In 1996, BC Hydro was a company with total assets of $12.1 billion, delivering 42,834 GWh of electricity to BC’s residential, commercial and industrial users.
Ten years later, BC Hydro had total assets of $12.5 billion and it delivered 50,602 GWh of power to the same customers, an 18% increase in domestic consumption with only a 3% growth in assets.
Ten years along, in 2016, BC Hydro’s domestic consumers needed only 49,142 GWh, down 3%, but the utility’s assets had grown by 136% to more than $29.6 billion.
Incredibly, from 1996 to 2016, purchases from independent power producers (IPPs) soared by 839% to 14,877 GWh, which cost about $1.3 billion in the current fiscal year. According to BC Public Accounts, the obligation to IPPs is $1.85 billion in the year ended March 2017.
Many of IPP deals were made when BC Liberals thought they could find a profitable export market in the USA. Since private operators didn’t want to put their own money on the line, it was decided that the public would carry almost all financial risks for the private power system. It didn’t take long for every sharp operator in the province to join in the frenzy of activity. As a result, a few people cashed in and the public utility is stuck with buying power they don’t need at prices they can’t afford.
Unfortunately, Liberal politicians learned nothing – or perhaps learned they could easily get away with financial fraud – and they’ve taken a similar approach to LNG. Billions of public money are committed to benefit gas producers and future governments are locked into decades with no substantial revenues from gas. Like high prices in the California power crisis at the turn of the century, a short period of elevated Asian LNG prices had BC Liberal hearts beating fast. Foolishly, they dealt with the gas industry with the same expertise they applied to electrical power markets.
The values of IPP generating facilities are not included in BC Hydro assets although the company is obliged by contracts extending up to 56 years to pay a reported $56.2 billion for the produced power. Had the public operation built and owned these many producing sites, its asset growth at Hydro ould have been substantially larger.
At BC Hydro, what citizens have is a spendthrift corporation gone mad, bent on delivering billions into the hands of BC Liberal friends. The company has plans for more than $20 billion additional capital spending in the next decade, has the stated intention of buying larger volumes from IPPs at higher prices and the utility’s managers have proven inability to either tell the truth of future needs or to forecast them without massive error.
The company is led by BC Liberal apparatchik Jessica McDonald who says her lack of experience in utility management is OK because her predecessors were equally lacking in experience. One qualification of hers cannot be denied; she’s married to a person Premier Clark called “one of my oldest friends.”
McDonald acts with a Board of Directors that has zero experience in large utility management and the most important qualification to serve appears to be political loyalty. We must accept that McDonald – who would not have been hired in a private company with assets over $25 billion – can trust her job to be secure at least until the next election.
Main qualification for winning billion dollar contracts is being a generous BC Liberal contributor. #bcpoli #SiteChttps://t.co/t64yc8nZ5d
— Norm Farrell (@Norm_Farrell) March 18, 2016