UPDATED: Bipole, Beers, and (sigh...) more math

UPDATE: I talked to Hugh McFadyen about converters. He conceded that they are planning to build new converters for the east side route, but that for technical reasons they would not be as expensive as the west side converters ... they just don't know how much less expensive. I'm not about to make a wild guess, so I'm leaving my number alone, but consider it a starting point. It could be much higher. Given that the west side converters could cost upwards of $2.6b, even a small % difference in price would make a big difference to my number.

Also, under the other things to consider category: I heard suggestions last night that Hydro is using an estimate of $1000/acre as the price for acquiring farmland for their right of way, which might not be bad if you're buying a whole section, but if you're only buying a strip of land through the middle of a field, not many farmers are likely to bite. Hydro said it will not expropriate land, so expect the cost of negotiated settlements to increase greatly.

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Every time I do a post on Bipole III I think it's going to be my last, but invariably they keep pulling me back in. They = every politician who is confusing the fuck out of the population.

There is of course a ridiculous discrepancy between the competing estimates of what the additional cost will be of building our new HVDC power line down the longer west side route versus the more direct east side route. The PCs say it will be $11,748 per family. The NDP says it will be $13.68 per household. As you might imagine, virtually every assumption in these calculations is different: the route costs, inclusion of line losses, amortization of costs, population figures, etc.. I was tossing around the idea of bridging one number to the next, in much the same way as that old video (which I can't seem to find anywhere) showed Courtney Love transforming from a hot starlet into a disgusting junkie. However, that would have been much too much work, so instead I'll calculate my own numbers from scratch.

I am doing this because I have not really seen any good analysis of this data out there in the Media. The Press has been reporting the numbers and doing some peripheral commentary on them, but the reader must still be left thinking "so who am I supposed to believe? What is the REAL number?"

The best analysis I have seen so far comes from up-and-coming blogger Westerner with his Land of Ice and Grain blog. Westerner has been doing some good work with his blog, and I encourage you to read his post on Bipole III because it has good critique of some of the methods used by the two parties, and lots of links to lots of data sources.

So here we go. I am going to try to keep this as simple as possible:

TRANSMISSION COSTS

This is my source for the west side costs.

Original: $1133 million

Addendum: $1477

New March 2011: $1451

New leaked estimate: $1516*

I will forego the leaked estimate in favour of the new official estimate:

West side: $1451 million

Cost of the east side line:

The PCs say $600 million, plus $188m for licensing costs. I could not find this amount in my scan of the source that they listed, so I'm not sure I trust this number, but I suspect that it is an original estimate -- not an updated one suitable for a comparison.

This Free Press article says that Hydro pegged the additional cost at $571m. At the time, the official estimate for the West side was still the original estimate of $1134m, which puts the East side cost at 1134-571=563 ..even less than the PC estimate. I suspect, however, that they were basing it on updated costs, perhaps the 2009 CPJ addendum costs which place the West side transmission at $1477m, which means the East side would be $906m. It is hypocritical for Brennan and the NDP to use updated costs for the East side route, but original costs for the west side route. I will go with newest March 2011 numbers because I used those numbers for the west side as well. $1451-571=880. This puts the cost per km almost on par with the west side route.

East side: $880 million

Incremental cost: $571 million

LINE LOSSES

This one is pretty simple: the number being used by the PCs based on a leaked Hydro report is $300m. I haven't heard anyone dispute this number (which means it's probably higher) so I'll use it.

In Brennan's $13 estimate, by the way, he treats line losses as follows: "I did not include what Mr. McFadyen was talking about, increases losses that occur, I excluded that." Way to go, Bob. "What Mr. McFadyen was talking about" in reference to the waste of enough electricity to power every household in Brandon. Aren't you due for retirement or a heart attack or something?

Incremental cost: $300 million

CONVERTER COSTS

Here is where the biggest confusion lays. Bob Brennan, in a waffling sort of way, is on record as saying that new converters are needed for both routes. The NDP doesn't waffle on this at all. They say converters are required for both sides, period. End of story. The PCs, on the other hand, do not include converters in their estimate. Who is right?

Here are Brennan's exact words:

Mr. Brennan: When we originally looked at the proposal to build the line down the east side, it was at that point being tied in to the existing conversion equipment, and at that point, it was–the converter stations, without considering new generation being added to the system or the reliability associated with something happening to the existing converter stations, it was not included at that point.

When we went to the west side, there was a need to have conversion equipment which, in our opinion, took away reliability issues that we had at that time and at the same time provided for new generation to be able to come down the line at that point in time. So conversion equipment should be considered on both sides in our view.

At first, I thought Brennan was full of shit. The routing study only mentioned converters for the East side as an afterthought, to mitigate the unlikely catastrophic loss of the Dorsey station. The secret leaked report that the PCs cite for some of their numbers also says that the converters are not required for the east side, but then it also says the following (section 5.1):

Converters would be required on the east route to facilitate additional northern generation to be sent south but would not be required to, at present, solve the reliability concern for HVdc line outages.

So there you go. It seems implausible that the routing study would not take into consideration added capacity, but I am now inclined to believe that converters are indeed required for the east side, even though the original design point was to tie it into the existing Dorsey converters. Perhaps the construction of new converters could be delayed for the east side, thereby saving money, but let's assume not:

Incremental cost: $0

TOTAL INCREMENTAL COST: $871 million

This is lower than what the Canadian Taxpayer Federation is reporting, but my research assistants here at Anybody Want A Peanut assure me that it is a fair and conservative figure.

Now, since everybody insists on doing this as some sort of per capita cost, I might as well too. The PCs use a family of four (total pop/4). Brennan uses some household number from the future. I personally like Westerner's idea of using rate payers. I think it is the most logical way to do it. There are about 510,000 rate payers, so the average cost per rate payer is:

$1,708 per ratepayer

There's your number. I give you permission to use this free of charge. You don't even have to give me credit.

This is still far from the end of the Bipole III story. The costs are sure to continue increasing, the process of buying farmers out of their land is only beginning, and there are numerous adjustments one could take to account for the time value of money, among other things.

There are also the very major issues that the West route is far less reliable, in that it is much more susceptible to natural disasters, unable to carry the load should the interlake HVDC lines get blown down again, whereas this is not a problem with the east route; and building down the west side would require a new Bipole IV line to be build 25 years sooner according to this report. All of this is potentially very costly and favours the east route.

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There is a "Beers and Bipole" doohicky Monday evening, June 27, hosted by the Canadian Taxpayers Federation, and featuring Hugh "I'm not Filmon" McFadyen, Jon "the good doctor, but gosh I wish he had more charisma" Gerrard, James "who?" Beddome, and Minister Stan "my boss is too busy for this shit, but I have no idea why Wowchuk can't make it" Struthers. That ought to be interesting, if you find this kind of thing interesting. If you made it this far in post I can assume that perhaps you do, so go and grab yourself a beer, and listen to the politicians continue to confuse the fuck out of everybody. Beer: the cause of, and solution to, all of life's problems (except probably Bipole).

(credit goes to Homer Simpson for that last line.)

* Leaked estimate was $4.1m total cost. Converter costs went up 132%, which puts them at $2584m, which leaves $1516m for transmission costs.