Independent Power Producers (IPP)

Omission of truth becomes a lie

174px-PinocchioIndustry shill Resource Works recently circulated a claim that British Columbia’s power sales reached an all time high and boasted that “fact” should quiet Site C opponents.

BC Hydro’s sales to residential, commercial, light industrial and heavy industrial consumers were less in fiscal year 2018 than in FY 2006 and, unlike figures tossed out by Resource Works, those numbers are tested by independent auditors. But lack of consumption growth for 12 years is only one argument against Site C completion.

Like others urging a shutdown of the hydro dam project, I recognize that demand for electricity will grow slowly over time. However, the cost of alternative power sources is the clinching argument.

Site C power will ultimately cost 11¢ to 15¢ per kWh, perhaps more when damages are ultimately awarded First Nations people when their rights under Treaty 8 are upheld in the Supreme Court of Canada

Meanwhile, the cost of wind power under a recent Alberta contract is below 4¢ per kWh and elsewhere, “the cost of solar power could fall as low as 1 cent per kilowatt hour as soon as 2019.”

Ministry of Finance reports show how the value of hydro power has changed. In fiscal year 2001, British Columbia had revenues from Columbia River Treaty power sales of $632 million ($862 million 2018 dollars).

In FY 2018, BC sold the Canadian entitlement to downstream power at about 2.5¢ per kWh, earning $111 million. In contrast, BC Hydro purchased from independent power producers (IPPs) at an average price of 9.1¢ per kWh in FY 2018. (Some got a rate more than 50% higher.)

In other words, had the province’s Columbia River Treaty  power replaced power from IPPs, the saving would have been about $300 million in a single year.

In June 2018, Postmedia columnist Vaughn Palmer wrote that sale of downstream benefits to the U.S. had “poured almost $1.4 billion into provincial coffers over the past 10 years.” Sounds pretty good, does it not? Except that BC Hydro poured almost $9 billion into IPP coffers over the past 10 years. Not a word from Palmer about that.

Once more, business friendly media lies by omission.

Here is another omission that Postmedia and other corporate properties won’t be revealing.

Revenue comparison

Of course, regular readers know the picture is even worse since unrecorded royalty credits owed natural gas producers increased $455 million in the most recent fiscal year. In real terms, the BC government’s natural resource revenues in 2018 were 37% of the level in 2001, despite material increases in output.

The decline has been moderated by an accounting policy. Until fiscal year 2012 (Hello, Premier Clark), revenue from bonus bids in auctions of natural gas rights was substantial, having totalled $5.4 billion in the preceding four years. The revenue was deferred and recognized over eight years. In 2013, the period changed to nine years and in 2018, to ten years.

The effect is that revenue is being recognized in 2018 from rights sales that occurred in 2009.

8 replies »

  1. Apparently MSM members and Politicians have at least one thing in common. They’re both able to leave their conscience at the door. Yes, there should be a way to make politicians and media accountable. Billions of reasons why.

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  2. As Norm says, Resource Works circulated a claim recently that BC’s power sales reached an historic high in 2017. The data used to support this claim came from the BC Ministry of Finance Government 2018 Financial and Economic Review – August 2018. On page 85 of that review, a table of supply and consumption of electrical energy in British Columbia showed an increase in electrical power consumption in 2017 of 9,124 GWh over 2016. That is almost twice the estimated yearly output of the Site C dam isn’t it? So what explains the massive increase?

    In the 29-year history of supply and consumption recorded in the table, total generation and import has always been exactly equal to total export and consumption. Supply has equaled demand, which is what one would expect, since electricity (so far) can’t be stored in the amounts we’re dealing with here. But in 2017, for the first time, it didn’t. The table shows we used and exported 4,809 GWh more than we generated and imported. How can that be? There may be an explanation, but it isn’t apparent to this layman. If Johnny only has 83,303 apples he can’t eat 72,075 of them and have enough left to sell Rachel 16,037.

    And so last week I asked Stewart Muir, the Executive Director of Resource Works, for help in understanding the apparent anomaly in the figures he relied upon to publish his claim. I’m still waiting.

    Can anyone else explain this?

    https://www2.gov.bc.ca/assets/gov/british-columbians-our-governments/government-finances/financial-economic-review/financial-economic-review-2018.pdf

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    • The quoted Statistics Canada sources report up to 2015 and a search of StatsCan does not reveal data that supports the quoted table.

      I suspect the energy ministry is using the same people to prepare this report that calculated demand load growth during the last many years.

      https://www150.statcan.gc.ca/n1/en/subjects/energy/nuclear_and_electric_power?p=0-All#all

      Bureaucrats are capable of creating any data that serves their purposes but we can only rely on figures that are independently tested. That is why I compare BC Hydro’s financial sales records and the accompanying quantities sold. Revenue is a function of price and quantity so it is relatively easy to spot inaccurate or misleading data.

      Unfortunately, BC Hydro has a track record of being opaque and untruthful when it comes to revealing information.

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      • Thanks Norm. Informative and straight to the point as usual.

        One of the main principles of democracy is the consent of the people. It should go without saying that informed consent is critical. When the government presents false or deliberately misleading information to the people, that condition is violated.

        I expect a government formed by a political party with the word Democratic in its name should be especially concerned with upholding the principle of informed consent.

        Premier John Horgan is ultimately responsible for the information his government provides to the people. He needs to decide if opaque and untruthful will be descriptors befitting his time in office.

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  3. When an uncomfortable question arises about the truth do nothing is official policy. Its so common a move. What else are they supposed to do. Reply into a “disorderly vacuum land” beyond their influence, and lose their identity as an individual?
    But its what they do, not what they say as you’ve remarked.
    So where is the dialogue in this democracy??
    It looks to be just a theory without any questions allowed in a civil manner to be asked about it.
    Its never discussed but always assumed to be a real things for us.
    I don’t even know what it is this democracy.
    I think we are in a situation where the old way people have to die before fresh minds are allowed to speak to be heard. Its a common social phenom in science as well.
    I always thought evolution had something going for it even though it takes more than a long time, and I think that’s what we’re left with for change.
    Young people, and evolution.
    I’m upbeat.
    And I’ve heard DNA is really responsive in the latest science imaginings about our cosmic flux.
    Will it outwit our political consciousness and save us???
    The saga goes on.
    A surprise always is in store for us.

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