BC Hydro

Swag, the Liberal raison d’être

In our province, like sometimes oblivious night watchmen, voters shuffle to the polls every four years and make record of their presence. Knowing the schedule, thieves and miscreants pretend to put things in order, aiming to resume loading swag again when the coast is clear.

beagles-2

Swag is what British Columbia’s Liberal Party is about. Whether it’s cash-for-access, pay-to-play, quango patronage or tried and true scratch-my-back contracting, Liberals are practiced at converting public wealth to private.

BC Hydro is an example.The utility paid private power producers over $9 billion between 2003 and 2016. But, that’s only the start.

The auditor general reported in March 2016 that BC Hydro was obligated to pay more than another $58 billion on independent power producers’ energy purchase agreements. Prices paid IPPs have been at about three times market price, as determined by the Mid-C index published by the United States Department of Energy.

Not satisfied with paying friends a multiple of market value, BC Hydro increases the purchased quantities and the contracted prices annually. IPPs have their payments protected from inflation but disabled people of British Columbia waited almost ten years for a minor adjustment of benefits. That’s the Liberal way.

The government friendly corporate media won’t tell you about these details but, if pressed, they’ll remind you that fast ferries cost the province millions back in the 1990s.

Almost $70 billion from BC Hydro’s isn’t enough loot for Liberal friends. The result is Site C, a hydroelectric dam we don’t need and can’t afford. It is being rushed past the point of no return to ensure this province has surplus power for decades to come.

The only evidence we need to prove my assertion of utility mismanagement is a chart of the domestic demand for electricity in BC. This displays sales of power to residential, industrial and commercial consumers. Remaining power is dumped on markets outside the province by BC Hydro and the utility loses money on almost every transaction. (In the first nine months of 2016, they paid 8.5¢ a KWh to IPPs and realized 2.6¢ a KWH through surplus power trade sales.)

chart-1

FY 2017, is Q1 & Q2, the 6 months ended Sept, 2016

BTW, a while back, BC Hydro began reporting some sales of surplus energy in a category separate from trade sales. They want citizens to believe that domestic demand is higher than it is, so this is a direct effort to mislead the public. The numbers I use are consistent and, as noted, include sales to residential, commercial, light industry and heavy industry.

chart-2

When purchases from private power contractors are rising and your sales to consumers are dropping,  there are only two options. One is to export power to markets willing to pay a fraction of BC Hydro’s marginal costs. The other is to reduce power generated internally. (Hint: trades sales in the last three years are 20% of the volume of the preceding three years.)

The following numbers are taken from BC Hydro sales reports and domestic consumption is the total sales to residential, commercial and industrial customers:

10-years

Although the requirement for power from BC Hydro’s facilities has reduced, the utility has been spending lavish amounts to build capacity. Total assets in September 2006 were $13 billion; in September 2016, assets were $31 billion.

9 replies »

  1. This is too thorough a financial ruin to have been done simply by gross negligence. It’s a fair inference from Campbell and Clark’s adoration of Fraser Institute “philosophy” and other acts, even seemingly unconnected like Christy using tax dollars to seek personal revenge on the teacher’s union, that this Hydro debacle is part of a right wing plan to bankrupt the public sector to the great advantage of private sector pals. If you think this is hyperbole, check out the IPPs involved and look at their donations to Christy. But also ask yourself, what sort of government would strip BC Hydro of its right to create new power (except Site C) force it to buy all the IPPS can produce whether tt’s needed or not, and pay IPPS triple its value? Then – this is beyond any comprehension – saddle what’s left of Hydro with ca$10 billion for Site C, for whose power there’s no market nor forseeable need. The winners? Look to Watergare for the answer. FOLLOW THE MONEY and SURPRISE! THE WINNERS, Christy’s pals and funders, IPPs. .THE LOSERS! I think you’ve had enough bad news for one day.

    Liked by 3 people

  2. Why can’t BC Hydro follow its own rules when procuring electricity from independent Power producers? eg. cost-effective electricity that benefits BC Hydro’s ratepayers

    Overview of BC Hydro’s energy procurement practices.

    http://www.llbc.leg.bc.ca/public/pubdocs/bcdocs2012_2/523954/energy_procurement_practices.par.0001.file.energy-procurement-practices-overview.pdf

    (Page 1 of 28)
    This document and its attachments is intended to provide a high-level summary of BC Hydro’s energy procurement practices, and does not itself form a part of any existing or future procurement process, whether competitive or non-competitive, undertaken by our on behalf of BC Hydro.

    (Page 2 of 28)
    Ethical Conduct – Strive to ensure ethical behaviour and avoidance of conflict of interest by employees, contractors and proponents.

    Cost-Effectiveness enter into contracts with proponents which proved cost-effective electricity that benefits BC Hydro’s ratepayers.

    (Page 10 of 28)
    Project Financial Metrics
    To ensure the bilateral agreement represents a fair and balanced transaction for both the proponent and BC Hydro’s ratepayers, negotiations will be generally conducted on an ‘open book’ basis. The proponent will be required to provide BC Hydro with a sufficiently detailed financial model, along with supporting information and documentation requested by BC Hydro, to support the validity and reasonableness of key assumptions. BC Hydro will perform necessary due diligence to satisfy itself that the financing and investment return assumptions reflect the risk/reward of the transaction and general industry requirement for comparable transactions.

    (Page 15 of 28)
    Code of Conduct for BC Hydro Directors and Employees

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  3. I’d like to thank Norm, Rafe and like minded individuals who speak up and stand up for taxpayer’s rights in BC. We are knowingly governed by a corrupt political organization and yet there are those among us willing to hold their nose and vote for them again because they see themselves still profiting under this government. Sad that they don’t see the entire picture. Sad they don’t see the irreparable harm being done.

    Liked by 1 person

  4. Hello Norm: Thank you for your in depth reporting on the BC Liberal’s irresponsible spending and total disregard for the environment.
    Is Christy Clark required to show where she holds her own personal investments?

    The latest “Christy Spin” is that she claims she doesn’t want the stipend. Really, what she is saying is, “she no longer needs the money”. Even if she looses, she’s won!
    Her dinner guests have made her rich.

    Before the next election, British Columbians should be allowed to see her tax returns since her debut into BC politics.

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  5. Is the 15% property tax on foreigners, that was applied by the BC Liberals to cool off the real estate market here in British Columbia, any different than the infamous 1885 ‘head tax’ that was meant to discourage Chinese people from entering Canada?

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  6. As Rafe says; “This is too thorough a financial ruin to have been done simply by gross negligence.”

    Gordon Campbell used his Premier ship to sell BC Rail for a song to a political friend , so another political friend could run tourist trains.

    The Canada Line has made wealthy several political friends, at the same time earning money for other political friends building the grossly over engineered trolley.

    The Port Mann Bridge was built o divert tax monies to political friends, while at the same time, ensuring other political friends make huge profits on the backs of taxpayers who are paying for this grossly over engineered bridge.

    Political friends make money of TransLink by acting as consultants and or lobbyists to sell dated fare gates and fare system.

    The poorly engineered new Hwy. 17 (SFPR) is so poorly engineered and built by political friends, that portions of the route are dangerous to drive after two years.

    Now with the current Premier, personally makes money off political friends, by the largess of their donation to the Part.

    The BC Liberal Party, by political friends, for political friends, of political friends.

    And what are political friends are really for, to make money off the taxpayer.

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  7. Norm, I don’t think I’ve seen a table like your final one in this piece. “Required from internal sources”… does this mean, largely, BC Hydro’s legacy dams?

    If so, with the upgrades that Hydro has done since 2006, one would think BC Hydro is even more capable of producing power now — or soon will be, as projects come back on line (I’m still seeing cranes at Ruskin dam, for example. Due to be finished this year.)

    You’re showing slightly more than a 10 GWh drop in Hydro’s contribution to our power diet over 10 years — compensated by a rise in output from independent power producers.

    Consumption has dropped slightly since 2006.This would indicate that Hydro was — and is — perfectly capable of supplying our needs and could have/should have said, “Don’t worry… I’ve got this,” when the IPP gang came calling, in Gordon Campbell’s first term.

    Now, thanks to the BC Liberals and their banning of oversight by the BC Utilities Commission, IPPs have now taken about 30% of the domestic production away from BC Hydro — and as you say, Hydro is paying over 300% more for it, over market price… when Hydro didn’t need the help in the first place.

    We’re also stuck with long-term contracts to these IPPs, so they’re not going away. Worse yet, MORE IPPs are being planned. To me that’s the most telling part: the BC Liberals know what a financial failure the IPP program has been — yet they keep building on it, rather than quietly shutting the door.

    Time for a change.

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