BC Hydro

From Erik Andersen

In private emails, a number of people with expert economic knowledge exchange ideas about energy in BC. I get copies of some. This example, written by respected and retired economist Erik Andersen, refers to electricity markets in BC:

This is a presentation of what’s called  a “coffin corner”, running out of flying speed and altitude at the same time.

I simply cannot understand people who are determined to avoid the evidence that we in North America have been both losing the financial capacity to be consumers at the same time electricity from renewable sources has been getting less and less costly, even to the point that GE does not see a commercial future for its large hydro generation machinery.

While the official annual rate of inflation has been steady at between 1-2%, the rate fails to include services related to governments that have been increasing at 5-7% per year for more than a decade.

In 2014, French economist Thomas Piketty made it incontestable that concentration of global wealth was the enemy of democracy. In other words, he feared loss of an economy that shared well enough to allow the normal open market forces to work at all.

Wealth concentration is the same as a monopoly over everything and, taken to its present extreme, makes more and more goods and services unaffordable for a growing proportion of the population.

The buy side of the domestic electricity market is the casualty, even though technology is developing to over come this condition, not just fast enough.

plutocratsThere is an important warning here for all of us. People who profess to believe in free markets do not want free markets. They want an economic system that works to their own advantage.

If that means using the power of the state to pick our pockets of cash, they’re OK with that, if the cash ends up in their pockets.

With citizens distracted by celebrity news and reporting designed to serve interests of the plutocrats, the schemes are successful with surprising ease.


Forbes, November 13, 2017, about GE:

In terms of divisions, power looks to continue to be a black hole; organic revenues may decline double digits and operating profits may fall by a quarter. 

GE and Siemens: power pioneers flying too far from the sun, Financial Times, November 12, 2017:

The two industrial titans are struggling to cope with the disruption to their business models from wind and solar…

GE to shed 12,000 jobs worldwide as demand for traditional power plants drops, CBC, December 7, 2017

“This decision was painful but necessary for GE Power to respond to the disruption in the power market, which is driving significantly lower volumes in products and services,” said Russell Stokes, head of GE Power…

Categories: BC Hydro, Economics

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8 replies »

  1. In November of 2015 BC’s Energy and Mines Minister Bill Bennett stated that when he became minister in 2013, BC didn’t need the electricity from any more IPPs and that was still the case. (22:30 to 25:00 minute mark)
    https://www.cleanenergybc.org/the-untold-stories-of-bill-bennett

    He was right of course, but it raises the question of whether BC ever did need that electricity and whether the government’s legislated insemination of the industry was artificial. Mr. Bennett helps out in that regard as well:

    “…while government has used BC Hydro to ‘foster the growth’ of the industry by buying electricity from IPPs at higher prices than could be obtained elsewhere, ‘we can’t afford to do it right now. That’s just a fact of life’.” http://www.vancouversun.com/technology/Bennett+reassures+IPPs+future+regardless+Site+decision/10296461/story.html

    So according to their own Energy Minister, the BC Liberals deliberately used BC Hydro to grow private corporations by buying electricity at higher prices than could be obtained elsewhere.

    As Norm has illustrated many times and in many forms, it’s also a fact of life that despite Bennett’s belated and telling recognition that “we can’t afford to do it right now”, BC Hydro continued on his watch to purchase unneeded IPP electricity at an exponential pace (which continues today), using borrowed money that our descendants will still be paying off many years hence. Not to get citizens needed electricity at the best price, but to grow private corporations.

    But we’re not supposed to worry; the brain trust that conceived this travesty proudly announced in this press release they cleverly shaved a whole $8million off the billions wasted.
    https://www.bchydro.com/news/press_centre/news_releases/2016/ipp-contracts-letter.html

    Good thing they didn’t have anything to do with planning Site C. What’s that you say…?

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  2. From the Victoria Times Colonist Jan 2017:

    http://www.timescolonist.com/business/b-c-hydro-debt-puts-credit-rating-at-risk-1.8588424

    “A top investment firm continues to sound alarm bells about B.C. Hydro’s finances, saying the Crown electricity provider’s rising debt level is a risk to B.C.’s credit rating.”
    ……

    “But projects like Site C are pushing up B.C. Hydro’s debt levels, and adding to concerns about the province’s overall “high debt burden” compared to its peers, Moody’s also wrote in its credit opinion. B.C. Hydro’s debt has increased from $8.1 billion in 2008 to a projected $18.1 billion last year, and there is a further $20 billion expected in the future for infrastructure projects, a $2-billion annual upgrade program and the Site C dam.

    “The anticipated increase in debt continues to pressure the province’s rating since it raises the contingent liability of British Columbia,” wrote Moody’s, which has expressed similar concerns the past three years. Hydro’s debt is ultimately backstopped by taxpayers if the situation worsens, noted Moody’s.

    Hydro does have the flexibility to raise electricity rates to pay its debts, but its finances are nonetheless “among the weakest of Canadian provincial utilities,” said Moody’s.”

    The cost of Site has grown from $6 billion to $8 billion, now at $10.7 billion.

    Imagine a pile of money containing $1 million. Then imagine 10,700 of those piles.

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  3. BC Hydro’s finances are “among the weakest of Canadian provincial utilities,” said Moody’s.”

    How can that be? They have a fricken monopoly on electricity! They have infrastructure that is already paid for.

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    • Your comment demonstrates how badly mismanaged BC Hydro has been during its stewardship by BC Liberals. These folks claim they were a business-friendly government; what they really were was a crony-friendly government. That’s why they put unqualified politcal hacks in charge.

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  4. I guess being on the hook for over $56 billion for overpriced IPP power purchases might just crimp their fiscal picture somewhat. Gee, I wonder.

    Imagine a pile of money containing $1 million. Then imagine 56 Thousand of those piles. Pile of money, as far as the eye can see. All going to IPPs.

    Then add $10.7 billion for Site C…..

    Good grief.

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  5. Quote from Premier Horgan, Jon McComb interview today:

    “If we complete the (Site C) project we pay it down over a 70 year period, and at the end of construction we’re going to have a place to generate electricity, and more importantly, have capacity to bring on more renewables.”

    What, $56 billion for over-priced IPP power purchases by BC Hydro is not enough?

    This is what Brad Bennett, former Chair of BC Hydro said Site C was about.

    At 3:20 minutes.

    https://globalnews.ca/bc/program/the-jon-mccomb-show

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  6. B.c. hydro was originally created to do 2 things: provide power for kitimat smelters,ab clear out the swarm of ripoff artists running private power co’s whose pricing and collection tactics were usurious,extortionate and part of some serious criminal landgrabs. For more than 50 years,b.c. had the cheapest,most reliable power IN THIS COUNTRY, and better than most of the u.s.. In 16 years,that has been driven off a cliff. The scavengers have found their way in again. Check out photos of leech infested spawning salmon on quadra island(cbc, today)for an EXACT visual analogy of todays b.c. hydro, and for the forseeable future.

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