BC Hydro’s Exploding Debt – Accident or by Design?
Mysterious foreign corporate interests are directing our provincial energy policy, as BC Hydro prepares to buy yet another round of discredited private power contracts.
Recent articles about some of the wrong-headed thinking by our government that has put BC Hydro in financial harm’s way, suggest that it has just been a matter of over-enthusiasm and nothing more sinister. It is almost a description of our government as a victim that needs our sympathy not our ridicule – or worse.
Ask yourselves if it was prudent of BC Hydro to recently borrow and spend $10 billion, presumably increasing its capacity to do business, knowing that the global economy was in disarray?
Prior to 2008 publicly available indicators showed commercial/economic global affairs were in trouble. It is not unreasonable to expect those who we pay very well to know about these developments and rein in their more bullish instincts. This is called looking after the public interest. Out of the many such “situational indicators” we all have access to, take a moment to look at one – the Baltic Dry Cargo Index, the 5 year chart. The index plummeted by 94% between a record high in May 2008 and December 2008, when it hit its lowest point since 1986. This should have sent a powerful warning to the people forecasting our future energy demand.
BC Hydro’s most current forecast shows they expect the domestic need for electricity will become 64,000 GWhrs by 2017. GWhrs are the units of electricity their forecast uses so just think of them as units of useable electricity for discussion purposes. Now, most people I know, acting in a common sense way, would test this outlook against the best possible evidence of real demand available. Since the financial peak of 2008, BC Hydro’s record of sales shows demand collapsing, both in total and on a per capita basis. This reality has yet to be recognized by the “smartest guys in the room”. So for at least three years our Government and BC Hydro have been in denial of reality.
In fact, even as recently as this week, it emerges that BC Hydro is planning to buy even more private power contracts, through a 2,000 GWhr clean power call (see page 9 of Hydro’s 2012 Draft Integrated Resources Plan); at the same time we learn that Alterra Power intends to take another run at its controversial mega-IPP in Bute Inlet, announcing a deal with the Sliammon First Nation to build transmission lines for the project.
So, over the last six to eight years how much new debt has BC Hydro taken on in your name, as a citizen and owner; do you know or care? Besides the formal amount of $8 billion in new total liabilities it has added $2.2 billion of receivables from the ratepayer’s category. BC’s Auditor General reports that it looks like this category is programmed to balloon even more. These obligations do not take into account the present value of the secret IPP contracts that would probably add another $30-40 billion to total liabilities.
In the face of evidence that no new electricity generation is needed in the foreseeable future, BC Hydro is presenting a story where it sees the need for 14,000 new units by 2017, not that far off. In terms of new borrowing and spending what does this mean? If we use the values associated with the Site C project, each new unit of useable electricity comes with a capital requirement of about $2 million. Your government/public corporation is planning to contract for or directly finance new generation that will produce a new liability of about $30 billion by 2017 and double that by the end of the forecast period.
You may ask, where does this insanity stop? What motive could possibly explain this outrageous mismanagement of our public asset?
Perhaps the explanation lies outside of BC. In 2006, a new corporation came into existence in the US, dubbed the “North American Electric Reliability Corporation” (NERC).
This corporation has the legal mandate to impose its will on all North American electricity producers. This will is a legal right to levy fines of consequence on those producers not obeying instructions. This corporation is not beholden to any elected body, nor does it disclose its beneficial owners. Our federal government has accepted this reality by having the National Energy Board sign a memorandum of understanding with NERC, in the fall of 2006. NERC’s most recent annual report affirms it now has “ENFORCEMENT” powers in Ontario and New Brunswick. NERC has been and is active elsewhere in Canada, furthering its restraint of trade objective which certainly does not look as serving the public interest of BC citizens.
The forgoing is not something both the BC Government and BC Hydro would have been ignorant of, which makes knowing of an act of complicity.
Most people have memories of Enron Corporation that are generally uncomplimentary of the folks in charge of it. Some of the more prominent of these people are still around. It might amuse you to read what is essentially the Enron oath of office. It serves to illustrate the difference between the “talk and the walk” for some people.
The following quotation is taken from the 1998 Annual Report by Enron:
RESPECT: We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness, and arrogance don’t belong here.
INTEGRITY: We work with customers and prospects openly, honestly, and sincerely. When we say we will do something, we will do it; when we say we cannot or will not do something, then we won’t do it.
COMMUNICATION: We have an obligation to communicate. Here, we take the time to talk with one another … and to listen. We believe that information is meant to move and that information moves people.
EXCELLENCE: We are satisfied with nothing less than the very best in everything we do. We will continue to raise the bar for everyone. The great fun here will be for all of us to discover just how good we can really be.
Don’t for a moment think that juvenile insincerity is limited to the US when the smell of big money is in the air. The time has long passed for being apologists for the folks who are determined to help others get control of our best provincial asset and the business monopoly that is attached.