BC Hydro

Private profits but public risks – Updated

The initial part of this article was posted here almost a decade ago.

There is little wonder that British Columbia’s private power producers insisted on long-term take-or-pay supply contracts.

In 2010, according to Vancouver Sun journalist Scott Simpson, BC Hydro’s round of private power acquisitions included purchase prices up to 13.4¢ per KWh plus inflation escalators. (Simpson’s article is no longer available online.)

The Super-Safe, Small & Simple (4S) ‘nuclear battery’ system developed by Toshiba and Westinghouse projects production costs of 5¢ to 7¢ per KWh, less a U.S. federal subsidy of 2¢. And that is only one of many small scale nuclear power options coming into production.

As a result, BC producers recognized formidable price uncertainty in the near and long term and convinced Gordon Campbell to have the public assume all risk of financial losses.

Inflation indexed contracts as long as 40 years [later as much as 70 years], with certainty of high prices and no unsold power, gave private producers billions in risk-free profits, unprecedented in Canadian business.

BC Hydro’s hoped-for export market in the USA disappeared through advances in low cost power generation available to American utilities.

A technology update from respected international journal The Economist:

A global race is under way to develop small-reactor designs, says Paul Genoa of the Nuclear Energy Institute, an industry body in Washington, DC. He estimates that more than 20 countries have expressed serious interest in buying mini-reactors.

At least eight different approaches are being developed, mainly in America and Asia, by an army of 3,000 nuclear engineers, according to Ron Moleschi of SNC-Lavalin Nuclear, an engineering firm based in Montreal. Regulatory and licensing procedures are lengthy, so little will be built until around 2017, he says. But after that the industry is expected to take off. The International Atomic Energy Agency (IAEA) estimates that by 2030 at least 40 (and possibly more than 90) small reactors will be in operation. It reckons that more than half of the countries that will build nuclear plants in coming years will plump for these smaller, simpler designs.

…Engineers of small reactors stress their similarity to proven, existing designs such as those found in nuclear-powered ships and submarines…

…TerraPower, an American firm backed by Bill Gates, thinks it has the solution. It is working with Toshiba to design a small reactor based on a “travelling wave” design. Once kick-started with a tiny amount of enriched uranium, it would run for decades on non-enriched, depleted uranium, a widely available material…

…Mr Gates points out that nuclear power has historically been dogged by five worries: safety, proliferation, waste, cost and fuel availability. “This thing is a miracle that solves all five,” he says…”

Who should British Columbians trust for business judgement? Should it be Bill Gates, the world’s wealthiest man until he put his wealth into charitable work, or a teacher turned politician whose major private enterprise was a failed hotel development?

Regarding initiatives by Bill Gates and Gordon Campbell, one gambles with his own money, the other gambles with taxpayers’ funds.

Gates, by the way is joined in his nuclear investment by Microsoft co-founder Paul Allen and Vinod Kohsla, founder of Sun Microsystems, along with a number of senior Microsoft investors.

2020 Update:

Bill Gates and associates are still in the nuclear game with TerraPower, styled as a nuclear innovation company.

TerraPower seems no longer involved with Toshiba, a company that had a billion dollar nuclear development program ended in France and suffered huge losses in the Westinghouse nuclear program.

TerraPower had agreed with China to proceed with system development but the Trump administration put an end to that partnership.

Commercialization of small-scale nuclear power has turned out to be far more difficult than investors expected a decade ago. Even one of the world’s richest entrepreneurs cannot finance a multi-billion-dollar program with an uncertain future.

But as Bill Gates argued here, the world needs power from sources that do not emit carbon dioxide. Nuclear may play a role in the 2030s but solar, wind and geothermal are viable power sources today.

10 replies »

  1. Hmmm…decisions, decisions! I think I'll take Gates, and hope that his generous nature will see him return some of his fortune, obtained through extraordinary investment timing in the giveaway of BC Rail. I'd settle for some truth from him on the deal too…I'm pretty sure he'd have some background on it being as he's now major shareholder of our railway.


  2. Leah, though I'm confident Bill Gates hasn't lost money on his CN investments he didn't make his fortune “through extraordinary investment timing in the giveaway of BC Rail.” He made the bulk of it through buying the DOS operating system for lunch money from a Seattle programmer, licensing it to IBM for the first generations of PCs and then grafting a poor copy of Apples GUI on top of it for the first few iterations of Windows!

    As to the IPP take or not but pay inflated prices anyway scam, I've been all over that for years, ever since my village looked into small scale hydro for emergency backup only to discover that the water rights weren't even available – having been already obtained for peanuts by someone who is better buddies with the Campbelloids than us.

    Eloise and I at WaterWalk, Peter Dimitrov at Free Speech Canada and even Scott Simpson at the Sun (as well as the SFU author of Liquid Gold) have been all over this. Locally we've pretty well perhaps shut down AXOR at Glacier-Howser, though they are rethinking, it is hard for me to imagine they'll be getting a sweeter deal than they had and they are implying the cost structure has changed and they would expect a higher price for a new submission or power offering.

    As to:

    BC Hydro's last round of private power acquisitions included purchase prices up to 13.4¢ per KWh plus inflation escalators.

    Late spring or early summer of 2010 I checked and BC Hydro was selling surplus power onto the Columbia Grid (not necessarily “Green Rape of River” power as it can't be sorted in the transmission system) for slightly less than 1/2 CENT per KWh!

    I just wish I was fortunate enough to purchase everything I need or want from someone with the business acumen to sell it to me for approximately ONE THIRTIETH of their cost!

    Those LIEberal's and their management skills – but let's face it the idea isn't good business as long as lots of money sloshes around and lots of it winds up in the right pockets, theirs and their friends.


  3. BTW, Bill and Melinda Gates Foundation owned 1.84% of CN, Sept 2010. About half of shares are owned in USA but the two largest shareholders are the Royal Bank and the TD Bank, which together own 10%.

    As far as I can tell, the people with business acumen were the “free enterprise” types who knew that real money depended not on generating power but on generating government backed long-term contracts they could convert to quick cash, and lots of it. A few million placed in influential hands allowed tens of billions of contracts to be written.


  4. Reading your reply and re-reading my comment, I guess I wasn't very clear.

    It was the government of Campbell that came up with the scam that allowed the “free enterprise” types to take advantage of the situation. It of course helps from the Campbelloid point of view that the whole buying high selling low business plan degrades the asset that is/was BC Hydro.

    My use of the term “acumen” was facetious and I meant that everything was working as planned. It didn't make business sense, except in the sloshing of money and where the money wound up, whose pockets.

    It's the same template as the BC Rail scam, devalue the asset or cook the books so it looks worthless then give to friends to save the public from the burden. If all kinds of folks, the right folks, make money in the meantime, all the better!


  5. I understood your intent. My use of the word acumen is also facetious as is my use of the term free enterprise. Yes, the grand schemes for private power, guaranteed with public money, are working well for those who gain rewards up front by spinning off the deals to institutions. The very same guys stuffing their pockets would claim they don't want government interfering with business yet government guarantees make it all possible.


  6. Nice work Norm.

    The DMSR that U of Ottawa physicist David LeBlanc is pushing could be ready for mass production in 5 years at a fraction of the cost of Gates abortion. An early test reactor worked without a hitch for 10 years in the sixties.

    Till then we have the Candu ACR technology which promises to cost under $1B/Gw less than 2 cents a kwh with mass production.

    If Canwest/Gordo had built existing Candu's down at Burrard Thermal using the same money he spent on stockbroker power BCHydro would be the lowest cost energy producer in Canada, BC would be GHG free and we's have a huge export market
    Canwest/Gordo bought the equiv of 1.5 Candu's for the cost of 25.

    Liked by 1 person

  7. Koot, nice summations of several points: how Bill Gates made it, the BC Lieberals business… ahem, 'acumen', and Campbell's deeeliciously simple recipe for stripping BC citizens of it's assets.

    Print up some tee-shirts, will ya?

    The masses would benefit from seeing these two-liner explanations, maybe as ads on buses too? Gotta educate our young-uns somehow, since they keep whittling education back until we're not gonna produce nuthin' but illiterate workers juggling three minimum-wage jobs to keep afloat.

    Liked by 1 person

    • I am left leaning politcally, but the NDP leave me as cold as a corpse. Premier Horgan is nothing more than a puppet for Geoff Meggs and despite the hype and hoopla with Covid-19 the NDP are far from electable.

      When the NDP took power they still did not have more seats than the utterly corrupt liberals and they have done nothing to improve the situation.

      Site C was going to be a boondoggle but Horgan, to save union jobs, did not cancel the Liberal inspired project and now looks like to be a rerun of the FastFerry debacle only a hundred times worse.

      TransLink needs massive reforms but the the NDP did nothing and let the amateur hour metro Vancouver Mayors spend $4.6 billion to extend the light metro system 12.8 km; 5.8 km in a subway under Broadway on a route that does not have near enough the ridership to sustain it. Another FastFerry project times 15!

      Oh yes, Horgan got federal cash for union bus drivers at TransLink to drive empty buses because going on employment insurance was not an option.

      When anarchy spawned across this province the NDP hid from sight, until they picketed Horgan’s house, well he didn’t like that.

      It is Bonnie Henry’s handling of the pandemic, not the NDP that has controlled this dreadful disease and Dix looks far more like a Premier than Horgan.

      The NDP allowed school-boards to throw the grade 12 graduating class under the bus and they know it and their parents know it. They will remember at the polls.

      Horgan’s pandering to political splinter groups, etc. will not gain him the votes he wants.

      I think the NDP will have a hard time to get reelected, because they will try to sell their rehashed platform against a new Liberal one. Too many old political hacks are advising the NDP and the next election may reveal this.

      I will note vote NDP, they are just BC Liberal Lite.

      Liked by 1 person

  8. Please, Gordon Campbell had zero business acumen, he was a real estate developer through Marathon Realty, the real estate arm of the CPR, which sold free land to the highest bidder.

    He learned is shady arts there and as all grifters drifted into politics. With is many business connections and friends he eventually became Premier of BC and in turn paid off his corporate debt.

    He was BC’s Trump, only we did not know it at the time. he became undone by lying once too many times and unlike Trump, the parliamentary system enabled the party to get rid of him.

    He is now radio active politically and his jobs come from corporate debts being repaid.

    Campbell full aim was to rape BC of it assets so the province will always be thrall to big business and overseas influences. He succeeded and has been rewarded like a true Quisling.

    The ruin of river power projects have been so designed to ensure major profits for his business buddies, nothing more.

    Liked by 1 person

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