I’ve argued on this website that BC Hydro’s ratepayers are victims of corporate inertia. The company continues to do what it properly did for its first 45 years. Unfortunately, now 58 years old, the company’s failure to adapt puts it on a path of destruction.
Years ago, SFU Professor and private power promoter Mark Jaccard assured us “independent power producers who will lose their shirts — not ours – – if they get it wrong.” In his 2018 retrospective report, government finance expert Ken Davidson concluded that somebody got it wrong but definitely not the independent power producers.
Throughout that time, I couldn’t understand why the obvious insanity of costly private power programs didn’t raise the ire of many citizens. For that, I lay a large part of the blame on radio and Press Gallery pundits. Some had personal interests affecting their points of view and some believed that health of the business coalition party ranked above the public interest.
Politically connected individuals took advantage of citizens’ desire for clean, renewable energy and the Liberals wrote contracts with “lucky firms” that bore no relationship to market prices, guaranteed massive private profits and ensured all financial risks stayed with the public. The contracts in British Columbia last as long as sixty years and allow prices that are as much as 5x market value. In addition, the contracts have annual inflation escalators, a privilege allowed no other commercial segment. All taxpayers get is more power to sell at a loss.
BC Hydro sold less electricity to this province’s residential, commercial and industrial customers in 2018 than in 2005. The total of 50,472 gigawatt hours in 2018 was also a decline from 2017. Despite buying less in 2018 than in 2005, consumers paid BC Hydro 85% more, an extra $2.2 billion.
In early 2014, BC Hydro awarded SNC-Lavalin a contract to design, build, finance and maintain the John Hart Generating Station Replacement Project on Vancouver Island in British Columbia, Canada.
Site C did not proceed through ignorance and stupidity. It was a mean spirited and carefully designed choice to favour special economic and political interests above all others. Residential and small business ratepayers were viewed as powerless consumers who, with sufficient advertising and mistruths, could be convinced to believe Site C was appropriate and inevitable, even a wise choice. The net effect is to remove money from many pockets and deposit it into the pockets of a few.
The BC Government has no business case for Site C. Unfortunately, they also don’t have the courage to terminate this expensive white elephant.
BC Hydro’s quarterly report for the period ended September 30, 2018 shows the utility is very good at some things. Specifically, borrowing and spending money. In the thirteen years from 2005, assets employed to service BC consumers have almost tripled in value. Trouble is, actual sales to residential, commercial and industrial consumers are less in 2018 than in 2005.
Perhaps an even more vile set of falsehoods is BC Hydro’s continuing claims that demand for electricity by its BC consumers has been growing steadily. That has led to excessive capital spending that measures in the billions.
Paul Starr of Princeton University wrote The Limits of Privatization. In the paper, he discusses an effect in which influence on government now comes from the “enlarged class of private contractors and other providers dependent on public money.”
John Horgan’s Government is condoning a disinformation campaign that would make despots of the world proud. And, we’re paying billions because of it. Corporate media is today publishing BC Hydro propaganda under the guise of it being authentic news. An example…
In the current year, BC Hydro expects to export electricity for a price of C$26.50 per megawatt hour. Compare that to the C$91.40/MWh paid independent power producers in the fiscal year ended March, 2018, an amount 28% higher than five years before. Bank of Canada puts inflation at 7% and the average market price barely changed between FY 2013 and FY 2018.
The analysis by Richard McCandless would be headline material if corporate media were paying attention to the public interest. Burdens imposed on ratepayers measure in the billions and traditional journalists — including the ones who reported for years on far smaller sums lost to fast ferries — report almost no part of the news.
BC Hydro and the energy ministry employ many people paid salaries of hundreds of thousands of dollars each year. But, these people don’t work to save ratepayers’ money but to convince customers that the 80% rate increase between 2007 and and 2018 was appropriate and the huge increases still to come are necessary. We’re paying one load of operatives to remove money from our pockets and another load to convince us that all is well and we as the victims should be happy. Monday, I watched a CTV news report that featured a citizen complaining about 25¢ being added to his monthly electricity bill for the Customer Crisis Fund. The consumer would really be angry if he stopped to think about the real losses he and others suffer through malfeasance and mismanagement.
My writings in the past have decried BC Hydro directors and executives surrendering to corporate inertia. Inappropriate rigidity has led to failure in many badly run corporations and it now threatens our giant public utility. But, I now conclude that explanation is too generous to BC policy makers, past and present. We have evidence that shifting energy industry dynamics were anticipated but consciously ignored. Groups with special interests were favoured and fleecing of the public began.
BC Hydro suffers a lack of managerial competence, contempt for fiduciary responsibilities, a disregard for present day energy realities and, perhaps most important, a failure of vision. The first exists because Government turned the company into a politicized utility, with senior managers and board members selected for Liberal Party loyalty, not for competence. As a result, BC Hydro dares not plot a new course with even a hint that recent energy policies have been a grand mistake.
Perhaps that “fantastically large broom” that BC Hydro’s boss Chris O’Riley carries around, will come in handy for these upcoming new NDP-BC Hydro reviews. It should come in handy for sweeping old — or new — problems under the rug.
There is an “extremely high probability” that Site C will be delayed by at least one year according to a comprehensive report prepared by international dam construction expert, E. Harvey Elwin, who reviewed a number of confidential documents obtained by West Moberly First Nations in the leadup to their court application for an injunction to halt work on the project. Mr. Elwin’s report contradicts recent assurances by Energy Minister Michelle Mungall praising BC Hydro for doing “a fantastic job” and claiming the project is on track with its current schedule and budget.
We know Gordon Campbell crafted a story that people in BC should have enough domestic generation capacity to cover the most extreme shortage of water we could imagine. Like any unethical insurance salesman he consciously omitted telling the public what certainty of supply in a highly unlikely year would cost.