BC Hydro

It will get worse for BC Hydro ratepayers

If you are paying attention to the affairs of BC Hydro, you know the utility is in financial trouble.

However, it is electricity consumers that are feeling the pain. Unfortunately, with billions of dollars in phony assets to be written off, a growing power supply that outstrips static demand, payments to private power producers at three times market price and an export market awash in surplus power, the economic agony dealt by BC Hydro will accelerate.

British Columbia’s electricity consumers, who’ve recently experienced substantial rate increases, face onerous new charges. The only alternative is for the province to provide subsidies worth many billions over the next decade.

bc hydro unit revenue increases 520

This disaster arises from the political decisions taken early in Premier Gordon Campbell’s tenure. BC Liberals thought:

  • electricity consumption would continue to rise steadily,
  • a profitable export market for surplus BC power would exist in the western USA, and
  • power producers independent of BC Hydro could best serve the demand.

They were wrong. Dead wrong.

After Enron failed, private power producers (IPPs) — many of them new to the business and directly associated to BC’s governing political party — knew the American market would not guarantee profits. They asked government to have BC Hydro’s ratepayers ensure lucrative returns. Liberals obliged.

As a result, BC Hydro was required to make long-term contracts for private power with inflation protected prices not tied to market value of electricity delivered. In addition, the public utility invested heavily in high voltage lines to collect and distribute power.

I fear there is no easy solution. Burdening consumers with significantly higher electricity rates harms the economy. So does borrowing money to shift the burden from today unto tomorrow.

BC Hydro must go on a diet of austerity, reducing its internal and external costs. It must be run as an insolvent company.

Every possibility should be explored to cancel IPP contracts and a new management must mandate accurate load forecasting and make a major commitment to conservation by consumers.

And, of course, Site C should be cancelled, with demand increases in the next two decades met with locally generated wind and solar facilities or by geothermal power.

12 replies »

  1. Agreed that Hydro must go on a diet of austerity to reduce costs. Does anyone personally know a hydro manager? Well-paid to do the work they do, how come there are 5 figure performance bonuses yearly to almost everyone up the chain? Seriously? Most of us are happy with our lot, to get paid an hours’ pay for an hours’ work. Why the bonus scheme?

    Liked by 1 person

    • why the 5 figure bonuses? well it keeps them from telling the public or some reporter the truth. Oh, some of those managers may be “friends” of the B.C. Lieberals.

      Agree, there is no reason for them to receive these bonuses. It isn’t like they did an outstanding job. One couldn’t even say they did an adequate job which justifies their salaries.

      Liked by 1 person

  2. horrors, horrors. Norm how could you suggest the supporters of the former premier, el gordo, have their financial pipelines cut off to just save the customers of B.C. Hydro billions. Its just so unfair. All those supporters and owners of IPPs were counting on all that easy money. You’re suggesting that not continue? dear, dear, dear. They must be clutching their pearls as I write.

    No problem, el gordo cut up the contract the province had with 9 thousand hospital cleaners. No reason the provincial government can’t do it to the IPP contract holders or simply pull an WAC Bennett, you know expropriate the IPP companies operating in B.C. selling to B.C. Hydro.

    B.C. consumers can not afford the extravagance of el gordo and the B.C. Lieberals, Discontinue Site C. and get rid of the IPPs or tell them their new rates for sales is the same as what it costs B.C. Hydro for electricity from our own dams. The B.C. Lieberals never had any problems cutting benefits to those who needed them. There isn’t any reason the NDP can’t protect the taxpayers of B.C. There is a whole lot more of us than there are of “the friends of the B.C. Lieberals”.

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    • Many of the politically connected promoters cleared out early in the game after flipping the contracts to long term investment companies outside the province. The rewards were quick and very sweet.

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    • The appearance of fraud and the proof of it in court are two different things. Without a smoking gun, a judge might decide that all that is proven is very costly incompetence.

      Liked by 1 person

  3. I always thought Gordo’s Idol was Ontario premier Mike Harris: Gordo wanted to privatize BC Hydro just like Mike was doing in Ontario — until, that is, concerned citizens got a injunction to stop the privatization project and citizens were alerted to the likelihood of rates jumping by three-fold if it were to proceed. Harris subsequently resigned (partly for other reasons) and his finance minister took over, calling an election soon after, and getting thrashed as a result. Notice there’s been no Conservative government in Ontario ever since.

    But Gordo learned from this to temper his privatization zeal regards BC Hydro, and was prescient in adopting a piecemeal privatization as his whole-hog approach to privatizing BC Rail began to worry his government.

    As Norm points out, it is inevitable, if not quite as starkly as in Ontario, that BC hydro customers awaken to what Gordo’s plan is going to cost them. I’m hoping it will have a similar and salutary effect on the prospects of the BC Liberals ever getting elected again. Their approach was much more diabolical than Harris’ audacious gambit for Ontario Hydro: it provided for “dividends,” paid to supporters by way of IPP parasitism, that would eventually bankrupt the public enterprise which would then be sold for thrash-value to select insiders who would then gouge the piss out of customers.

    Easily multiple-times as evil as Harris’ comparatively blunt (or “common sense”) privatization plan, I’m hoping Gordo’s will earn his party as many multiples of eternities in hell — which might just as well be forcing neo-right saboteurs of public enterprise to witness citizens enjoying handsome, economy-of-scale savings by running their own public enterprise — savings neo-rightists thirst after like a parched man does a desert mirage — and pay very nice dividends to pay for public works at the same time and, to justly add to the saboteurs’ punishment, make them watch responsible, social-democratic government restore to health what they thought they’d irreversibly poisoned. For that they deserve to watch helplessly as the citizenry armours and inoculates public enterprises against intentional bankrupting for the duration of their eternal night shift shoveling the smoking sulphur piles of Hades.

    For that, I don’t mind paying a bit extra to restore BC Hydro to health and prosperity.

    Liked by 1 person

  4. It seems that barring some currently inconceivable good fortune, the BC Hydro financial millstone will be locked onto the necks of BC citizens for decades. It must be paid off, and we and our descendants are the only source.

    I propose a dedicated tax on hydro rates entitled “The BC Liberal Debt Reduction Levy”. Lest we and our descendants forget.

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  5. Thank you Norm for continuing with the exposure. I’m afraid that I can’t continue to support Gordon’s misplaced idea – I am going off-grid. I know my insignificant contribution, or non-contribution will have little to no effect on the whole scheme but it will give me some solace to know that I’m not party to it. I only wish the majority of the population was in a position to follow suit. Good luck to all, and especially to Horgan as he tries to bring some sense to the mess he’s inherited.

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  6. The plan for BC Hydro was the same play they made at BC Rail.

    Take a profitable business, load it with debt, and say the government has no business in business and we must sell this albatross around the taxpayers neck.

    CC4BC was just doing her part to load up BC Hydro with debt after Campbell, Cronies & Co. had started the ball rolling with IPPs and transmission lines to nowhere.

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