BC Hydro

BC Hydro: your primary role is NOT asset builder

Informed citizens often exchange information that deserves a wider audience. Here is part of an exchange about generation and distribution of electricity. It began with this:

When the Grid with all generators is under one ownership (like the old Ontario Hydro days) things are under good control because generation, transmission lines and load control are under one house.

Yes, there is a negative side to it (monopoly) but believe me, the technical side is under good control.

Well, then there was the mood with politicians to end the monopoly and “de-regulate” electric energy. Everything was split up; grid company was separate, generators were separated and so on.

The loser here is the stability of the grid…

Economist Erik Andersen responded:

Essentially there is a need to make critical and efficient supply side decisions to control the whole at one place. That has been the rationale behind the creation of natural monopolies and Utility Commissions were to ride herd to look after the public interest.

This model has worked in places in North America but over the past 100 years has not worked correctly in all places. New York, probably one of the oldest NA cities to electrify , has customer rates 4 times greater than Montreal. Both cities lived through the same time period and had access to the same technologies yet the rate gap is huge.

Utility Commissions are made up of industry insiders, who, being human, are obliging to their friends. The patch-work of rates in NA suggests that politics has had the greatest influence rather than technology and a balanced market.

What should be, as you suggest, is in many places not so and BC is one example.

We know Gordon Campbell crafted a story that people in BC should have enough domestic generation capacity to cover the most extreme shortage of water we could imagine. Like any unethical insurance salesman he consciously omitted telling the public what certainty of supply in a highly unlikely year would cost.

We know from the Auditor General that BC Hydro had $58 billion of contractual obligations in 2016, plus $6 billion of other payables known as regulatory assets, plus another $10.6 billion for Site C , plus $22.8 billion of long-term debt , plus $4.1 billion of current liabilities.

This total of over $100 billion is 10 times greater than the BCH total liability condition in 2005 yet in the same period there was no increase in domestic demand, as measured by reported sales.

Most professions in my experience would take legal action against such unethical misconduct, but no, they and the NDP are looking for ways to skate by the issue like happened with Enron.

This story is not BC unique so it is little wonder people are now looking to technology to see if there is a way of escaping the tyranny of abusive monopolies. It is my opinion that folks will learn to manage their electricity needs so as to conform to its availability from green sources.

Long ago I learned that there was little point to deploying a big jet if it was you just imposing your requirements on the market/customers . We used to call those airlines who practiced this kind of business “legacy carriers”. It was not a term of respect but rather one of disrespect.

Large electric utilities are like those “legacy carriers”; some will remake themselves, like Air Canada did, but blow away all their retained earnings before doing so, and others like PanAm will fade away, leaving financial wreckage in their wake, Enron style.

Roger Bryenton added:

My observation, is that these utilities were stuck in the old paradigm of “we supply power”.

They were slow or refused to accept that intermittent sources were “legitimate” power supplies, and thus did very little other than try to manage intermittency, and not very effectively. They did not see themselves as facilitators and integrators.

Nor does BC Hydro even today. According to them, conservation was, and still is, not a valid power management and supply option. Otherwise, why spend billions on new supply?

Over 40 years ago I helped sponsor a demonstration project with load management integral to the supply. We prioritized the loads: lights, computers, then fridges, then other appliances, and lastly electric ovens, clothes dryers and finally water heaters. We managed the 30% plus “peak loads” by reducing them, instead of adding unneeded peaking.

Thus I would observe and possibly criticize the large utilities for “managing” by overbuilding, and not really managing. Utilities are very good at building and grossly over-spending, eg BCH burns through 30% of revenue, finding ways to squander our bill payments.

BIGGER IS BETTER. REALLY BIGGER IS EVEN REALLY BETTER!!!

Thus the problems were not in supplies of renewables with intermittency characteristics, but in not supplying current and progressive thinking, and solutions, to the non-problem of supply and grid stability. \

Diligent conservation programs ought to have been implemented earlier. That is “the problem”. With new attitudes, utilities, including BC Hydro, need to adapt to the paradigm of integration and facilitation.

Their focus on the asset building role must change.

wind turbines

Categories: BC Hydro, Site C

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8 replies »

  1. Interesting observation. Something of note is the accrued interest debt. Only one question.
    Is there going to be an end to deferring debt into the far away distant future so that dividends will be paid into the Provincial General Revenue coffers annually?

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  2. That is a very interesting question. Norman gave us the total of dividends , water rentals etc for the past 12 or more years, about $12 billion, and I believe the Government showed its intention to take several hundred million this year, don’t think it looks too promising for BC Hydro customers.

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    • Agreed.

      Attorney General David Eby and former RCMP Deputy Commissioner Peter German have shown that much of the cash coming into government was dirty money from casinos, property transfers, luxury vehicles and sales and income taxes arising from the economic stimulation provided by criminal resources.

      Eliminating or reducing that flow of funds will burden the treasury. Ordinary citizens will have to pay the difference, whether through higher taxes or higher utility, insurance and other rates.

      Liberals fell in love with the revenues from gaming and illegal activities. That left them paralysed when it came to ethical questions. The current government ought not to fall into the same trap.

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  3. I thought for sure this Post was going to be on why BC Hydro makes ‘donations’ to municipal and special interest groups when the money comes from ratepayers from across British Columbia

    1) BC Hydro: Generate Opportunities (GO) Fund

    2) Clean Energy Project: In the Community

    3) twenty years and 300,000 trees regreening later

    4)BC Hydro Power Pioneers

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  4. Well I guess the Liberals were planning for the unborn to pay the debt. They sure don’t have a voice now to speak up with. Safety move.
    The young nowadays are born into a debt economy. Hardly a way to prosperity when our prosperity was achieved in a zero sum begining. The forests, fish etc.
    Their zero sum is with the social media/internet possiblities open to anyone.
    I think the real issue is that critical thinking isn’t considered to be an issue for who we are of any age.
    Hydro just sums up this anarchy.
    Always refreshing to read “Insights”, and its never a social disappointment.
    Hugh

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