BC Hydro

Surprise is surprising – UPDATED

Can you blame British Columbians for being uninformed when the people delivering political news are uninformed?

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$101 billion in contractual obligations is breathtaking? What is really surprising is that Toronto Globe and Mail’s BC political reporter didn’t notice before February of 2017.

On one hand, I applaud Ms. Hunter for daring to mention the subject now. On the other hand, I wonder why she previously avoided this huge issue and did not report it fully in her newspaper?

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The Auditor General discusses these contractual obligations but does so with the intention of defending past treatment of the commitments:

Governments enter into contracts with third parties for various reasons. Long-term agreements to purchase services or supplies can, for example, be an effective way to guarantee government a specified quantity of goods or services at pre-determined prices.

However, agreements can also limit the flexibility of future governments to change financial operating arrangements, and the payments can become onerous if the future cost of those goods and services goes down.

The A-G neglected to say that contracts can be an effective way of guaranteeing that future governments are locked into long term purchases at prices that are a multiple of market value, from day one of the agreements.

The A-G speaks of buying services and supplies but the bulk of British Columbia’s contractual obligations are payable for healthcare, educational and road facilities and to independent power producers. These power plants were financed on the strength of contracts with BC Hydro obliging the utility to take IPP output, regardless of whether it is needed or not.

The result is worse than if BC Hydro had borrowed money directly and constructed those same facilities. In practice, with profits guaranteed, IPPs were able to take their BC Hydro contracts to bankers and secure funds needed to build generating facilities. BC Hydro took all the market risk and absorbs all the financial losses from creating power that cannot be profitably resold. Under these sweetheart deals, losses belong entirely to BC Hydro.

We can’t be surprised that the energy industry contributes generously to BC Liberals. The return on investment is spectacular.

The A-G wants us to think that contractual obligations are similar to making a fixed price agreement to buy toilet paper from one of many potential suppliers. From the private companies viewpoints, the long term power contracts were highly effective. For the public, contrary to the auditor’s comments, they are an unmitigated disaster.

Comments about contractual obligations are a disingenuous effort from Auditor General Carol Bellringer. She knows better but defends a practice that aims for deception.

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ADDENDUM

A quick review of Public Accounts published for 2016 by the ten Canadian provinces reveals this information, with the per household amount calculated using Statistics Canada population and household size statistics.

Plainly, BC is way out in front of every province in Canada

But remember, government friendly pundits in British Columbia don’t want this information getting out. So, if you tell friends, say it in a whisper.

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Categories: BC Hydro, Debt, Journalism

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8 replies »

  1. British Columbians have been misinformed previously by the same two entities. Remember what President George W. Bush said. “Fool me once, shame on … shame on you. Fool me… You can’t get fooled again!”

    When BC’s Auditor General produced a very flawed whitewash report on the Basi/Virk BC Rail trial payoff, the Globe and Mail published an article that not only swallowed it without any analysis, but included several errors that proved it couldn’t even get stenography right.

    Neither organization will fool me again.

    Liked by 1 person

  2. Why aren’t the BC NDP doing the digging for facts, doing the job you’re doing? There’s no excuse. If they would bring to light the kinds of stories and real facts that you do, they could post it on their own site. They could hound the BCLibs during question period over and over, put em on the spot, which they would probably gain greater respect for from the public.
    – And – what do you mean by “Can you blame British Columbians for being uninformed when the people delivering political news are uninformed?” The ppl delivering political news are informed!! Why aren’t they helping to shed some light on what you do. Perhaps not as much of the general public are aware of your site, but don’t try and convince me for a second the Gov’t, Mike, Vaughn, Keith et al don’t visit your site. If they weren’t covers for the government, the info you provide would at least be a lead in to news stories, to do their own research, check the facts, they could bust that bunch in a second with a little effort. Oh right, they would see what you freely give as “no news here folks, move along.”
    When it suits them, they are prepared to go after something full on. Remember the way they were over the Glen Clark deck fiasco, imagine so prepared, cameras on hand, & fast ferries, etc.

    Liked by 1 person

  3. Thanks Norm. Another barn buster. But I wonder what percentage of the voters will it trickle down to? We’ve only got two months and 3 days. And if that seems like a long time, how about 64 days!

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  4. In 2013, then Auditor General, John Doyle defended the BC Liberals over the Evergreen line, despite ignoring the fact that modern LRT is cheaper to build and can carry more people than SkyTrain.

    Only seven ICTS, ALRT, ART have been built in fourty years, compared to over two hundred LRT operations built during the same time.

    I would say the A.G.’s office continues to kow-tow to the BC Liberals.

    http://www.railforthevalley.com/latest-news/zweisystem/sorry-mr-doyle-you-are-wrong/

    http://www.railforthevalley.com/latest-news/zweisystem/a-letter-to-bcs-auditor-general-john-doyle/

    http://www.railforthevalley.com/latest-news/zweisystem/a-question-of-capacity-a-transit-primer-for-bcs-auditor-general/

    http://www.railforthevalley.com/latest-news/zweisystem/even-your-auditor-general-seems-to-have-done-his-sums-on-the-back-of-envelopes/

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    • A government that wants to improve administration of public affairs would grant a large budget increase to the auditor general and require value-for-money audits to be prioritized.

      It is understandable why the Liberals don’t want it but, I hope, an opposition party will make the commitment.

      Liked by 1 person

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