When the spending of billions of dollars is at stake, vested interests are many. Not just contractors and their workers are involved. So too are utility managers and senior bureaucrats who give secret advice to governments.
In BC, we know that NDP decision makers were wrongly told that clean energy alternatives to Site C were unacceptably expensive and unreliable. Advisors also pushed the sunk cost fallacy, knowing that people focus more on losses than on gains.
David McRaney examined the latter subject in You Are Not So Smart, a blog that explores self-delusion:
Sunk costs are a favorite subject of economists. Simply put, they are payments or investments which can never be recovered. An android with fully functioning logic circuits would never make a decision which took sunk costs into account, but you would. As an emotional human, your aversion to loss often leads you right into the sunk cost fallacy.
The evidence that self-interest guides decision-making is shown in a Bloomberg article about the resistance of large utilities to net metering:
…In Nevada, it’s worked well. So well, in fact, that NV Energy, the state’s largest utility, is fighting it with everything it’s got.
First, NV Energy deployed its lobbyists to limit the total amount of energy homeowners and small businesses were allowed to generate to 3 percent of peak capacity for all utilities.
Then it expertly argued its case before regulators, who rewrote the rules for net-metering customers. In December it scored a major win: Nevada’s Public Utilities Commission (PUC) imposed rules that not only make it more expensive to go solar, but also make it uneconomical for those who’ve already signed up.
Similar regulatory skirmishes are playing out in dozens of other states, but no other has gone as far as Nevada to undermine homeowners who’ve already installed solar arrays…
Site C proponents claim the project has an economic life that will extend into the next century. To many, that is not an appropriate justification. The Eckert and Mauchly Computer Co. of Philadelphia sold its first UNIVAC 1 in 1952:
The massive computer was 8 feet high, 7-1/2 feet wide and 14-1/2 feet long. It had lots and lots of tubes that dimmed lights all over Washington when it cranked out information.
The machine was inoperable as often as it was running because vacuum tubes needed constant replacement. Not surprisingly, UNIVAC was rather quickly outdated by advancing technology. Today, almost everyone in BC above the age of 12 uses cell phones that have more than 1,000 times the computing power. Half a million of today’s phones use less power than a single UNIVAC.
People outside utilities see massive changes pending for energy creation. The Guardian published Let the people lighten energy load with citizen-owned schemes:
The potential for citizen involvement in electricity production is considerable. A recent study showed that by 2050 half of all Europeans could produce their own electricity either at home, as part of a cooperative, or in their small business. Counting generation from wind and solar power alone, these small actors could meet almost half of Europe’s total electricity needs.
Even more people could support the energy transition, and share in the benefits, by storing power in batteries, electric vehicles and smart boilers. This enables the grid to draw power when it’s cheap and plentiful, and temporarily lighten the load if there’s a peak in demand.
The coming shift in power distribution is referred to as the democratization of energy. It is resisted at BC Hydro and other utilities but it is inevitable. Failure to adapt will cost us billions.