower customers is coming and will be a fact of life within five years, he said.
"With that, you'll be deciding what power you'll be using not us and probably electronics will be your largest consumer product."
Watson said that on the nuclear energy front, SaskPower is just monitoring for now. "But we owe it to you to follow it just as we have to follow carbon capture. We were told we have to wait for the regulations, but if the election is around the corner, we may not wait," he said.
Selling the flyash, a by-product of thermal power, is another value-added component of the business. SaskPower takes in about $32 million per year selling flyash to the concrete industry.
"We'll never be able to create power as cheaply as they do in Manitoba with their hydro plants," he said, referring to recent talks that were held between Saskatchewan and Manitoba regarding power supplies.
"But our fundamental plan is to produce the power we require so we'll never be ransomed by another supplier," he said.
Referring to the carbon capture component of Boundary Dam No. 3 unit, Watson said that regulations will be coming from the federal government sometime in the future, but "we'll be ready to go on carbon capture sometime this year."
Later, during an interview, he noted the carbon capture component at Boundary Dam still has no definite time line and the pilot project idea for Shand is still in the early stages of discussion.
Wind power will be increased from its current 8.5 per cent of total production to about 10 per cent, but it can never be used as a base load producer due to the variances, whereas coal and natural gas can be.
