BC Hydro

IPP losses about $800 million in 2016

BC Hydro’s quarterly report for the three months ended December 31, 2016 is finally released to the public. The company departs from a practice of decades and does not report its “trade” sales of electricity. Instead, it combines electricity and gas trade sales.

No doubt they are sensitive to reporting very low trade prices, particularly when proceeds of surplus power sales are about 1/3 of the average price paid to independent power producers (IPPs). This is getting worse because IPP prices are rising quickly and journalist Jonny Wakefield reported this week that 20 new IPP facilities are under construction.

IPP prices

Although we do not know the quantity of power shipped out province, we know the volume of sales to residential, commercial and industrial customers. This chart shows those sales for the last twelve calendar years. 2016 almost matches the preceding year and is the tenth lowest in the past dozen years. This is despite brisk sales in the final quarter of the calendar year.

Capture

In various places, I’ve noted that flat demand and increased intake of private power leaves BC Hydro in a position of dumping excess power on the open market at a loss or reducing power generated at its own facilities.

Since BC Hydro is buying more than $100 million a month of private power and incurs expenses and line losses to send it to markets that value it at about one-third, annual losses on surplus power sales are now about $800 million.

Despite the flat demand for power, BC Hydro is not only buying more private power, its capital spending program is out of control. As a result, despite a reduction in sales to BC customers since 2005, the utility’s assets in 2016 are 256% of the total eleven years ago.

With Site C and other major capital projects, we can expect assets to grow by another 15-20 billion dollars in the near future.

assets

BC Hydro’s politicized management, under directions from Victoria, are hiding bad news with accounting trickery and, while they’ve increased the average price to residential and business consumers by 74% since 2005, the rates must rise significantly or the province must reverse the flow of cash from the public treasury to the accounts of BC Hydro.

There is no alternative.

Two plus two must always equal four.

 

8 replies »

  1. Hello Norm:
    As Christy Clark dances her way through her world of “pretend and make-believe” she could be making British Columbia’s Site C Dam a potential target.

    The LA Times describes a scenario to the US power grid that could also be a possibility for BC.

    The term is “An electromagnetic pulse, or EMP, attack from a terriorist group or rogue state using a nuclear weapon detonated in the atmosphere.”

    It won’t wipe out BC Hydro’s hidden debts, but it could wipe out our hydro.

    North Korea, Russia, terrorist group and a crazed American president … Where’s James Bond when we really need him?

    http://www.latimes.com/business/la-fi-power-grid-20170315-story.html?utm_source=Today%27s+Headlines&utm_campaign=934511b30c-EMAIL_CAMPAIGN_2016_12_12&utm_medium=email&utm_term=0_b04355194f-934511b30c-78523569

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  2. Why hasn’t former BC Liberal Finance Minister been tapped to implement another Contractual Obligation like he did for the Sea to Sky Highway where he was caught on Hansard saying it would only cost $600 million, no mention of the BILLIONs?

    Hansen now sits as a Director of TIC, Port Mann Bridge, Golden Ears and probably George Massey Tunnel Replacement

    He could wipe out BC Hydro’s debt with a stroke of a pen.

    http://www.brdo.gov.bc.ca/boardView.asp?boardNum=215107

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  3. I just did a calculation of the fast ferries cost ($460 million, minus the $19.4 m Washington Group paid at the fire sale auction.) Year 2000 $441.6 m brought to 2017 dollars is about $612 m. So, the BC Liberals’ IPP initiative has cost us almost 4 fast ferries in just one year. In past years, it was closer to 3, so this problem is rising quickly.

    As Norm has said elsewhere, perhaps the BC Libs started the IPP program with honest intentions. Once a few years had passed and the numbers had come in, though, there could be no doubt that their motives were destructive.

    That they would continue to entertain new IPP projects under (presumably) the same excessive contract structure is intentional. Criminally intentional, say I. Naivety can no longer be an excuse.

    Like

  4. One of the enjoyable and informative features of the U.S. governance model is the Congressional hearings process.

    Can anyone imagine BC Hydro CEO Jessica McDonald surviving the equivalent of a House oversight hearing on BC Hydro’s performance?

    Liked by 1 person

  5. This is what Brad Bennett, Chair of BC Hydro, said about the Site C dam:

    “Without adding Site C, we can’t add any more IPPs to our system or it becomes unbalanced and affects the rates we need to charge.”

    From Business Examiner, Mar. 2017, paper edition, p. 3.

    So BC Hydro owes $56 billion for IPP power, then it must build the $9 billion Site C dam, so it can get even more IPP power. WTF?

    Like

  6. Hello Norm:
    A local company in the Municipality of Saanich found a unique way to describe their displeasure with the local government.

    Maybe some of your readers might place signs in their community to educate the local voters on Site C Dam, Hydro’s Debt, MSP and ICBC.

    This news item has received a lot of media attention already.

    Sections of the sign reads:

    “If you are thinking of doing business in or with the Municipality of Saanich start young …. We would like to see our municipality be progressive and encourage job and economic growth … If you agree, contact the Mayor’s office.”

    http://www.saanichnews.com/news/416255754.html

    Like

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