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Wheels coming off Liberal energy policy as contracts cancelled

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Posted September 5, 2013 by Rafe Mair in Economics
Wheels coming off Liberal energy policy as IPP contracts cancelled

BC Energy Minister Bill Bennett

Folks, the wheels are coming off the BC Government’s 2002 Energy policy, which forbade BC Hydro from creating new power (Site C Dam being exempted).

Energy Minister Bill Bennett has cancelled 10 Independent Power Projects (IPPs), with plans to defer delivery on up to another 9.

This is a major vindication for all of us who have pointed out the obvious – BC Hydro cannot go on paying over two times the market for electricity. It simply can’t deal with the $50 BILLION-plus bill it must pay for the privilege of losing money hand over fist.

Let us always remember that this policy was put in place because the Campbell Clark government, egged on by big business and the loony right wing Fraser Institute, said we would need the energy and that only the private sector could handle this need.

How deep will the cuts go?

The obvious question to the minister is how far will he go? Will he place a moratorium on all future IPP projects? What about other contracts already signed? Will he look at IPP dams in production?

What about the fairness of those deals, which were stated by the BC Utilities Commission as “not being in the public interest”? What if in examining these secret contracts, the minister finds them to be, as I suspect, unconscionable bargains?

Will he start monitoring IPP plants and enforcing environmental rules? Why now, ten years after the Energy Plan, is the minister analyzing this IPP mess?

Why now, ten years after the Energy Plan, is the minister analyzing this IPP mess?

Let good ol’ Uncle Rafe tell you why.

As many have been saying, BC Hydro is bankrupt – at least it would be if it were in the private sector. Its only recourse to avoid actual bankruptcy is to pass this mess off to voters, and that will mean big-time trouble for the Clark government. Premier Clark is now looking towards the election of 2017 and can see her government in deep, deep trouble. She sees the BC Hydro situation as the big issue – demonstrating how the pitiful NDP campaign last May was so harmful to the province.

The premier’s difficulty is that she was part of the energy policy a decade ago and supported it because right wing ideologues like the Fraser Institute advised her government that publicly owned enterprises were to be despised and done away with. In short, the present damage to BC Hydro is irreparable, which was the whole idea in the first place.

LNG Hail Mary

Premier Clark lost all the Campbell nitwits and is now supported by a caucus that was glad to see the end of him. They don’t have an ideological approach to BC Hydro and see their own survival as dependent upon cleaning up this energy mess.

Premier Clark knows this and has a solution: build Site “C” for about $10 BILLION, sell power at a huge discount to large energy producers if they will “mine” gas, largely by “fracking”, then take that gas to Prince Rupert, liquefy it, using huge quantities of subsidized power, then sell it to Asian markets. This will, opines the Premier, not only wipe out the province’s debt but also will put $100 BILLION into a “Prosperity Fund” – and we’ll all be on easy street.

All of this depends, of course, on getting a market for this gas. That depends on its putative customers needing gas in 2017 and beyond. What happens if these future customers have lots of gas? That has largely happened.

(Let me digress to note that recently The UK and Israel have each discovered enough natural gas for 25 years, the point being that the likelihood is that by 2017 – the absolute earliest any of BC’s LNG will be ready for export – gas will be a glut on the market.)

Mr. Bennett is no fool and sees that placing everything on #12 Red on the wheel is madness, while also realizing that what I’ve just said is so obvious that not to deal with it could not only defeat the government but destroy the right wing coalition.

Premier Clark has no vision because visions cost money.

Premier Clark has no vision because visions cost money. She sees that the energy situation is catastrophic. She will rely on companies pledging to build LNG plants yet the shovels are barely turning. As the months and years progress, she will “suddenly” find that the world – especially including Asia – will be awash in natural gas. More and more, like Mr.Macawber, her policy will be based on the hope that “something will turn up”.

Thanks to the pitiful press we face, and the just-as-pitiful NDP election campaign last May, the public is largely in the dark about this mess – but that won’t last until the next election in 2017.

Minister Bennett and his colleagues will dip deep into the top hat but, alas, there are no rabbits there.


About the Author

Rafe Mair

Rafe Mair, LL.B, LL.D (Hon) a B.C. MLA 1975 to 1981, was Minister of Environment from late 1978 through 1979. In 1981 he left politics for Talk Radio becoming recognized as one of B.C.'s pre-eminent journalists. An avid fly fisherman, he took a special interest in Atlantic salmon farms and private power projects as environmental calamities and became a powerful voice in opposition to them. Rafe continues to make regular appearances on radio and television, writes regularly for thetyee.ca, and writes a regular blog at rafeonline.com.

9 Comments


  1.  
    Greg Shea

    Thank you, Rafe. I am very depressed about the prospect of yet another dam on the beautiful Peace River. It is the OOS OOM mentality of the coastal “tribes” that is really disheartening. Never mind the cost, the loss of this amazingly arable land will be catastrophic as the reality of climate change finally reaches the MSM. We used to grow over 80% of our own food locally on Vancouver Island. Now, it is less than 8%! There is a whole 3 day supply of food in the grocery stores should our main sources be lost (e.g. California and Mexico).

    Oh well, at least people will finally start to realize that we need to change our lifestyles dramatically. There is a considerable “lowering” of our life’s expectations if we want a planet on which to depend.

    It is encouraging to note that dams are being taken down in other jurisdictions (e.g. Klamath River and White Salmon River south of BC). However, it would be far fetched to ever imagine that the WAC Bennett dam would be removed!

    I wonder how the struggle against nuclear energy is going in Peace River, Alberta?

    Greg Shea (Lake Cowichan)




  2.  

    IPP’s remain a scandal. Bil Bennett is showing himself to be one of the more admirable of Liberal cabinet ministers and he has the leviathan of B.C. Hydro to tame. Still, there are some 100 more IPP’s that have 20 year contracts with Hydro to be paid twice the market rate for electricity.

    Mr. Bennett has a lot more work to do.




  3.  
    erik

    Way to go Rafe.

    It seems the Provincial Government have been aiding those who only wish to exploit and plunder.

    I don’t think our MLAs grasped what has happened in BC over the past ten years and that makes it impossible for them to figure out what is the smart thing to do next.

    BC posted a 63% increase in GDP between 2003 and 2013. In that same period electricity sales to BC only customers remained frozen at 50,000 GWhrs. Instinctively, most people would expect sales of such a basic economic input as electrical energy to parallel the growth in the economy, as measured by GDP, but it did not.

    So why not? The only credible explanation is economic and financial “leakage” from BC. That means we have and are transferring wealth out of BC and keeping none of the economic benefits from growth, achieved by borrowing, at home.

    So the “sharpest minds in the province” have loaded citizens with lots of new debt while at the same time engineered the bulk of new benefits into the pockets of those elsewhere.

    BC Hydro sold 7,417 GWhrs last year to folks with long-term contracts located outside of BC (see page 68 of the 2013 Annual Report). The capital cost of that amount of new generation, using Site C numbers, is between $16 and $20 billion. That amount of energy sold to out of province customers in 2013 is twice the amount expected from Site C.

    This degree of error is so large at BC Hydro, by direction from the Government, that one cannot simply think of this outcome as accidental. The policies were thought out and deliberate as to execution, making this a major breach of trust that has yet to be addressed.




    •  
      K.Dykstra

      The “cause” is enjoying his perks (again at our expense) in London.
      He should be investigated, charged, convicted and jailed.




  4.  
    Hugh

    Site C to cost $10 billion? I thought it was $8 billion.

    But then the NW Transmission line ended up costing a bit more too.





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