Interested residents of BC are fortunate to have Rick McCandless explain dark mysteries of public finance. As a former senior official of the provincial government who has only the public interest at heart, McCandless is a well qualified commentator.
His latest “Occasional Paper” is BC HYDRO FIVE-YEAR STATISTICS 2013 to 2018. It includes:
In late August the government finally released the province’s public accounts for 2017/18. The delay in the release was caused by the government waiting to decide how much of the year-end surplus would be set aside to address auditor general’s objection to the use of regulatory accounting at B.C. Hydro.
The decision to prospectively commit $950 million to begin to reduce the balance of the net deferrals overshadowed the reporting on B.C. Hydro’s actual results for the previous fiscal year.
The lack of meaningful analysis may be explained because of the difficulty in understanding the true meaning and import of the financial results.The pernicious effect of deferring revenue and expenditures distorts the financial results. The deferrals are designed to attain pre-determined net income and dividend targets set by cabinet order, as opposed to these results being the difference between the revenue received and the expenditure in the year.
McCandless confirms that in fiscal year 2018, the sales volume of domestic electricity continues on a flat line. In fact, power delivered by Hydro to BC residential, commercial and industrial consumers was greater in FY 2006 than in the year just passed.
Regarding cost of energy, McCandless notes:
In the last five years B.C. Hydro’s cost of energy increased by $534 million, or 49.4%. This was entirely due to a 72.6% increase in the cost of electricity purchased from private power producers.
The amount of water rental paid to the provincial government declined by some 7% due to the cancellation of the Tier 3 rates.
Another part of the analysis would be headline material if corporate media were paying attention to the public interest. Burdens imposed on ratepayers measure in the billions and traditional journalists — including ones who told us for years about smaller sums lost to fast ferries — report almost no part of the news.
To adjust to the decline in requirements B.C. Hydro reduced its purchases of short-term power contracts (reflecting the decline in Trade volumes). However, the commitment to private power producers resulted in a 3,679 GWh increase (34.5%) to this sector, and a 4,200 GWh drop (16.1%) in power from the publicly-owned dams. The decline in owned GWh produced was almost equal to the power from Site C (5,100 GWh).
…during the last five years the payment to the private power producers increased by 72.6%, while Table 3.2 shows that the purchased GWh’s increased by 34.5%. The average price per MWh increased from about $71.20 to $91.40, or 28% (some 5.6% per year).
McCandless summarizes:
The five-year comparison shows that despite a strong economy and significant population growth, the increase in electricity sales of Domestic electricity has lagged considerably. B.C. Hydro has been forced to pay significantly more for private power generation, and curtailed generation from its own dams to accommodate the increase in privately generated electricity…
I cannot explain why this information is not put to the public by institutions that exist to supply news. McCandless circulates his analyses to an extensive list of reporters and commentators so, ignorance of the province’s energy woes is not an explanation.
The Canadian Association of Journalists publishes Ethics Guidelines that includes:
We serve democracy and the public interest by reporting the truth. This sometimes conflicts with various public and private interests, including those of sources, governments, advertisers and, on occasion, with our duty and obligation to an employer.
Defending the public’s interest includes promoting the free flow of information, exposing crime or wrongdoing, protecting public health and safety, and preventing the public from being misled.
Of course, the CAJ code also includes this:
We do not solicit gifts or favours for personal use, and should promptly return unsolicited gifts of more than nominal value. If it is impractical to return the gift, we will give it to an appropriate charity.
We generally do not accept payment for speaking to groups we report on or comment on.
Many parts of the CAJ guidelines must have been redacted when forwarded to certain members of BC’s Legislative press gallery.
This illustrates one of the reasons demand for electricity has been flat and, because solar prices are decreasing while BC Hydro rates are rising, that 12-year trend will continue.
The pictured house is a new one on West Queens Avenue in North Vancouver. There is more than solar power that contributes to the home’s small energy footprint. Smart design and numerous efficiencies are the products of Mindful Homes. Half of the home’s annual electricity requirement is provided by solar panels, even on the rainy North Shore.
Categories: BC Hydro, Independent Power Producers (IPP)
in-sights.ca 
God love ya, Norm. Great reporting.
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I wonder who ownesall the shares in these private IPPs
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Great job as always, Norm. It’s not as though the media haven’t been kept informed. A too small group of us have been collecting the FACTS for over ten years. What B.C. desperately needs – and has for years – are some Norm Farrells in government! Vicki Huntington did a great job but there weren’t enough others to keep her company.
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The IPPs are costing Hydro dearly. Meanwhile, Burrard Thermal, which was costing Hydro $20 million/yr as an emergency standby plant, was shut down. Would have been an ideal backup for the Columbia River Treaty power, negating the need for Site C.
A correction in the article. The price paid to IPPs is now $91.40 per MWh, not GWh.
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Corrected. Thank you.
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Does Canada have a RICO type law on the books?
Would a corruption inquiry affect said contracts?
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is it possible to re-negotiate the terms of payment for private power suppliers ie the run-of-river dams with their gilt edged contracts?
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IPP contracts are secret. We know more about individual deals by following private producers’ reports to shareholders and investment analysts. That’s how I learned that BC Hydro’s contracts with Altagas were for 60 years.
While the public cannot know the terms of these contracts, you can be sure they designed to be bulletproof. Both sides were motivated to prevent future governments from altering the contracts. Meaning the IPP operators and the BC Liberals.
These deals were made by government for philosophical reasons, not business reasons. Their aim was to privatize generation and distribution of power but the western North American market for electricity tanked after the turn of the century.
IPP dreams of getting rich by selling power to Americans shifted to getting rich by selling electricity to BC Hydro at prices that guaranteed profits, reduced risk to near zero and had inflation protection and long terms.
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Had to laugh when I got to the part about this being a new house. It looks like the old ones built back in the 1960s early 1970s. Guess the builders back in the day, had it right the first time. What also makes these houses so environmental is that they aren’t huge. It leaves a smaller foot print and allows water to get back into the soil
I’ve always been of the opinion if each new house/town house was built with a solar panel on the roof, we’d be in much better shape all over the world. Building codes aren’t going to be changed because of course, that would change profits for other corporations.
There is no need for that dam, dam. it would be so much better to be building new schools in the province because Surrey has so many portables, its just ridiculous. If all the workers on Site C were laid off and sent back to their communities and started work building schools, hospitals, seniors housing, affordable and social housing, this province would be in so much better shape and in the end would save so much money.
Everyone keeps talking about the drug epidemic, but the solution, if decent housing to start with. Back in the 1990s, some one wrote, if you’re not crazy when you hit the streets, you will be in a year. No one paid much attention to that and know we live with the mess we do.
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Much time being spent instead today by @CKNW980 on a topic of vital public interest, complete with online poll. Are you afraid of spiders?
The suspense involved in waiting for the poll results must be excruciating for listeners.
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Opprobrium..ah yes the opoiate of the 1984 poli classes?
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A friend, who lives, not too close to a Starbucks, is off grid.
He has solar panels and a small wind turbine and as a last resort, a diesel generator.
He has all the appliances and he is almost self sufficient, with power.
He tells me that if every house in BC, install 300 Watt solar panels, the demand for electricity would drop considerably.
This is the future BC Hydro should be chasing, not mega dams.
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Another great article that truly depicts the mismanagement at BC Hydro. I wish there was a way to force every taxpayer in BC to read this article.
Thanks Norm,
Guy in Vic
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I was informed last week (when I hooked my Solar installation up to the grid) that there were only 1360 such installations IN THE PROVINCE! ie, residential solar to grid installations. Presumably does not include off-grid installations.
When the general public buys on, or there is an incentive to do so (financial assistance?) there will be a much larger drop in demand. Until the government will be forced to charge a royalty for the use of sunshine as a ‘natural resource’.
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