Evidence shows no need for Site C Dam: Economist to Energy Minister

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Energy Minister Bill Bennett
Energy Minister Bill Bennett

Dear Minister Bennett,

I know you have heard it all so I guess it is now all about the legacy you and your cabinet colleagues are willing to create. Thinking in terms of demand for electricity in BC, the reported record of sales by BC Hydro has flat-lined at about 50,000 GWhrs between 2008 and now. BC Hydro reports sales for four categories of customers.

Even with a 1.2% annual population growth, as estimated by BC Statistics, sales on a per capital basis are have been trending lower. It is a fact, long denied by the executives of BC Ferries, that higher rates cause demand to shrink. Known as price elasticity, customers start searching for ways to reduce consumption right up to the extremes of going off-grid or moving out of BC.

Light industrial and commercial customers are doing the same.

Large Industrial customers started reducing their demand in 2006 when the annual sales for this category was 16,428 GWhrs. By Fiscal 2014 reported sales were down to 13,994 GWhrs, a drop of about 14%.

Where reported annual sales go berserk is for the “Other” category. In 2006 sales to “Others” was reported to be 1,838 GWhrs with about 2,000 GWhrs being the annual total until 2013 when it spiked to 7,417 GWhrs only to crash in 2014 to 2,558 GWhrs. Until there is disclosure as who are the “Others” in BC , inclusion of this category, in making up any demand outlook, is irresponsible. The Auditor’s notes suggest that in fact sales to “others” are sales to customers outside of BC.

What is blinding obvious from these numbers is that BCH already has or has access to the generation of 125% of the projected output of Site C. One could speculate that with what BCH already has they have the existing condition that saves an expenditure of $8-10 billion.

Creating a story about growing future demand for electricity in to engage in self-delusion. In-spite of BC Hydro spending billions and contracting for tens of billions more, over the period 2006 through to 2014, reported total domestic sales (including the dubious sales to “Others”) have been stubbornly stuck at 52/53,000 GWhrs. Growth in total revenues is only coming to BC Hydro by rate increases, not increases in demand.

There is a vast difference between need and want. Since there is no credible evidence of need for more electricity in BC, in the foreseeable future, Site C is only an expensive indulgence serving the interests of the construction industry but at a big cost to BC citizens who ultimately shoulder the financial liabilities of BC Hydro follies. It is ironic that all BC Hydro customers, other than residential, operate with limited liability status so they could care less if BC Hydro is crippled by excessive liabilities, yet they are the customers it seems the government listens to most closely.

Sincerely,

Erik Andersen

Hydro-demand-graph

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About Erik Andersen

Erik Andersen is a retired economist who practiced as a transportation economist with the Canadian Transport Commission; with Airports Branch, Transport Canada; with ICAO and at private corporations such as Pacific Western Airlines. More recently he has been lobbying Federal Ministers to reform the way Canada Pension Plan Investment Board invests pension funds. He has been using his talents of late to expose the calamitous fiscal impact of private power companies on British Columbians.

11 thoughts on “Evidence shows no need for Site C Dam: Economist to Energy Minister

  1. When BC Hydro offered the power from the Mica Dam at fire sale prices to California because they had an abundance, even trying their best to undercut Washington’s sales to California and on top of that, use their own grid, makes no sense. A few years later, they pushed through WAC Dam , what on earth do we need a third Dam? How much power do they wish to sell to our neighbors? If BC Hydro can offer California low rates, why not BC residents as well? you have already destroyed entire landscapes, starving thousands of Big and Small wildlife by destroying the critical habitat needed for their winter survival, and hundreds of thousands of pristine fertile acres of land, and now you want more? I say no.

  2. Thank goodness for the Common Sense Canadian..and we can only home that a critical mass will be built and common sense prevail in enough of the population to affect a course change in the good-ship Kristy Harper…..the pressure is on to secure our resources (gas, oil, water, etc) to foreign corporatist government interests, and massive penalties (e.g NAFTA, FIPPAs, Eurotrade) if we reneg…..i say, lets find all the green-energy/tech investment brokers in an alternative economic summit, and push the major portfolio holders in unionized pension funds, etc…making the push for “revestment’ into truly sustainable and less corporate welfare-based policies to support the real generators of jobs which are the mass of small and medium businesses in Canada….anybody with half a brain can create a subsidized business and skim the gravy until the debtor calls in the chips..and that’s what happening….the environmental externalities are no longer external…they’re a liability and its not just our children put current populations are going to have to pay…the smart money is in the progressive companies and states that understand the real bottom line…and consider true wealth is in a healthy, informed and innovative population supported by a healthy environment needed to support that investment..and a regulatory/jurisdicational (inluding First Nations) context that fosters at least some degree of certainty….and the new wave is coming like a big freight train whether we choose to see it coming or not both in the form of public dissent and environmental changes to force the question…Do we choose to keep Canada as a progressive or as a regressive place in the global village?…i really don’t think mega-project resource developments overseen my military guards are in the cards, but then again I could be wrong….

    http://www.theglobeandmail.com/globe-debate/on-pipelines-politicians-are-just-listening-to-the-people/article21818339/

  3. Now for what I didn’t say to Minister Bennet but perhaps should of.
    Every thinking adult knows, at a personal level, that their personal financial equity is their buffer against unpleasant and surprising set backs. A personal balance sheet that can be called upon when the individual is confronted by loss of employment, crippling illness and a whole number of other unpleasantnesses you all can probably imagine is a form of personal salvation if there is a good equity base to resort to. A personal asset base of $500,000 but has $480,000 of attached liabilities will do nothing to get a person through even a minor setback.
    This model has been chosen by our government. Since 2006 and on top of what it annually reports as “debt”, the Auditor General also reports on “Contingencies and contractual obligations”. To find this you have to drill down to almost the last page of the AG’s audit statement that goes with the Min. Finance Annual Report. Since 06 it has increased every year to the point that it is now over $100 billion. Probably about $60 billion is because of Hydro’s IPP contracting practices which are still being added to.
    These liabilities reduce the public’s provincial equity base which means the government has taken the province to the point we are much less able to accommodate economic and financial setbacks.
    If the province were a corporation, its board has managed to place its employees’ job security at serious risk from a deliberate reduction of it equity base. That is the case at BC Hydro now but not sure if its employees understand that.

  4. For years now I have read every blog and commented on the corruption in this province by this government. Blogs about the Basi Virk payout, BC hydros peculiar accounting practices, the sale of BC Rail, corruption in BCLottery corp, ICBC, BC Ferries, Mt Polley mining disaster, fish farming, shady deals put together on Bridges, Highways for Olympics. Mismanagement of everything including the childcare ministry and schools. The list goes on and on and on but in all those years I have never once heard of them being held accountable or for that matter investigated. I used to blame them and still do to an extent but must ask myself, How does a handful of low life criminals get away scot free?
    No one is holding them accountable, the media in this province are a joke, either inept or or working in the interest of the bottom feeders we call government.
    More so every day I feel there is no-one to blame but me. Me and you! The people who know what is going on and what they do. Again how can a handful of low lives destroy this province?
    Because we let them. Until we get balls and make a stand nothing will change, why would it?

    1. You hit the nail right on the head we need to kick out the leaders and turn this province around ,before its tooo late!!!

      1. We are up against all the brain-dead idiots who think the BC Liberals are doing a great job. These morons are looking forward to LNG paying off our debt and making us all really RICH!!

  5. I’m sick and tired of insane politicians destroying everything so that they and their friends can make more and more money, while canadians believe their lies that we need whatever they tell us we need. Truly sickening.

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