BC Hydro’s quarterly report for the period ended September 30, 2018 shows the utility is very good at some things. Specifically, borrowing and spending money. In the thirteen years from 2005, assets employed to service BC consumers have almost tripled in value.
The nature of power utilities is that capital expenditure decisions are made years before assets enter service. Back in 2005, BC Hydro was projecting that domestic demand would increase 20% by 2018.
Trouble is, actual sales to residential, commercial and industrial consumers are less in 2018 than in 2005. The flat demand line is firmly established. Yet, like a locomotive operated by a deaf and blind engineer, the company proceeds as if nothing changed.
BC Hydro is a bureaucracy operated to reward a variety of special interests, none of them ratepayers.
Since 2005, the quantity of domestic electricity sales may not have grown but BC Hydro’s ability to deliver power has increased dramatically. The company not only added 16% to its internal generating capacity, it contracted for about $60 billion worth of private power purchases and made plans for capital spending of more than $20 billion in the coming decade, including Site C.
All this has resulted in rate increases of almost 80%, an upward trend that will continue, even accelerate.
Power consumption in British Columbia, excluding below-cost electricity delivered to the natural gas industry and other corporate welfare bums, is unlikely to grow materially in the near future.
Delivering cheap power to favoured users means the utility must charge higher rates to residential and small business consumers but rising prices encourage customers to seek alternatives. These come in the form of conservation, efficiencies and self-generation.
As usual, people with the least ability to shield themselves from rising prices will be the ones to suffer.
Remember the 3% rate increase that was effective April 1, 2018?
Oddly, BC Hydro reports its average revenues of one kilowatt-hour of electricity sold to residential consumers increased 1.8% in the first six months of the current fiscal year, April to September. That could mean sales reported are about $10 million less than we should expect. Another possibility is that unaudited consumption figures are not reported accurately.
The Canadian Entitlement is an issue that BC politicians and utility executives don’t like to talk about. Yet, buried in the government’s 2018 budget documents, is news that sale of downstream Columbia River power will bring in $105 million.
That’s about 2.3¢ per kWh, which is about one-quarter of what BC Hydro pays independent power producers. Had the province taken back the Canadian Entitlement and reduced IPP purchases, our cost of energy would have been reduced by $300 million in the last year.
Categories: BC Hydro