Category Archives: WATER

Audio: Damien Gillis discusses Site C Dam, Victoria Rally on CFRO 102.7

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Listen to this ten minute discussion on Wake Up with Co-op re: the renewed Site C Dam
proposal and a recent rally in Victoria to voice opposition to the plan. This past
Sunday, First Nations, ranchers, conservationists, and citizens from the Peace River
region and around BC paddled to the Legislature to deliver their message to the
premier and public. They are concerned Site C will unnecessarily flood important
farmland, ecosystems, and traditional aboriginal territories at great cost to the
public and BC Hydro ratepayers – all to subsidize the Tar Sands and resource mining
for multi-national corporations, the United States, and Asia.




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Taking Hansen’s Lies on HST, Energy to the Court of Public Opinion

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Finance Minister Colin Hansen has, faintly, apologized for his handling of the HST.

Let’s get this straight minister – you didn’t make a mistake, you lied. You had two briefing papers, one written at your request, that 2 months before the election, gave you the skinny on an HST policy for BC. The question of HST was one of the most controversial finance issues in the country. You and the Premier knew that and your ministry and the Premier’s office had been in touch with Ontario and federal issues. To the long list list of the premier’s serial falsehoods – your 1:51 statement on private power, found by googling Hansen/private power, contains 5 statements each of which is false.

I bring this up for www.thecanadian.org because our talented filmmaker Damien Gillis and I will be starting a tour of BC in October and those whom we address ought to know that your credibility and that of your colleague Gordon (Pinocchio) Campbell will be severely challenged.

The purpose of our tour is, of course, not only to deal with your government’s lie-based Energy Policy, but to demonstrate what we can do in the area of self-sufficiency for BC power needs without ever damming so much as a tiddler’s creek.

The opening question will run like thus: if you, Mr, Mrs, and Ms British Columbian, wanted to have BC energy self-sufficient for the foreseeable future, what would you do?

We will then lay out our plan and compare it to that of your government. In dealing with this matter we will point out the credibility shortcomings of you, the premier and your government. High on the list will be your five statements alluded to above; we will deal with each of them, and ask the public whether they believe you. But we will also lay before the public the relatively simple route we can take – the route your government should have followed.

We will demonstrate that not only have you denied the public a right to be heard – you have forbidden local governments to zone power projects according to the needs and desires of the local population.

Your difficulty, Mr. Hansen, and through you to the premier, is that no one believes you any more. During the time the public, very much including me, was asleep at the switch, no one was challenging you. We trusted and believed you. We saw your energy plan as having no environmental impacts and necessary for our energy needs because that’s what you told us.

As you know, minister, I’ve been there. And I know that even the most of unpopular programs will be accepted, even grudgingly, if the truth and the whole truth is told to the public. When the Bill Bennett government came into office in 1975 we found a public government car insurance company, founded about 18 months before, that had managed to lose nearly $200 million with a monopoly! We immediately raised premiums so as to make the company viable and all hell broke loose, amongst our supporters as well as the general public. We had, however, told the entire story to the public and they came to accept if not like our policy. The message from my experience, minister, is don’t ever lie to the public. I’m afraid that my advice is too late for you.

Here is what we will be doing: I give you this in the hopes that you will send a MLA – or either or both of you and the premier for that matter – so we can let the public decide who is telling the truth.

With the help of Damien’s great camera work we will show the people just what these “little run of the river” projects really look like.

We will debunk the nonsense that these weirs (the Independent Power people don’t like to call them dams, which they are) are being built by little people, Mom and Pop operations, as the expression goes.

We will show the enormous damage done by roads and transmission lines to and from the “weir”.

We will outline the true cost of these “little ol’ weirs” in terms of destruction of ecologies these rivers support.

We will go right to the root of the matter and demonstrate beyond doubt that whatever our power needs may be now or in the future, they cannot be met by Independent Power Producers (IPPs).

We will demonstrate how your government has forced BC Hydro to pay, on a “take or pay” basis, 2-3 times what it can sell that power for.

We will demonstrate why IPP power is of virtually no use to BC Hydro and its shareholders (us) because it mainly comes at high run-off time when BC Hydro doesn’t need it and thus must sell it at a loss or, if it chooses to use that power, must pay to the IPPs about 8 times what it can produce it for itself.

We will show how your policies are bankrupting BC Hydro and – are you ready for this? – how BC Hydro will no longer be able to pay its handsome annual dividend to the government unless it raises the rates to consumers to get the money!

The public will understand well the calamity that your energy policy is because we are telling the truth, backed up by independent experts, while the Campbell government relies upon one falsehood after another; because on this and most other issues, your government has practiced gross deceit and the public knows it.

You and your government, Mr Hansen, have done enormous permanent damage and it cannot all be undone. But the jig is up. And though the forfeit is piddling compared ti what it should be, you and your colleagues will be expunged from your seats of power by a population that knows it’s been lied to.

POSTSCRIPT: I do not say that Campbell and Hansen are liars – just that on the occasions referred to they were lying.

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Balancing act

Economics, WATER
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Article by Erik Andersen in the North Shore News. “All indices that have not been politically contaminated continue to reflect a weakening economy in B.C. and, by extension, a lessening of the demand for electrical energy. My invitations to other experts to explain or justify Hydro’s massive increase in borrowing, spending and productivity on the basis of domestic “need” have gone unanswered.” Read article

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Rex Weyler

B.C. Government Destroying Public Power

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Republished from BC Citizens for Public Power

The B.C. Energy Plan, portrayed by the Liberal government in 2002 as “clean energy leadership,” now appears as a thinly disguised campaign to privatize our public utility, B.C. Hydro. Backed by powerful international financing, our own government converted public assets into private hands for private profit, while raising our domestic electricity rates to pay for the swindle.

In 2001, Gordon Campbell and the B.C. Liberals made two election promises regarding our public energy utility. They promised to “Protect BC Hydro and all of its core assets, including dams, reservoirs and power lines under public ownership.” And they promised to “Restore an independent BC Utilities Commission” to regulate our electricity rates.

Once elected, they immediately broke both promises. The B.C. Energy Plan systematically dismantled, privatized, encumbered, and disempowered BC Hydro. The plan attacks our public power utility with a hundred small cuts. In the first stroke, they privatized BC Hydro operations, power transmission, and access to BC’s rivers. The plan forbids our public utility from increasing its power capacity and allows only private companies to generate new sources of electricity in the province. Finally, the plan creates a financial burden on BC Hydro, forcing it to buy unfairly priced power, which has caused BC Hydro – once a profitable public company – to lose millions of dollars, a recipe for the bankruptcy of public power.

Accounting tricks

In a recent study, economist Erik Andersen outlined how our own Government set out to bankrupt B.C. Hydro. The public utility has historically been profitable, returning income to help pay for B.C. schools, hospitals, and other services. For the year ending March 31, 2007, B.C. Hydro contributed $379 million dollars to the provincial treasury. Those days appear to be over.

In 2008 B.C. Hydro lost $72 million, and the year ending March 2010 indicates a net loss of $249 million. This is a reversal of $628 million in net income over four years. You might think the government would be horrified, but this has been their strategy all along. To hide this news from the public, the government drew money from the provincial “regulatory account,” and inflated intangible assets like “goodwill” on the balance sheet, accounting maneuvers used to hide the losses.

Meanwhile, the government has been increasing B.C. Hydro’s debt to pay for expensive power from private companies. This shows up in the debt-to-equity ratio, a measure of a company’s health. A company, like a family household, is more stable with low debt and high equity. Traditionally, BC Hydro’s debt/equity ratio has been about 70/30. By 2009 the debt had risen to an 81/19 ratio. If we exclude withdrawals from B.C.’s Regulatory Account, the 2010 ratio is 89/11. Any business person would tell you, this is a recipe for bankruptcy.

Public pays for Privatization

This destruction of B.C. Hydro is a tactic in the privatization of energy. Since the government has forbidden your energy utility from developing energy, we now buy about 16% of our energy from private corporations through 89 “Electricity Purchase Agreements,” contracts that force B.C. Hydro to buy power at 3-4-times the historic cost. We now pay $80 to $125 per megawatt-hour for energy that BC Hydro can generate for $20-$30 per megawatt-hour.

To subsidize this expensive power, the citizens of B.C. pay in two ways. First, energy rate hikes have added about 10% to our household energy bills, with another 6% increase planned. Secondly, the cost of energy is reflected in the financial losses of our public utility.

When the Liberal government began to privatize B.C. Hydro services, they hired Accenture, formed by refugees from the Arthur Anderson consulting firm associated with the Enron scandal. Accenture took over certain B.C. Hydro services, such as billing and administration. Energy Minister Richard Neufeld promised that B.C. Hydro would save $250 million in operating expenses over ten years. Under questioning from the opposition, Neufeld had to admit that he had not even read the Accenture contract. Now, six years into the privatization scheme, B.C. Hydro expenses have increased, not decreased.

The government has kept financial records with Accenture secret, so the public cannot see what is going on, but Will McMartin at the Tyee dug into the records to find out how we are doing.

Over the first six years of the contract with Accenture, the government budgeted to pay the private company $832.9 million dollars. In actual fact, the government has paid Accenture $1.168 billion, about $335 million over budget for six years. At this rate, through the ten year contract, the government will be over budget by about $560 million. So, instead of $250 million in savings for B.C. Hydro, these figures suggest there will be a $310 million increase in expenses. That means that Neufeld’s prediction was wrong by half a billion dollars! And who pays for this? You do.

Privatize the profits, socialize the costs

Meanwhile Accenture executives such as Peter Leighton and John Icke, who helped write the deal, have jumped onto the privatization gravy-train. Last March, the government awarded their company, Finavera Renewables, four Electricity Purchase Agreements.

Meanwhile, demand for electricity has not grown as the government claimed it would, and in fact has declined. In B.C., the demand for electricity has been falling since 2008, declining by 3.8% in the year ending March 2010. Demand for BC Energy by foreign customers has collapsed, which leaves B.C. Hydro and B.C. citizens stuck with expensive purchase agreements that are unnecessary.

Our government has privatized the profits and stuck the people with the losses. We need to restore BC Hydro, once one of our province’s strongest public companies and a competitive advantage for our economy. B.C. Hydro was a secure, public, long-term energy utility that could manage complex social, ecological, and energy values for our public benefit. Private power promotes consumption, while public power can conserve and operate at an optimum scale. Private power has a single goal: profit for a few insiders. Public power, operated by BC Hydro, can serve our complex public objectives, including conservation, job creation, and fair energy rates.

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Hydro prices ‘going up like a rocket’

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Article by Don Butler in the Ottawa Citizen.

“(Tom) Adams (of Energy Probe) assigned much of the blame for the rise in electricity rates to Ontario’s Green Energy Act, which promotes the use of solar, wind and other alternative power sources.

“The Feed-in Tariff (FIT) program, which locks in generous payments for 20 years for large green energy projects, is ‘just outrageous,’ Adams said.”

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Sinister Financial Vectors at BC Hydro

Economics, WATER
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An Economic Analysis of the Impact of the Campbell Private Power Policy on the Financial Health of BC Hydro

A vector gives information as to direction and the magnitude of a changing position. A series of financial statements can also provide vector information about the financial health or otherwise of corporations.

  • The first vector is of the direction and speed of change for the operating net income at BC Hydro. In fiscal 2007 (financial year ending March 31, 2007) BC Hydro’s net operating revenues, less financing expenses, were $379 millions. By 2010 the recorded loss was $249 million. In the four year period there has been a $628 million reversal of net operating income.
  • The vector for recorded demand is also instructive. Expressed in GWhs (what BC Hydro sells) total volume of domestic (inside BC) sales went from 52,440 in 2006 to 50,233 units by 2010. After five years at the 52/53 thousand levels, demand dropped away sharply in fiscal 2010.
  • A handy vector is the ratio of debt-to-equity. A ratio of 0/100 is the extreme where the corporation or individual has zero debt. The opposite extreme is 100/0 where there is no equity. There can even be conditions where the debt is greater than 100. A ratio of 100/0 can be evidence of insolvency. At BC Hydro this ratio had traditionally hovered around the 70/30 mark. The 2009 Annual report showed a remarkable change to 81/19. After calling upon the “Regulatory Account” for the 2010 year the debt-to-equity ratio is now presented as 80/20. If the “regulatory account” transfers were stripped from the BC Hydro financial statements, the ratios for 2009 and 2010 respectively would be 87/13 and 89/11.
  • Productivity vectors always help to illustrate if we shareholders are getting value for money. In fiscal 2007 about $236,000 of capital was used to produce one GWh. By 2010 it took 38% more capital to get the same quantity of energy for domestic customers. By this evidence it looks as though the system is becoming less efficient. Liabilities also mirrored this vector.
  • The final vector of note is the immediate prospect of new and expensive contractual obligations associated with the call for power from Independent Power Producers (IPPs). From page 10 of the 2010 Annual Report BC Hydro states that “During fiscal 2010, IPPs provided 8,893 GWhs of energy to the BC Hydro system, which accounted for about 16 per cent of total domestic electricity requirements.” A December 2009 report from Price WaterhouseCoopers projects that existing and potential IPP projects will deliver 35,470 GWhs by 2020. The estimated total capital deployed would be $26.144 billion. That translates into $737,074 of new capital to produce one GWh or 126% greater than the already elevated 2010 level. Amazing!

Now what to make of this all? First off it was clear as long ago as 2006 that the growth in domestic demand for electricity was slowing and reversing. With this evidence it is hard to understand why the management and Board at BC Hydro embarked on the increased spending and aggressive contracting for energy from IPPs. From the 2010 Report it is manifestly clear that sales to outside of BC customers have collapsed. That leaves only the captive domestic customers to carry the growing financial burden.

As the evidence of need for more electricity in BC is not apparent, the aggressive borrowing/investing/contracting with IPPs is plain wrong. It is improbable that the BC Hydro team are “financial illiterates” so there must be some other explanation; hence the word “sinister”.

Some questions arising from my August 16, 2010 report re: BC Hydro that must be dealt with immediately

  1. Hydro borrowing/spending is at an unprecedented rate at the very time when there was at least 4 years advance notice of a slowing domestic demand. There is no credible projection of improved economic circumstances for at least the next 3 years. This is irresponsible by Hydro’s board and management as it has increased the risk of financial insolvency.
  2. The available evidence indicates that Hydro is paying IPPs more than double the open market rates prevailing in western North America. By the 2010 sales to others collapsed by 50% in 2009/2010.
  3. The best available consulting report indicates that from now to 2020 new IPP producers will use more than double the capital now used by Hydro to produce a single unit of saleable energy. This is the antithesis of improved productivity normally expected when large capital projects are begun.
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We Told You So! Economist’s Report Confirms Economic Folly of Campbell’s Private Power Policy

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Common Sense Canadian co-founder Damien Gillis and I have been raising concerns about the future of BC Hydro for over two years; and now a new economic analysis by contributor Erik Andersen, drawing on available hard data, proves beyond a doubt what we have been saying all along: Gordon Campbell’s private power program is unnecessary and costly to the point of threatening the very solvency of our most important crown corporation, BC Hydro – not to mention hitting the pocketbooks of every British Columbian and company doing business in our province that once relied on a steady supply of affordable public electricity.

It’s important to note why WAC Bennett bought the BC Electric in 1961 and made it into BC Hydro and Power Authority (BCH). The late premier – because our province is so large geographically and so sparsely settled – saw the need for ferries, rail, and power to be tools of public policy. He saw ferries as extensions of highways and knew that Black Ball Ferries, a private corporation, would only service areas that made money. He saw, similarly, that a private rail company would not service developing areas, so he created BC Rail. He also knew that for BC to compete on national and international markets we must have cheap, reliable power so created BCH and developed the “Two Rivers Policy”, bulking dams on the Peace and Columbia Rivers so that BC would always have clean, constant, and sufficient power. He was not opposed to selling power elsewhere but only so long as sufficient power was always available to British Columbia’s industries and people.

BC Hydro has been a huge success and is the envy of the world.

For reasons that can only be ideologically driven, the Campbell government has set out on a process that will bankrupt BCH (meanwhile Campbell has been in California this past week, shilling for this power which even Californians recognize is a bad deal for the environment, thus refusing to buy it – see
Campbell urges California to review imports by Scott Simpson in the Vancouver Sun. Despite what he and his ministers have stated, BC is not a net importer of power and never needs to be. With conservation, new generators on flood control dams and new generators and upgrades on power dams, and taking back the power to which we’re entitled under the Columbia River Treaty, we have power for as far as we wish to look.

Premier Campbell now has in place Independent Power Producers (IPPs), which he portrays as small private companies, doing no environmental damage, which will dam (IPPs prefer to say “weir”) up to 700 rivers in BC – saying that the energy produced will make us “energy sufficient by 2016”. Unfortunately Mr. Campbell is being very economical with the truth.

This power can only be produced during high run-off periods when BC Hydro doesn’t need their power – which they must buy anyway under contract – and since it can’t use it, it must then export it at less than half what they paid for it.

One doesn’t have to get much further than Kindergarten arithmetic to know that a company can’t do that very long before it goes broke!

It should also be noted that because BCH is forced into this “buy high/sell low” policy it will no longer be able to pay the government the very substantial annual dividends which went for our schools, hospitals and social programs.

What will now happen is a little three card monte game where BC Hydro will hike its rates to citizens and industry to make some extra money to give back to us as that missing dividend! One must also remember that there won’t be any BC Utilities Commission to stop this nonsense (Campbell took care of that just as soon as our public watchdog blew the whistle on the foolish scheme last year).

As Damien and I traveled the province speaking and showing DVDs, telling people what I’ve just revealed, there was no answer from either the “mom and pop” companies (such as General Electric, Ledcor etc.) nor from the government. During the 2009 election I spoke and challenged the Liberal government to meet with me in debate and there were no takers!

Now we know why – Damien and I have been right all along.

I believe that’s because Premier Campbell is a Fraser Institute acolyte who simply detests publicly owned companies. There is no other explanation for this mad energy policy whereby British Columbia sees its rivers and the ecology they sustain destroyed, its first class power company hurtling into bankruptcy, its profits going out of province all because of a hatred of public power by a far right-wing premier.

I said that Damien and I have been right all along as to what’s happening and this is where engineer and economist Erik Andersen comes in.

Click here to see his astonishing report making it clear what is happening. BC Hydro is going broke, it’s that simple.

Quite properly, Mr. Andersen doesn’t deal with government policies but just the facts.

Please read this and forward to your friends. The first step toward dealing with this catastrophe in the making is bringing an end to the fantasy Campbell has conjured for the past decade that this private power policy is an economic and environmental benefit for the people of BC.

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