BC Hydro sold less electricity to this province’s residential, commercial and industrial customers in 2018 than in 2005. The total of 50,472 gigawatt hours in 2018 was also a decline from 2017.
Despite buying less in 2018 than in 2005, consumers paid BC Hydro 85% more, an extra $2.2 billion.
BC Hydro’s sales records show a long-standing record of incorrect demand forecasts. Yet, the utility continues to spin mistruths to BC citizens. This statement — similar to claims made for years — was taken from a BC Hydro webpage on March 2, 2019:
One thing is clear: the demand for electricity is expected to grow –almost 40% over the next 20 years.
Reality is shown by comparing the company’s Electric Load Forecasts to sales noted in its financial reports:
Miscalculation of demand is not accidental. The industry knows better. Despite our new electronic gadgets, North Americans have been using less electricity.
The culture of BC Hydro was established by BC Liberals who used it as a vehicle to reward insiders, friends and financial contributors. The company may be under different direction today, but the utility is like a freight train travelling at speed. Even if a new direction is wanted, the track is laid.
However, with shared norms and values, many in the utility’s senior management desire only incremental change and fiercely resist material transformation. Overcoming organizational inertia is a difficult task.
With thousands of high-paying jobs at stake and billions of dollars of spending each year, resistance to change is natural, inside and outside the company.
But with technologies enabling, even compelling new directions, power companies will alter more in the next decade than in the last century. Only utilities that adapt to a new style will succeed and only utilities that embrace disruption will adapt.
According to the Climate Policy Initiative:
Wind and solar have become established resources for low-carbon electricity around the world. Cost declines for those technologies now allow us a tantalizing vision of the not-too-distant future where electricity is supplied almost exclusively by renewables…
Unless BC Hydro chooses decentralized approaches to supplying energy, market forces will do it for them.
This will not include hundreds of independent power producers scattered throughout BC wilderness areas selling power by very long term contracts at triple market value.
Micro-grids, efficient wind turbines, small-scale solar and new power storage systems will allow production of energy closer to where it is used. Individuals, institutions and businesses will choose more locally provided, sustainable and cost competitive energy.
BC Hydro has become financially inefficient. Root causes include costly private power contracts, wasteful capital expenditures and debt incurred to pay $8 billion to governments in the past ten years.
In December 2005, BC Hydro’s total assets were $12 billion. At the end of 2018, the total was $35 billion and the company has capital spending plans for more than $10 billion in the next few years.
Despite 13 years of flat demand by its regular domestic customers and 17% more capacity to generate power at its dams, BC Hydro bought 77% more electricity from independent power producers (IPPs) in the 12 months of 2018 than in the same 12 months in 2005. The cost of IPP purchases increased $814 million.
Because it was forced to buy private power and export markets were at times non-existent, BC Hydro couldn’t use its own generating facilities efficiently, even though it spent billions on upgrades.
These statistics and other writings here at In-Sights reinforce what expert Ken Davidson concluded in Zapped, A Review of BC Hydro’s Purchase of Power from Independent Power Producers. From his Executive Summary:
Government provided clear direction that moving forward, BC Hydro would not increase its internal generating capacity and was no longer allowed to rely on importing power to meet demand (also known as load).
To add urgency to the process, Government directed BC Hydro to apply new parameters to its energy planning processes. These parameters created the appearance of an urgent need for 8,500 gigawatt hours (GWh) per year of new Firm energy.
As Government had removed the options for BC Hydro to increase its internal generating capacity or importing power to meet demand, this need for new energy could only be met through procurements to elicit proposals from independent power producers. The demand for energy volumes (that was not actually required) and price signalling presented to the market drove prices higher.
This report draws three conclusions:
• BC Hydro bought too much energy and energy with the wrong profile,
• BC Hydro paid too much for the energy it bought, and
• BC Hydro undertook these actions at the direction of Government.
Although the Horgan Government has changed all but three of BC Hydro’s directors, the board has no one bothered by paying an extra few hundred dollars a year for electricity.
Consumers need to demand representation in the boardroom. It has long had an excess of technical expertise and a severe shortage of common sense.