Follow this link and read my commentaries about BC Hydro. Listen to CKNW on Wednesday after the 9am news. I’ll be talking with Jon McComb. ipp-purchases-and-market-prices
BC Hydro has experienced flat demand for more than a decade. Nevertheless, the value of its assets have grown 250% and purchases of private power grew 280% since 2005. Add to this, the fact it has committed to spend another $10 billion or so to build the Site C dam. It is inexplicable.
BC Hydro has three particularly important types of customers. These consumers, all inside British Columbia, are categorized as: Residential, Commercial and light industry, Heavy industry. There are others outside the province but BC […]
At my Tyee article BC Hydro: From Public Interest to Private Profits, a couple of commenters associated with BC Hydro and the Liberal Party dispute statistics. However, the numbers I use are from BC […]
An almost quote from James Boren, “Every Liberal has a right to fuzzify, profundify and drivelate. It’s a part of our freedom of speech…If people can understand what is being said in Victoria, they might want to take over their own government again.”
Leaders cannot keep marching in the same direction simply because they have invested heavily in a particular course of action. Instead, leaders must react to changing conditions and be willing to shift direction accordingly, perhaps even to pivot one hundred eighty degrees if the situation warrants it. This is not a complex direction but it doesn’t resonate with the small minds running government in Victoria. Regarding BC Hydro, they’ve become overly committed to announced policies despite consistently poor results and clear evidence of failure.
BC Liberals claim NDP doesn’t want to talk about their record at BC Hydro. In fact, it is the Liberals who don’t want to talk about the NDP record.
BC Hydro has been managed to deliver billions of dollars in benefits to independent power producers. Had IPPs been left to sell their product to the same free market that BC Hydro trades into, they would have gained 4.9 billion fewer revenue dollars since 2003.
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.