Locking BC Hydro into decades-long contracts with private power producers (IPPs) was a colossal mistake that ignored the likelihood of market and technological changes. BC Hydro was forced to make deals lasting as long as 60 years for political, not business reasons.
Years ago, I expected too much of small nuclear reactors (SMRs) as a future energy source. In the past dozen years, there has been little progress in implementing SMRs. That’s not a bad thing. A recent study led by UBC and Stanford researchers reinforces that opinion:
The results show that most small modular reactor designs will increase the volume of nuclear waste in need of management and disposal, by factors of 2 to 30. The findings stand in sharp contrast to the cost and waste reduction benefits that advocates have claimed for advanced nuclear technologies.Nuclear waste from small modular reactors
While costs of utility-scale solar and wind power and electricity storage systems have dropped dramatically, BC Hydro cannot take advantage of these technologies. In addition to paying perhaps $20 billion for Site C, the utility will be paying tens of billions of dollars to IPPs enjoying inflation escalating prices already 3x to 5x the cost of non-destructive green renewables.
You may wonder if the business case for BC’s private power policy was bad, why did BC Liberals create it. The answers include cupidity, stupidity, and old fashioned political corruption. (These same factors are at play in British Columbia’s LNG and natural gas policies.)
About 700 potential entrepreneurs in British Columbia paid attention when Gordon Campbell’s government opened the province to private power. Many understood that political influence would be helpful. That is why there was a race to sign up BC Liberal insiders to help secure BC Hydro, a customer with very deep pockets. With guaranteed long-term supply contracts, risk disappeared and rewards skyrocketed.
BC Hydro is on the hook for Energy Purchase Agreements (EPAs) worth tens of billions of dollars, with details of inflation protected contracts kept secret. Some deals are take-or-pay, so BC Hydro is on the hook whether or not it needs the electricity. The utility can sell excess power but wholesale market prices are a fraction of what IPPs are paid. The only things private power deals guarantee are profits for IPPs and losses for BC Hydro.
I have looked at justifications for BC’s private power policy but I conclude the motivations were greed and right-wing ideology that wants no public enterprise to succeed. Why else were long-term secret contracts designed to be unbreakable.
Ordinary business arrangements are often structured to adjust or end when conditions change materially. Since electricity demand went flat in 2005, more than $15.5 billion has been paid to IPPs and $50 billion more is due to be paid because government decided EPAs would have no clauses for early cancellation.
Simple oversight or a devious strategy? The latter is the logical answer.
In 2009, I asked:
What if new or improved technologies emerge to make energy generation convenient, inexpensive and relatively innocuous? Will BC Hydro still be purchasing high priced private power?
The answer, as an infamous Alaskan politician said, “You betcha!”
It did not take unusual prescience to oppose private power schemes. Beyond the environmental effects, those of us paying attention knew that technology advances in multiple streams at an ever-quickening pace. According to Ray Kurzweil:
An analysis of the history of technology shows that technological change is exponential, contrary to the common-sense “intuitive linear” view. So we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate).The Law of Accelerating Returns
Because corrupt practices of the past are not easily resolved in court, it may be too late to save the billions of dollars that will flow to private power producers. But it is not too late for voters to punish political figures who originated or tolerated this grand scheme. They sit on both sides of the BC Legislature.
You can support In-Sights by following this link
Categories: BC Hydro, Independent Power Producers (IPP)
That's very revealing. Naikun Wind used to be a mining penny stock. Good work Norman!
Here's a link to an interesting page on Powerex's website. Powerex is the electricity trader. The page talks a bit about the role of Powerex and BCTC (the transmission system).
Good link Hugh. Note the BC Transmission Corporation was formed in 2003. It demonstrates that BC Liberals have been working on the power privatization scheme since forming government. The weren't honest enough to take the policy to the public during an election so it is being done incrementally. This demonstrates, again, BC Liberal contempt for democracy.
I added your link to the body of the article.
Norman, thank you for an excellent push forward in the efforts to understand what damage has been done to the province we love.
Damn. Don't you wonder at Fermit the Krog? Why isn't he using his position as Opposition Justice Critic to dig into these matters?
Mary, I'm afraid it is an unwritten rule that causes each of the two parties to pull their punches when it comes to ethics. The shoe might be on the Liberal foot now but it will be worn by the NDP eventually.
Look at the British parliament. Over 100 MPs dare not run again because of the expenses scandals. Both sides of the house knew that fraud was occurring but it took the leak of documents by an angry civil servant to bring the vast robbery to the public.
That code is also why companions of politicians can draw six figure salaries and no one ever talks about the implicit conflict. Or how retired civil servants can draw pensions and be paid for multiple overlapping contracts. Liberals have Lee Doney and the others. The NDP had Bob Williams and the others.
It disappoints me that the NDP has not decided to create a new game of politics, based on open, accountable, honest government that might re-involve young adults who are turned off the old ways.
Very well done Norman…..I really enjoyed the read,very informative, thanks for truth telling.
Mr. Farrell…..I commend your dogged determination to shine the light on those BC Liberal rats festering in dark dank corners…
The comment names, from 2010…Hugh..BC Mary(Mackie)…myself…..
We’ve been at it a long time Norm…..in thinking about the stuff you regularly put out for public consumption…Ross K…Laila…Tyee…a little Straight Goods too..
Just between that small group above…More information, more insight, more scoops, more charts, more analysis….More damn truth and journalism than all our legislative media/Postmedia/Global combined…
We don’t do man bites dog stories and we don’t distort the truth..we don’t post government comments, ministers’s comments, spindoctor’s comment when they are clearly lies, or untruths, if we post a comment we identify the lie, the falsehood…We don’t just quote government spin and leave it hanging, leave it to the public to figure out the lie..