During their tenure, BC Liberals declared increases in private power purchases and aggressive expansion of BC Hydro assets were needed to meet growing demands by consumers. After 2005, electricity sales mocked that claim. So, the politicians asserted a need to serve North America by supplying clean energy. Others were better equipped to apply new technologies and they didn’t believe BC’s river damaging energy was particularly green. The goal changed again, to powering a trillion dollar LNG industry that would add $9 billion a year to the public treasury. When that was revealed as fantasy, Liberals suggested BC could provide clean energy to enable Albertans to harvest dirty energy from bituminous sands. Recently, Christy Clark said the Site C dam was needed to flood the Peace River valley as a measure to prevent flooding of the Peace River valley. The Premier needed a new justification for building the dam after it became clear that plans to sell to Alberta were as realistic as paying off provincial debt with natural gas revenue.
Listen to the audio from my August 2 conversation with CKNW morning man Jon McComb.
The mainstream media, as is to be expected, is largely parroting the government’s cover story and ignoring the real problem: BC Hydro and its ratepayers are in a world of hurt because of 12 years of very deliberate and disastrous BC Liberal Government policies, pushed on the public utility.
“Conservation is the cleanest, easiest and least expensive way to meet the increasing demand for electricity in B.C. – it’s like building a virtual dam.” – Bob Elton, BC Hydro President and […]
In 2001, for each dollar of assets, BC Hydro had 63¢ in electricity sales. In 2016, the number fell to 17¢. BC Hydro sold more electricity to residential, commercial and industrial customers in 2005 than the utility did in 2016. BC Hydro did that with assets worth 40% of today’s value. Shockingly, the company is embarked on a program of capital expenditure that will add about $15 billion to its list of assets. By any measure, the management of BC Hydro has been a colossal failure, incompetence made worse by chicanery and flawed policy objectives.
In the last five years, the delivery of cash to IPPs totaled $4.6 billion. If the established trend continues, the amount will be $8.3 billion in the next five years. Amounts flowing to IPPs and the necessary write-off of more than $6 billion in deferred costs means in the next five years, consumers will pay rates 60% higher than they’ve paid in the last five years. In addition, more than $10 billion dollars is committed to Site C and BC Hydro has been spending over $2 billion a year on capital expenditures. Without profitable new markets – none are anticipated – the 60% price rise for electricity could be 100% in the foreseeable future.
The following excerpts are from a piece in DeSmog Blog. It is written by Martyn Brown, an articulate commentator on public affairs and, years ago, Premier Gordon Campbell’s Chief of Staff. The linked piece is the fourth of four parts about B.C.’s climate action plan. The entire series is worth the time of anyone seeking a more complete understanding of the intended and unintended directions of BC’s current energy policies. It is excellent work.
Politicians assumed that power demand would grow and prices rise so they readily agreed to BC Hydro purchase contracts that were decades long with annual price escalation tied to inflation. They carelessly assumed the arrangements would be beneficial to all. However, what private industry achieved was guaranteed sales with guaranteed profits. All of the financial risks were carried by the public.
Had IPP’s sold their power for the same price that BC Hydro realized in trade markets, they would have realized:
In FY 2015, $591 million less;
In FY 2016, $782 million less.
The deals will get better for IPPs. BC Hydro’s website now announces that it has contracted for 19,290 GWh from these private producers. That is 35% more than purchases in the just completed fiscal year and follows an established trend.
The BC Liberal government pushed hard for a controversial expansion of the power grid into the northern wilderness, at a cost of more than $800 million. The Northwest Transmission Line was built to enable resource developments but Imperial Metals’ Red Chris and an AltaGas hydro project are the only major players on the power line grid. Red Chris would not be feasible without the extension of the power line and the $886-million expenditure “appears increasingly as a public subsidy for a single mine.”
Comparing CY 2007 to CY 2015, domestic power consumption declined 4%. But, the amount paid IPPs increased $762 million or 167%. According to BC Hydro, the per gigawatt hour price paid IPPs in the quarter ended December 2015 was $91,422. In the same period, the average MidC wholesale price was $44,212 Canadian, well under half the amount paid IPPs in British Columbia.
Locking BC Hydro into decades-long contracts (as much as 60 years) was a colossal mistake that ignored the likelihood of technological change. The cost of utility scale solar and wind power has dropped dramatically in recent years. As a result, BC Hydro will be paying tens of billions of dollars extra to private producers enjoying inflation protected prices far higher than alternative options.
The decision to proceed on any run-of-river project should be made after the most stringent environmental assessments and cumulative impact studies that are possible, as well as an assessment of where there may be lower environmental footprint alternatives for producing power. All of the most stringent environmental assessment and forest practice standards that exist should be applied to any clearing of forested land connected with any activity, including run-of-river power projects.
In the three months ended December 31, 2015, BC Hydro BOUGHT 3,719 GWh from private electricity producers at an average price of $91,422 per GWh (total $340 million). In the same quarter, BC Hydro SOLD 3,493 GWh to heavy industry at an average price of $54,394 per GWh (total $190 million). Liberals claim themselves to be wise managers of public finances.
The applicants do not need money or experience, they simply need political influence with BC Liberals. The energy purchase agreement provided by BC Hydro removes substantially all business risk and the favoured recipients take the project to money brokers who readily fund it because the creditworthiness of British Columbia stands behind each EPA. This would be like you and I buying a house we intend to rent to government through a 40 year lease at double or triple market rates, with payments escalating to protect against inflation, guaranteed by taxpayers of British Columbia….
An old expression says, “You scratch my back and I’ll scratch yours.” The maxim doesn’t require rewards for scratching be equal and, often, they are not.
According to Elections BC, AltaGas Ltd. and associates contributed a little more than $70,000 to the BC Liberals. It’s been money well spent… At $110,000 per GWh, AltaGas’ revenue from BC Hydro would be worth $143 million in 2016…
…The changeability of the future suggests to us that megaprojects are becoming less of a credible answer. They are a huge capital drain and carry a great deal of financial risk.
…We also know, better than ever before, that no means of generating electricity is environmentally benign. Hydroelectric dams can flood large areas of land and can impact aboriginal people and their lifestyles. Fossil-fuelled generation creates sulphur dioxide, nitric oxide, carbon dioxide and greenhouse gases that impact global warming and deplete the ozone layer…
One even more significant source of “supply,” in one sense of the word, is demand management or energy conservation — and it has dramatically fewer or nil environmental effects.
…demand management is much more than a good deal for the environment. It’s also a great business deal for Hydro’s customers. Furthermore, this is not a bridge or a “quick fix” until the next supply stations can be built…
…In broader terms, Holm emphasized, “The land to be flooded by Site C is capable of producing high-yielding fresh fruits and vegetables for over a million people.”
…Much like the Liberal Government did to the BC Utilities Commission – barring the public’s independent energy watchdog from reviewing the economics and need for Site C – it has also stripped the Agricultural Land Commission (ALC) of its lawful oversight of the biggest potential land removal in its history.
…Beneath the 15,000-page reports, the political shenanigans with the review process, and all the rhetoric about economic development lies a simple truth: Last year, BC generated about 110% as much electricity as it needed, but produced, at most, 48% of the food it consumed. In other words, while we have plenty of electricity to power our homes and businesses well into the future, the same thing cannot be said about our food security…
I’ve been reviewing more than 20 years of BC Hydro records and they show gradual growth in electrical demand until 2005. Subsequently, there has been no demand growth; in 2015, domestic power sales were lower than ten years before. What did grow were Hydro’s purchases of electricity from independent power producers. In calendar year 2006, 5,636 GWh supplied by IPPs cost $368 million (6.5¢/KWh); in 2015, 14,418 GWh cost Hydro $1,217 million (8.4¢/KWh).
A 155% increase in the volume of IPP purchases is alarming by itself given the lack of need for it but the average unit price has been rising steadily. In the 4th quarter of 2015, IPP unit prices were 9.2% higher than the preceding quarter. To accommodate power coming into the system, BC Hydro had to choose between shutting down their own capacity or dumping power in markets outside BC at well below cost…