BC Hydro

IPPs received $672 million above market price in 2015

British Columbia Hydro publishes quarterly reports that provide a long term record of consumption by domestic consumers, which are:

  • Residential
  • Commercial and light industry
  • Heavy industry

I’ve been reviewing more than 20 years of those records and they show gradual growth in electrical demand until 2005. Subsequently, there has been no demand growth; in 2015, domestic power sales were lower than ten years before.

What did grow were Hydro’s purchases of electricity from independent power producers. In calendar year 2006, 5,636 GWh supplied by IPPs cost $368 million (6.5¢/KWh); in 2015, 14,418 GWh cost Hydro $1,217 million (8.4¢/KWh).

A 155% increase in the volume of IPP purchases is alarming by itself given the lack of need for it but the average unit price has been rising steadily. In the 4th quarter of 2015, IPP unit prices were 9.2% higher than the preceding quarter. To accommodate power coming into the system, BC Hydro had to choose between shutting down their own capacity or dumping power in markets outside BC at well below cost.

The U.S. Energy Department issues comprehensive reports of electricity prices and the key number for the Pacific Northwest is the Mid-C (Columbia) Rate. By taking the weighted averages for 2015 and converting to Canadian dollars, we find the Mid-C price averaged under 3.8¢ a KWh in our currency.

That suggests IPP power, costing BC Hydro $1,217 million, could have been acquired from our southern neighbors for $545 million, a $672 million premium for buying power in BC. Ironically, many of the IPPs are foreign owned companies, happily exporting their profits.

As the charts below indicate, the fastest growth in the independent power industry has been in last two years, while Premier Clark hurries to get the Site C dam construction beyond what she calls a point of no return.

If this government’s assertions and policies were subject to careful analysis by investigative journalists in the professional media, we would see daily headlines and scandalous revelations. However, this is 2016 and that approach only happens in the movies.


 

29 replies »

  1. Forensic audits of BC hydro and high profile ministries within the current government, led by Clark and the organized criminal group known as the BC Liberals, will in the future lead to various high level charges, of fraud and corruption. All of Norm's evidence has to be seen by prosecuters and interested “third parties” read class action lawsuit “groups”.
    This corrupt game has gone on long enough. Personal opinion….

    Like

  2. $672,000,000 / 365 / 24 = $76,712.33 for every hour of 2015 going to IPPs.

    IPPs need $$, kids living in poverty and adults with developmental disabilities… not so much.

    Like

  3. “If this government's assertions and policies were subject to careful analysis by investigative journalists in the professional media, we would see daily headlines and scandalous revelations.”

    Anyone in the professional media reading this care to comment? Anyone in the professional media who has visited one of these hydroelectric IPP sites before (and after) construction care to comment? I'm pretty sure Norm won't block you. The key word here is “care”, because I am pretty sure you know how to count.

    Like

  4. The first anonymous stole my words “forensic audit” for that was my first reaction before I was half way through the piece Norm.

    I don't know what the answer is but like everyone else who reads you, I sure know the question. Who is going to step up? There must be dozens of potential whistle blowers, at least a few lawyers and maybe even an honest cop who is disgusted with this corruption.

    If Laura Miller can crowd fund her defence of criminal charges while a Liberal operative, then perhaps we, the people, can accomplish the same.

    MCguy asked the MSM to do their job and I put the same challenge to honest caring people who are in a position to take up the fight, to do so. Somebody needs to be a hero here.

    If not then Christy Coleman wins.

    Like

  5. Gosh.

    In addition to the proMedia Club members that mcguy mentions above, this sounds like something the good folks at the CTF may want to comment on as well.

    You know, in the same way they have been so vociferous recently about private planes and ice bomb bridges.

    Oh.

    Wait.

    .

    Like

  6. Hugh, how much is $672 million in billions?…over half you say?…how long will it take to be a whole billion? Maybe pro Media has a $1 billion threshold for BC taxpayer money before being important enough to care about. Shouldn't take much longer….Bennett and Polak can't refill the ink in their pads fast enough, rubber stamping more and more alpine lake draining projects on the Sunshine Coast. I will do some research and see if indeed any items that cost less that a billion dollars have ever been investigated by the MSM, in depth, with cameras rolling, on the evening news. I know they report whenever trillions are mentioned.

    Like

  7. There is very little difference between what Bernie Madoff was doing and what B.C. Hydro is up to with their books.
    The BC government has violated it's responsibilities to the people by enacting legislation to force the purchase of IPP power.
    Fraud and Extortion and the running of a Ponzi scheme are all within the realm of what should be investigated.
    Any ratepayer of Hydro or group of ratepayers has the right to seek legal opinions and perhaps further action. A class action perhaps. It shouldn't require any special person to do this?
    Any lawyer specializing in that type of law could be contact for consultation.
    If I'm wrong I stand to be corrected.

    Like

  8. A class action would certainly back the media into a corner now wouldn't it? Anyone remember Eron Mortgage? Nearly 20 years ago they defrauded investors out of something between 170 and 220 million. The stench touched the Government of the day and a large accounting firm. A class action was sought and denied. BC has government friendly courts.

    Like

  9. “Site C won’t be built for almost another decade, but it’s not just about Site C,” Mr. Bennett (BC Energy Minister) said. “The forecasts that Hydro has done indicate it won’t need much, if any, new generation in the next 10 years either. It’s the current situation in the province, where we are using about the same amount of electricity in 2016 that we were using in 2008.”

    Say what?

    http://www.theglobeandmail.com/news/british-columbia/bc-energy-minister-says-clean-power-projects-arent-the-priority/article28961898/

    Like

  10. “and the beat goes on” I am 64 years old now and I can't recall anything EVER changing without SOMEONE doing something!

    Like

  11. With regards to class action suits in this country. I don't think its friendly courts as was mentioned in a post above. It would appear most of our laws in this country, with regard to governance issues, are one sided, protecting governments and the”system” as it were. Enron being a private corporation had a different scenario. The US taxpayer is a far more “engaged” entity as a group than we here in “nice” Canada are. The US takes their rights and governance very seriously, the average Canadian ..well..”not so much”.
    We the taxpayers in this country have to become far more “vocal” as a group outside of the political party setup. We have to demand laws to protect taxpayer rights and our financial input into a poorly run, often corrupt system, whose “traditional ” parties have become out of touch with the average citizen, while pandering to their corporate masters, to ensure funding is maintained for election wins. The pay to play system is alive and well in this country. Corpratists know this and will support a corrupt system as long as their profits are maintained and large debt socialized so that their taxes are kept low, while their profits continue unabated.
    Unless the taxpayer “revolts” on a massive scale and becomes a third powerful entity to the corporations and governance setups, we will continue to be kept in the dark and fed….like “cultured mushrooms”.

    Like

  12. Eron Mortgage Corp cost investors about $170 million.

    http://www.cbc.ca/news/business/eron-mortgage-found-guilty-of-170-million-fraud-1.168916

    Brian Slobogian and Frank Biller, principals of the fraud, spent a short while in jail and the BC Securities Commission assessed financial penalties that remained unpaid as of January 2016.

    http://www.bcsc.bc.ca/Enforcement/Sanction_Payment_Status_Report/

    One of the effective deterrents to financial fraud in BC was Vancouver Sun investigative journalist David Baines. Here's an example of the kind of work that used to be done by pro-media journalists, back in the days when they served readers instead of advertisers.

    http://www.vancouversun.com/business/Baines+Biggar+necessarily+better+when+comes+Bulletin+Board+promotions/6808949/story.html?__lsa=0ec8-3270

    Like

  13. The deferrals are up to $5.564 billion at Dec 2015, according to unaudited financial statements of BC Hydro. That was an increase of $131 million in 9 months of the current fiscal year.

    Like

  14. It occurred to me yesterday that the “Fast Ferries” failed experiment should now, officially, be put to rest. The BC Liberals are sinking the equivalent of THREE Fast Ferries per year, through these IPP overpayments. I say sinking, because there's nothing to sell for scrap, or to a former employee now living in Fiji… it's just GONE.

    The NDP's Fast Cats cost BC residents about $460 Million in Year-2000 dollars. That's about $608 Million in 2016 dollars.

    Now, we see the BC Liberals requiring BC Hydro to buy power they don't need — and pay $672 Million over the market price. It would be refreshing if the BC Libs said, “Ya know… this isn't working. We're going to put a stop to all future IPPs.” But no: they keep on approving them.

    Three (+) Fast Ferries per year. Sunk by the current government and future governments, thanks to the long-term contracts. Link back to this story, whenever you hear someone say, “Remember the Fast Ferries.”

    Like

  15. Norm, do you have a figure on what it costs Hydro to make its own power at its legacy dams? I’m suspecting it’s below the mid-C rate. No?

    Like

    • BC Hydro does not publish the information. They used to do so but I’ve not seen it in the last few years. It is a difficult number to determine in any way that is truly meaningful.

      Much of the cost of BCH’s own power is dependent on accounting policies. They can push current costs up or down depending on decisions to defer, capitalize and depreciate. Accountants typically want consistency but the numbers suggest the utility has policies today that are much different than throughout most of its life. I’m told they now try to charge as little as possible to current expense accounts so they can maximize the profits reported. That’s reflected by the massive increase in BC Hydro’s property, plant and equipment values during a decade of flat demand.

      I’ve stated that BC Hydro paid 9.14¢ per KWh for power but that’s calculated by dividing the reported payments by the reported quantity of power received. We know the some purchases go below that average and some go well above. However, that doesn’t reflect the full cost since BCH incurs transmission expenses and line losses when it collects power from many widely distributed generating sites. There are no public statements that I’ve seen that discuss the extra costs of pulling in power from well more than 100 private sites of private production.

      To be honest, I always disliked cost accounting tasks and I still do.

      Like

  16. How many IPP’s are there and who owns them? I got into a discussion with my 85 year old father-in-law and somehow he has come to believe that the only reason they exist is because as he put it, “they are all owned by the natives and they force the government to build them so they can make money!”.

    Like

  17. Rafe Mair wrote this about the beginnings of BC’s private power scam:

    It was scarcely a secret that Gordon Campbell hated crown corporations. Within two years of taking office he passed an energy policy which took away from BC Hydro its ability to create new power, except Site C, and forced it to buy all its new power from private companies who were given exclusive rights to make it. This required scores of our rivers to be decimated by what the private companies – euphemistically dubbed IPPs (“Independent” Power Producers”) – called “weirs” but were in fact small but destructive dams.

    Hydro had to pay twice or more the market cost of this power and it was forced to take it when it was produced even though it didn’t need it at that time. The Finance Minister, Campbell crony Colin Hansen, said these IPPs would be little “mom and pop”, which was 100% bullshit – unless one considers General Electric to be a “mom and pop” operation. The owner of your corner grocery store can tell you what happens if you follow these sorts of business practices.

    http://rafeonline.com/2016/01/how-the-bc-liberals-killed-wac-bennetts-dream-of-affordable-public-power-ferries-rail/

    Like

  18. I read the headline right after reading Laila Yuille’s post about the lack of schools in Surrey. Now if they stopped spending so much money on nothing at B.C. Hydro we could most likely build a couple schools in a year. Of course I don’t expect that to happen. Those kids and their parents can’t afford to attend Christy’s $20K a head dinner parties.

    Not enough money for schools and B.C. Hydro has all that money to waste. Does make one wonder who is getting what in return. that just isn’t good business practises, unless of course those in political office are getting something in return. Might not be nice to write, but really what other conclusion could I come to.

    Over $600M a year and then we have 500K people without family doctors. Hell, the province could send a jet to England and load it up with doctors. They could even fund more seats at universities.

    speaking of class action lawsuits, that might be fun. I’d join and I’d contribute to the legal fees. My B.C. Hydro rates keep going up but its only because Management, the b.c. lieberals, keep screwing up. Perhaps a mismanagement lawsuite might be in order. The B.C. Lieberals were elected to run the province in a business like manner. Running B.C. Hydro is like giving away the business to “insiders”. Then the B.C. LIeberals force B.C. Hydro go fork over approx. $500M of our dollars. So our rates go up again. Its like a form of extortion, in my opinion.

    and if we’re going to have class action lawsuits perhaps we could have one about paying medical premiums but not having doctors. We paid but they didn’t deliver.

    Like

Leave a reply but be on topic and civil.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s