In the preceding article, I suggested BC Hydro was a sinking ship, ineptly managed. Numbers taken from 25 years of annual reports provide much of the evidence.
Like other electrical utilities in North America, BC’s public utility experienced steady demand growth until about 2005. For decades, system planners believed a growing population would always need more electricity.
Deindustrialization, improved efficiency of electrical equipment and consumers’ conservation and self-generation dictated new thinking was needed. But large organizations don’t readily alter precepts.
Because the utility expected new demand, it was adding capacity to its own generators.
Additionally, by Liberal direction, BC Hydro was signing new contracts with independent power producers (IPPs).
These contracts provided for IPPs to be paid higher prices each year. The payouts were huge.
Mistakes compounded. The utility had too much electricity, too little domestic demand and export markets that offered a fraction of its marginal cost of power.
Since long-term IPP deals had been mandated by Liberal politicians with aversions to public enterprises, the arrangements were a reality unconnected to BC Hydro’s market conditions.
The easy solution to surplus electricity was to lower production at BC Hydro’s own facilities.
The financial consequences of unsound energy policies have impacts, particularly for residential consumers.
But those effects are not yet fully apparent. In 2019, BC Hydro is losing over $100 million a month on operations and spending even more on Site C and other unjustifiable capital projects. Losses are concealed by the continuing use of deferral accounts and million dollar public relations campaigns but those are not solutions.
At BC Hydro, the financial picture is deteriorating and most politicians and corporate media pundits avoid the subject.
Categories: BC Hydro