Every year, BC Government and BC Hydro pay tens of millions of dollars to consultants. Some of the best advice available is free, although government pays scant attention to that which does not serve political goals.
More than ten years ago, economist Erik Andersen and famed commentator Rafe Mair warned that BC Liberals had planted seeds of destruction in the bowels of BC Hydro.
Indeed, the seeds germinated, spread invasively and debilitated the once proud utility. Citing five vectors, Andersen concluded the financial position of BC Hydro was headed dangerously downward.
Some excerpts from Rafe Mair’s 2010 article in The Tyee, Economist Calculates BC Hydro on Path to Ruin:
Erik Andersen is a former Transport Canada economist with a long and interesting pedigree of examining the affairs of business and government…
The picture he paints is of a once rock solid Crown corporation placed on the road to fiscal ruin by the Campbell government.
Andersen was asked to examine BC Hydro’s fiscal situation, especially in light of the contracts they have been forced by the Campbell government to enter with Independent Power Producers (IPPs).
Recorded demand: “Expressed in GWhs (what BC Hydro sells) total volume of domestic (inside B.C.) sales went from 52,440 in 2006 to 50,233 units by 2010. After five years at the 52/53 thousand levels, demand dropped away sharply in fiscal 2010.”
...Andersen’s conclusion? “As the evidence of need for more electricity is not apparent, the aggressive borrowing/investing/contracting with IPPs is clearly wrong.”
In the same report Andersen describes, “BC Hydro borrowing/spending (on IPPs)” as “irresponsible of Hydro’s Board and management as it has increased the risk of financial insolvency.”
…The visionary Socred premier W.A.C. Bennett saw that if B.C., with a growing economy, was to compete and prosper, it must have reliable — and cheap — power. He knew that private companies would be concerned with profit only. (He created BC Ferries and BC Rail for the same reasons, both of which have been privatized by the Campbell government).
Bennett developed his “Two Rivers” policy, putting large dams on the Peace and Columbia Rivers. B.C., and especially those who lived in the areas affected, paid a huge environmental price but we got what he bargained for.
B.C. can be power-sufficient for years to come by exercising the conservation projects of BC Hydro, by upgrading existing generators, by placing generators on “flood control” dams and by taking back our power we now export under the Columbia River Treaty. The Campbell government has chosen to ignore these uncomfortable facts, one can only assume for ideological commitment to private power.
By all rules of decency the Campbell government must resign, having, as Andersen’s vectors show, planted the seeds of destruction in the bowels of BC Hydro.
Indeed, what Erik said was correct. Flat demand has continued for another ten years since he drew attention to what BC Hydro didn’t want people to know.
IPP purchases kept growing and BC Hydro relied less on its own generating facilities. Yet the company’s assets and debt more than doubled while it produces less electricity for provincial consumers.
Perhaps most importantly, Hydro’s board of directors, its senior managers and provincial leaders continued to act irresponsibly. Together, the IPP and Site C blunders will result in unnecessary expenditures of more than $30 billion.