Note: I doubled the period of analysis, going back to 2003, which was the last year that unit prices paid to IPPs correlated to market prices evidenced by BC Hydro’s own out of province sales. That results in updating the title value from $3.6 bn to almost $5 bn.
For more than two decades, BC Liberals claimed they were the trustworthy party of business. The other guys were dangerous lefties – socialists, even communists – who would do dangerous things such as encouraging higher wages, regulating potential polluters and spending tax dollars on healthcare, public education and the social safety net.
In 2012, Rich Coleman was the most intemperate. From my article Socialist hordes at the gates, this time for real, quoting the Minister responsible for producing gas:
I know the socialist-communist thinking is that everything should be nationalized and controlled. If you had your way, you probably would nationalize mining, nationalize natural gas. You would nationalize everything, because you don’t believe in the private sector.
Only a year later, Coleman was a cheerleader for socialism. His new LNG friends were from state owned businesses, from nations where governments are unaccountable, dishonest and accustomed to secret dealings. Coleman and Liberal colleagues were willing to deliver value to state owned enterprises as long as the assets weren’t wasted on ordinary people. And, Malaysia’s leader makes sures he doesn’t do that. Now, Prime Minister Najib Razak is implicated by the FBI in misappropriations of more than $3 billion.
That is not far different from how Liberals conduct business in British Columbia. I’ve demonstrated how, in fiscal year 2015-16, with reduced rights and royalties payments and by subsidies of drilling costs, the BC Government stopped taking money from natural gas producers:
BC Hydro also has been managed to deliver billions of dollars in benefits to private independent power producers. Trade export quantities have consistently been higher than purchases of private power so, had BC Hydro not been forced to make IPP purchases, it would have had less surplus power. It therefore would exported smaller quantities at low prices. Had IPPs been left to sell their product to the same free market that BC Hydro trades into, they would have gained 3.6 billion fewer revenue dollars. It is almost $5 billion since 2003.
The IPPs didn’t gamble but they are winning big. BC Hydro customers and taxpayers are the losers and they will likely continue losing until the last contract expires in 2075.