Columnist Vaughn Palmer reports concerns expressed by Moody’s Investors Service about growing BC Hydro debt. The agency stated the obvious, which is that numerous capital projects are adding billions to the public utility’s debt and much higher electricity rates or contributions from government are inevitable.
Palmer repeats Moody’s judgement that BC Hydro’s financial metrics “are among the weakest of Canadian provincial utilities.” However, the Vancouver Sun pundit provides an inaccurate explanation of why the situation exists. Readers here know about sixty billion reasons for weakness, from independent power producers alone. Buying massive amounts of unneeded power at three times market value certainly results in weak financial metrics. So does selling to heavy industry or exporting electricity for less than the price BC Hydro pays to purchase power. Perhaps that information wasn’t in the press notes provided by BC Liberals.
Palmer blames not the Liberals who’ve held power for 15 years; the predecessors must share responsibility, even if dramatic financial changes are recent. Palmer wrote:
Successive provincial governments have siphoned $6 billion in dividends from Hydro over the past quarter century, about two thirds of it borrowed, as Rob Shaw reported in The Vancouver Sun Tuesday.
It is silly to suggest only 2/3 of BC Hydro’s payments to government were borrowed funds. Since 2001, BC Hydro has paid $10.3 billion to governments for dividends, water use, capital taxes and local services. Had those transfers not been made, the retained cash would have paid for new investments and kept term debt near zero at least until Christy Clark took control of the Premier’s office.
Palmer writes about other problems with BC Hydro financials:
Then there’s Hydro’s massive expansion into the realms of deferred accounting under the B.C. Liberals…
But, we need not worry about dividends, or about deferred expenses, he implies, even if BC’s Auditor General recently expressed major concerns. Palmer tells us:
The Liberals have begun to rein in both abuses…
In addition to that reassurance, we’re told the Liberals have been conservative. The Moody’s report is quoted:
No income nor economic impacts from LNG development and activities have been incorporated in its budget forecast.
The claims of income and economic impacts have certainly been incorporated in Liberal Party pronouncements but no self-respecting finance ministry officials took the promises of LNG income seriously. They could not when Liberals had signed away the right to taxes and gas resource rents from LNG companies. Government loyalists in the Press Gallery amplified the Prosperity Fund nonsense but, unlike officials, they rely on press releases, not facts.
Palmer continues the current Liberal messaging:
Looking ahead, the main risks that could tip the outlook from stable back to negative include political pressures leading to “a loss of fiscal discipline…”
Loss of fiscal discipline is code for spending on education, healthcare, disability benefits and other social needs. Liberals are OK with billions spent on bridges, roads, dams, transmission lines and other projects that put money into the pockets of their financial supporters. But, Premier Clark’s Government views expenditures on needy citizens as undisciplined. They want that message repeated by friendly media.
Some political pundits are like movie stunt fighters, throwing what seem to be real punches but never landing hurtful blows. The faux-journalists carry messages for causes they support or for organizations that hold their sympathies but, to be effective, they must create appearances of fair-minded neutrality. Like in movie fighting, with the co-opted Press Gallery Gang, it’s likely to be completely fake.
As usual, let us look at BC Hydro’s financial statements to see what the real debt trends look like. However, remember that BC Hydro must pay more than sixty billion dollars to private power producers and that’s a choice made entirely by BC Liberals.