B.C. Hydro cancels plan to phase out gas-powered generation as electricity gap looms

A June 2013 handout photograph of Spectra Energy's McMahon gas processing plant in B.C.

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B.C. Hydro says it needs to keep two natural-gas-powered generating stations operational to meet a looming electricity shortfall, pushing back provincial goals to phase out fossil-fuel generation by the end of the decade.

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Hydro, in a filing to the B.C. Utilities Commission, said it needs to extend operations of the Island Generation natural gas-fired plant in Campbell River and the McMahon gas plant near Fort St. John to fill most of a 500-megawatt generating shortfall the utility anticipates by 2030.

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“This has resulted in a need for capacity in the early years of the planning horizon, prior to new clean and renewable capacity resources coming into service,” Chris Sandve, Hydro’s chief regulatory officer, wrote in the filing.

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Extending operations of the 275-megawatt Island Generation gas plant and the 120-megawatt McMahon plant, Sandve added, would fill 400 megawatts of that shortfall to meet peak demand.

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In the filing, Sandve said the utility is in “confidential negotiations” to continue buying electricity from Island Generation, which in the past has been used sparingly during peak periods, and McMahon, which delivers base load electricity for the oil-and-gas sector.

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B.C. Hydro has ambitious plans to increase new renewable sources of electricity on the grid. It’s 2025 call for power alone would add 1,158 megawatts of capacity to generate 3,500 gigawatt hours of electricity a year by 2034.

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However, in its filing, Hydro noted that growth in electricity demand across North America is increasing rapidly after years of stagnant growth, largely due to the power-hungry data centres needed for artificial intelligence, and in the short-term, the risk to B.C.’s economy of hitting a power deficit is greater than that of building surplus generation.

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Hydro cited the need for electricity to power new mining activity in B.C. by 2030 would be worth $4 billion of economic activity, equivalent to 1.1 per cent of provincial GDP.

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Extending Island Generation and McMahon, however, represents a policy shift from the province’s objective of eliminating the use of fossil fuels in generating electricity, which is a concern to climate advocates, who worry about locking in new sources of fossil-fuel generation.

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To Hydro’s critics it’s “a belated recognition of economic and energy reality,” according to Barry Penner, chair of the think-tank Energy Futures Institute. “I hate to say I told you so, but I’ve been pointing out the risks associated with eliminating what’s left of our natural gas generation in B.C. since 2023.”

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Penner, as environment minister under former premier Gordon Campbell, was part of the government that aimed to make B.C. Hydro self-sufficient using renewable, privately owned power sources, a policy that was controversial at the time.

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In 2026, however, utilities are reaching limits to how much they can accommodate renewable, but intermittent, sources of electricity without adding baseload power to balance the grid, Penner said.