Premier Gordon Campbell erred in 2007 when he extracted an oft-cancelled project from BC Hydro’s storage vault. Numerous technical advisors had advised against building another dam on unstable Peace River land.
Engineering issues aside, the $6.6 billion plan seemed plausible when Campbell’s government gave final approval in 2010.
BC Hydro sales to residential, commercial and industrial customers had sagged 6% from two years before, but the utility had an almost 50-year record of rising domestic sales. The company mantra declared that demand for electricity would rise 40% every 20 years. BC Hydro continues using that line regardless of reality.
According to its own records, BC Hydro sold the same quantity of electricity to residential and business consumers in fiscal year 2020-21 as it did in 2004-05.
Corporate inertia may seem an innocuous phrase, but it is not. The expression describes a company that is rigid in its thinking and actions and not open to changing conditions. Without taxpayer support, enterprises of that sort soon disappear.
Appointed CEO in May 2010, David Cobb might have amended the faulty mindset in BC Hydro’s leadership. But instead of a corporate modernizer, politicians wanted a flunky pushing flawed Liberal policies.
Cobb’s view of government energy policy was revealed by a leaked internal conference call. Hydro’s soon to be ex-CEO talked about government forcing the utility to sign long-term contracts for money losing private power:
If it doesn’t change, it would be hundreds of millions of dollars per year that we would be spending of our ratepayers’ money with no value in return. The way the self-sufficiency policy is defined now…would require us to buy far more long-term power than we need… Government has to make a change.
David Cobb knew that zero-growth in domestic demand, soft export markets, and rising inflow of private power would cripple BC Hydro financially. The result would be escalating rates in a province that should have the lowest electricity prices in North America. The severity of the private power disaster was apparent, but people receiving payments were rubbing hands and writing cheques to the BC Liberals.
So the utility boss with a lengthy history of managerial success departed. His replacement was beancounter Charles Reid who showed his Liberal loyalty by making this outrageous statement to BC Business:
We’re predicting a 50 per cent growth in demand over the next 20 years.
After two years, Reid was replaced by Jessica McDonald whose main qualification seems to have been her experience as a close political colleague of Gordon Campbell.
People with a broad and objective knowledge of energy knew the electricity market had changed. Liberals appointees on Hydro’s Board of Directors were either unaware or silenced by politics or self-interest. A paper in the International Journal of Project Management may offer a hint of why Site C had an appeal:
Corruption is particularly relevant for large and uncommon projects where the public sector acts as client/owner or even as the main contractor. Megaprojects are “large unique projects” where public actors play a key role and are very likely to be affected by corruption.
Experts in other places knew conditions had changed. In early 2014, American Council for an Energy Efficient Economy issued a White Paper titled Why Is Electricity Use No Longer Growing?
ACEEE noted that although electricity sales had a long record of rising steadily, growth had essentially stopped early in the 21st century. Experts Steven Nadel and Rachel Young concluded that energy efficiency had become an important factor suppressing consumption of electricity.
While the ACEEE analysis was accurate, it was ignored in British Columbia.
Electricity demand is likely to grow as we decarbonize parts of our future world. However, prudent management of the public interest demands new sources of supply be clean, non-destructive and economically efficient.
International agency IRENA published about falling prices for renewable energy in 2017 and predicted the trend would continue, even accelerate. Again, British Columbia officials paid no attention.
The cost of electricity from renewable energy technologies has fallen steadily, and even dramatically, in recent years. This is especially the case since 2000, with the rise of solar and wind power generation as viable commercial options.
In psychiatry, the word “delusion” means a firm belief in what others know to be false. Despite evidence of massive physical and financial risks, Liberals decided to green light Site C. Not wanting to be labeled anti-development, and having its own friends to reward, BC NDP chose to carry on.
The project that was to be built on shaky ground was justified by reasoning that was delusional.
The challenge facing future analysts is to determine if the delusion was real or convenient for people who expected to gain. Corruption is the abuse of entrusted power for private gain. It plays a part in British Columbia’s energy management.