By any measure, BC Hydro was a success. So successful that pirates made plans to plunder.
BC Hydro was a decades old operation that delivered power to British Columbia’s residential and business consumers at prices that ranked among the lowest anywhere.
Additionally, a steady flow of money moved from the utility to public treasuries. Since 1989, the crown corporation contributed about $20 billion in dividends, water rentals and grants in lieu of property taxes.
With assistance of 21st century Liberal governments, politically connected individuals began treating BC Hydro as a machine for dispensing cash.
Independent power producers (IPPs) were large beneficiaries. From the beginning of fiscal year 1993 to the end of FY 2001, they were paid an average of $7.5 million a month. BC Hydro’s most recent financial report shows average monthly payments of $132 million.
Most of this 1,660% increase occurred while demand for electricity in BC barely changed.
In the quarter ended September 30, BC Hydro paid IPPs $291 million more than the same period in 2005, despite fewer watts of electricity sold to BC consumers in 2017.
Private power bought by the crown corporation during the period grew to 37% of deliveries to BC consumers, despite a significant increase in the utility’s own generating capacity. Private power totalled 14% of domestic sales a dozen years before.
Buying billions of dollars of private power through secret contracts that last as long as 2075 was not a business decision. It was privatization by stealth, a political choice aimed at delivering public wealth to Liberal friends.
Most decisions that led to BC Hydro adding almost $20 billion of new assets during a dozen years of flat demand were political as well. Asset growth is partly explained by the crown corporation deferring or capitalizing operating expenses and creating receivables by booking phantom revenue. Besides creation of fake profits, another part of the asset growth is explained by extension of distribution networks to serve mining and energy companies that had invested heavily in BC Liberals.
One reader asked me to explain the difference between the numbers reported here and the figures used in BC Hydro press releases and echoed by Site C proponents.
For decades, the crown corporation reported its sales as:
- residential
- commercial and light industry
- heavy industry
- other
- trade (exports)
I report numbers from the first three categories since these represent all BC consumers of electricity. With many years of oversupplied, low price markets outside BC, our public utility should not be building or acquiring export capacity on spec. Power surplus to domestic need is unaffordable.
Until 2012, the “other” category was not significant, amounting to less than 3% of the first three categories. In the second quarter of fiscal year 2018, “other” was 30% of those same items, measured in gigawatt hours.
The change is not accidental; it is purposeful disinformation. BC Hydro began adding sales outside the province to the “other” category instead of treating them as trade sales. The intention was to give an appearance of rising demand by BC users of electricity.
In the third quarter of FY 2017, BC Hydro stopped reporting trade sales as they’d done for decades. Revenues from sales of electricity were combined with sales of natural gas, making it impossible for analysts to verify the unit price of electrical trade sales. Seemingly, the company was embarassed to reveal this informaton since they were selling surplus power at a fraction of the price paid IPPs.
When a publicly owned corporation chooses to hide or distort financial information, they forfeit trust. Now, these unreliable people want continued license to spend ten to twelve billion dollars on Site C.
Deceit is a tool they use to keep people of BC uninformed.
Independent power producers have taken almost $12 billion from BC Hydro but that was not sufficient. Corporate pirates aimed to privatize more of the public’s wealth.
The Peace River dam, largest infrastructure project in provincial history, provided opportunity. Years of flat sales to BC consumers, rising private power purchases, export markets depressed by oversupply and declining prices for alternative energy ought to have ensured Site C was a non-starter. However, Liberals loved megaproject spending.
Will the Horgan Government end Site C and reestablish honest management of BC Hydro? They have this information and a failure to act would be a failure of nerve.
That has not been John Horgan’s style. I don’t expect his Government to fail in this situation.
11.5 years of flat sales to BC consumers didn’t stop BC Hydro from paying $19.9 billion for additional assets and $11.5 billion to IPPs for private power. Help us tell this real story to citizens of BC. Corporate media won’t do it. #bcpoli #cdnpoli #SiteChttps://t.co/ZYz3J1WUWg
— Norm Farrell (@Norm_Farrell) December 4, 2017
Financial advisory firm Lazard’s annual levelized cost of energy analysis reveals utility-scale solar LCOE dropped 86% in last 8 years. For wind, the figure was 67%. #bcpoli #SiteC
— Norm Farrell (@Norm_Farrell) December 4, 2017
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Categories: BC Hydro, Independent Power Producers (IPP)
in-sights.ca 
Thank you Norm for unraveling the financial games that BC Hydro plays all at the direction of the former BC Liberal cabinet minister in charge of BC Hydro. The pubic assets of this Province have been substantially looted for 16 long years – it is beyond belief that it took that that long before a majority of the voting citizens clearly perceived the lies and deception spun by the former government which covered up the plundering of our province by special interests.
Our democracy, including the mass media, is a very sick ‘puppy’, taking the big money out is a good thing but imo much more needs to be done to empower citizen to ensure better governance and accountability in the public interest and NOT inept foolishness or misfeasance by elected MLA/MPs.
In our whipped ‘democracy’, regardless of the party in power, way too much power resides in the Executive Branch of government which trends, as the last 16 years show, to be used ineptly, mistakenly and abusively – imo this institutional design fault has cost – and will continue to cost the BC public dearly:
(a) Add up the legal costs incurred and final settlement payments that resulted as a consequence of the Supreme Court of Canada overturning several of Gordon Campbell’s unconstitutional attacks on Labour (Teachers, health workers, etc) – hundreds of millions of dollars and un-quantifiable harm to students who deserved much better learning conditions in our schools;
(b) If Site C is terminated, the $2+ billion sunk costs will be the direct result of misguided public policy decisions by the Executive who eliminated critique by shutting down the authority of the BC Utilities Commission to vet all IPPs, Site C, indeed shut down the entire s.7 Transmission Inquiry by BCUC;
(c) the massive IPP payouts plus the yet untabulated subsidies by BC Hydro to the IPP sector, including inter-linkage Transmission line hook-ups, the management of BC Hydro by Accenture, the establishment of an independent Transmission Corporation, the wacky non-GAAP accounting procedures, the off-ledger accounts, etc.
(d) the billion $ debacle at ICBC;
(e) the massive laundering of money at Casino’s and its inflationary ‘gaming’ of the residential and commercial real estate sectors;
(e) 16 years of increasing raw log exports and deterioration of our public forests and their prudent management;
(f) the 999 year lease of BC Rail – and the $6 million payout to make the mess go away from further public scrutiny;
(g) opportunity costs – given that the billions hereto paid out on the heretofore mentioned could, in the last 16 years, have been invested otherwise in social, health, education, justice, etc. sectors.
The democratic imperative requires curtailing the power of the Executive Branch by empowering more citizen rights of recall, initiative, accountability, transparency and annual tabulation of the value of public assets, assets which should not be substantially sold, mortgaged, leased, securitized, destroyed, etc. without prior informed majority consent by voting citizens.[ As I suggested in 2002, if BC Hydro had been transformed into a co-operative with voting shares equally provided to each citizen resident of British Columbia, perhaps the Board of Directors elected by citizens during the past 16 years would have been more competent and accountable than the Board members appointed by former Ministers of Energy and we would not be in the troubling situation we are in now…ditto for ICBC, BC Ferry Corporation, etc. – but this would undermine Ministerial and Political Party power wouldn’t it?
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some one sure made a lot of money, but it wasn’t B.C. Hydro or us, the citizens/consumers. gee isn’t there a law about that some where?????
Like how can a government pay 10 cents and sell for 3 cents and make money? I know you can’t always fix stupid and stupid can be forgiven, but el gordo sold himself to the voters as a smart guy. His friends may have thought him smart, he made them a pile of money. I sure wish there was some way to have a class action against el gordo, for having done this. Even a little kid selling lemonade knows you have to charge more for the product than the cost of the lemons, oh, right kids get the lemons for free from Mom/Dad, etc. So el gordo got all that money from us, free, for his pals. Not a good thing. time to stop Site C and stop increasing the debt load at B.C. Hydro and start paying it down. To bad we can’t use el gordo’s pension as a down payment on the debt.
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Looks like a decision is imminent and I just wanted to personally thank you Norm for all the work you have done over the years on the BC Hydro file. The first order of business of the former government that split up BC Hydro and the subsequent so called ” Clean Energy Act” was the impetus to bring the flag ship crown corporation into a death spiral. If it was not strong voices like yours much of what that entailed would be largely down the memory hole.
No matter what the decision your commitment to this work is much appreciated.
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When the CE Act came out there was also a requirement for BC Hydro not only to be ‘self-sufficient’, but to have ‘insurance’ or an excess of BC (read: IPP) power.
This requirement was later removed – too blatant, I guess! Good grief.
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The 2010 BC Clean Energy Act says that BC Hydro must be self-sufficient in power, getting all its power from within BC:
From Sec.6:
(2) The authority (BC Hydro) must achieve electricity self-sufficiency by holding, by the year 2016 and each year after that, the rights to an amount of electricity that meets the electricity supply obligations solely from electricity generating facilities within the Province,
(a) assuming no more in each year than the heritage energy capability, and
(b) relying on Burrard Thermal for no energy and no capacity, except as authorized by regulation.
See:
http://www.bclaws.ca/civix/document/id/consol24/consol24/00_10022_01#section6
Somehow it’s ok to export to the US and Alberta, but not to import any power.
It’s ok to import oranges from the US but not electricity.
Often times electricity from the US is cheap hydro power.
Note how this policy benefits IPPs in BC.
Note how the CE Act mothballs Burrard Thermal – this is also a benefit to IPPs in BC.
So who wrote the BC Clean Energy Act? The IPP lobbyists!
The BC Clean Energy Act is from the BC Liberal Govt. It’s still there.
I’m sure the BC NDP Govt will soon get around to replacing it.
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plunder capitalism?
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That $291M figure isn’t good. Just think if that could have been profit for B.C. Hydro and put into health and education. gee. well it was put into the health of some one’s private pocket, but……..
good post,, very informative. too bad its not on the front page of the Vancouver Sun.
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The same pirates hit us Norm and burnt down our home and business at Pacific Rim Resort and [entered our property and destroyed] our bridge so that we would lose our refinancing and they could steal our home and campground business in Tofino that we had owned and operated for over 30 years.
The pirates who did this to us were apparently the same ones that you and Rafe Mair and Damien Gillis helped stop from taking BC Hydro:
…We too had no idea what had hit us. We only knew that someone was burning all our buildings, smashing our water and sewer facilities, smashing our gates and signs, turning the municipality and the local police against us and doing all they could to drive us off our land.
A local federal official warned us that “a really big money outfit was after our property” and that we “better watch out..”
They even sent in a US Realtor and Leasing Agent from Atlanta … to pretend he was working for us while he was spying on us and setting us up to be wiped out and taken over by his real client…
[People were] involved in arranging and managing the takeover of, and the arson and vandalism attacks against, our business and property in order to steal our land after we refused to sell out …
…They prey on governments and businesses here in BC and around the world and use their criminal piracy schemes to rob millions and billions from decent working people. They are monsters who should be prosecuted and put in prison for life for their crimes.
I am fighting the same monsters… who have taken our home, business and land using the same criminal tactics as they were using on BC Hydro.
We are praying that BC’s “New Sherriff in Town”, David Eby, will look into our case and return our property to us from BCIMC who now owns it.
It has been a long, lonely painful struggle and 10 years of hell for myself and my children.
Thanks for standing tall with Rafe and Damien and stopping this … from destroying BC Hydro and stealing it too..
Hats off to the three of you. You deserve the Medal of Honour and the Order of Canada for your brave and righteous opposition to these thieves in suits.
I hope and pray that Andrew Weaver and John Horgan will do the right thing and stop Site C and save BC Hydro from bankruptcy and criminal takeover by serial RICO predators…
Best Regards,
John D. “Jack” English, Pacific Rim Resort, Tofino, B.C. (250) 510-9474
…
Note: Comment is edited. I have no ability to confirm the allegations made by Mr. English and I don’t care to be involved in a court case based on another person’s words. But, readers can find them written elsewhere by using a search engine.
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Graft corruption racketeering breach of public trust breach of fiduciary duty collusion complicit?
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Even the justice ministers of the Provincial BC Liberal party must shudder at the way BC Hydro was handled by them. Inexcusable? Let the Liberal justice ministers answer that question. Extra points if they concede to polygraph tests.
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