BC Hydro

Financial destruction of BC Hydro

logo 300Simple financial analysis demonstrates that management of BC Hydro during recent years was thoroughly incompetent. Largely, that is explained by policies and people imposed by BC Liberals on a utility that had served the public proficiently for more than four decades.

In the last few years, the BC Liberal Government engaged in equity stripping like one of the most dreadful private equity firms. Dividends were first taken from BC Hydro in fiscal year 1990 when the Social Credit Government of Bill Vander Zalm judged the utility had a distributable surplus and an acceptable debt/equity ratio. From BC Hydro’s 1989/90 Annual Report.

payments 520

Throughout the nineties and for a few years after, BC Hydro was operating with steady revenue growth and authentic profits. Dividends did not cripple the utility but, after 2006, things changed.

liabilities 520

From FY 1992 to FY 2006, BC Hydro’s sales to residential and business consumers increased 28% and its liabilities decreased 1%.

From 2006 to 2017, sales to residential and business consumers in BC decreased 1% while BC Hydro’s liabilities increased 150%.

Financial distributions to the province were only part of the problem. Growing purchases from independent power producers were another element. Remember, demand by the company’s BC customers was flat from 2005 and export markets paid less than half of the unit cost of BC Hydro’s private power purchases.

IPP purchases 520

Nevertheless, private power purchases kept climbing. The commitment to IPPs was one of the dumbest business decision since 20th Century Fox allowed George Lucas to keep all marketing rights for Star Wars.

Liberals might have privatized BC Hydro but they’d suffered political fallout from interminable scandals surrounding Gordon Campbell’s movement of BC Rail into the friendly hands of a major financial backer. Instead, government kept BC Hydro in the public sector but privatized its profits and more.

Categories: BC Hydro

6 replies »

  1. You’d think the mainstream press would be squawking about this. Don’t hear much from them.

    Over $56 billion owed for intermittent IPP power. Hello?

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  2. We live in such a banana republic here in BC that when there is demonstrable larceny apparent and financial chicanery resulting in the bankrupting the crown jewel of BC public utilities. Something past generations built for the PUBLIC good was pillaged in an underhanded way and the public is left with massive debt and the ones that benefited were the financial supporters of the BC Liberal Party. The ones that signed secret decade long contracts for purchases at who knows what price? The ones that shut down the anti money laundering task force right after getting a report about massive money laundering in our casinos and housing market. The ones that said there was absolutely no foreign money problem in our housing market until the outcry was so intense they dropped a tax that had no teeth or enforcement and more loopholes than collective fingers to plug them. The same ones that a week after the election gave the poison pill of a bankrupt ICBC to the NDP/Green team . Christy Clark was our Trump but worse for us in BC basically Fox news owns all the channels and papers. How does a government with so many scandals and so many examples of bad or malicious or incompetent governance still enjoy even 5 percent of public support let alone 38 percent? Because the media lies through omission and treats the party they like with kid gloves. Its called crafting the narrative. The NEo-Liberal Party of BC in my opinion was a criminal organisation that existed to transfer public wealth to a select group of financial backers by dubious policies and shady contracts. I mean who in the hottest real estate market sells land to a donor for a 43 million dollar loss? They are the worst government in Canadian history.

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  3. The disheartening aspect to this lunacy is that there was a belief on the part of many (myself included) that if political power could be wrested away from the BC Liberals, the myriad of problems surrounding generated electrical power in this province could be solved if not greatly mitigated.

    John Horgan has not only eschewed the corrective measures necessary, but has doubled down on the causative factors. And neither he nor his hapless energy minister will step forward and defend their actions in the face of considerable evidence they’ve taken a very wrong turn down a dark BC Liberal street. That reveals an inability to defend, which doesn’t serve them or us well. It could also reveal contempt for the electorate, but I don’t believe they’ve reached that point yet. So how to explain it?

    Mr. Horgan’s government has made some good policy and program moves in the public interest. By and large they’ve been easy decisions.

    But whether it’s Site C, electoral reform, the promised BC Rail payoff inquiry, or more general corruption inquiries, it’s the hard choices they seem to have trouble with.

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  4. it is interesting that the NDP didn’t do much to have a really, really good look at B.C. Hydro and all those IPP contracts el gordo signed with “friends”. Is any one aware if the NDP/Greens tried to re negotiate those IPPs or did anyone begin an investigation as to how they got signed and what those IPPs gave the B.C. Lieberals? One really, really does wonder what went on. In my opinion it was simply a method of giving money to the owners of the IPPs. Of course that does cause me to think what did those owners of IPPs give el gordo and his friends? its a question which needs to be answered. No on in their right mind buys something at less than they can sell it for. I may not like el gordo, but he certainly wasn’t that stupid. So what is the story?

    The fact the NDP has stayed mum on this does have me wondering, is the problem so big they can’t deal with it and took a pass? Why did the NDP go ahead with Site C. It may be politically it was a bad choice, they could loose seats, etc. but then at least some one ought to hve come out and said so. To spend billions more to produce electricity we won’t need is just plain stupid and I don’t think Horgan is that stupid. So what is the deal?

    All of it makes us look like a banana republic.

    It might be easier if the NDP came right out and said, we can only handle so much because its so ugly and this is our decision, I can live with that.

    it would appear the NDP is trying to straighten out ICBC and that looks like it might just work. Now will they tackle B.C. Hydro next or just let it slide.

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