Industry 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.
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.