The Financial Pain Produced by Campbell/Clark’s Energy Policies


The Government of British Columbia, has for the past 8 years, directed BC Hydro to increase provincial power generation (contracting with IPPs) and transmission capacity to serve a yet-to-materialize provincial demand. The official forecast by BC Hydro in 2006 indicated domestic demand would be almost 25% greater in 2010/11 than is actually the case. A resolve to stick with this exaggeration continues to this day despite multi-year evidence of a gross over-supply condition throughout the Pacific Northwest. Because BC Hydro did follow orders, the generation and transmission capacity in BC has been and will continue to have large financial consequences for ratepayers and citizens, the guarantors of the BC Hydro’s debt. 
In the Fiscal year 2006 BC Hydro generated and delivered 52,002 GWhrs of electricity which was what its BC customers required. BC Hydro used $9.610 billion of fixed assets (property, plant and equipment) to do this work. It also used over $1 billion more in total liabilities.
By Fiscal 2011 the demand for electricity from BC customers had decreased to 50,607 GWhrs.

Next is the worrying part. BC Hydro had by this time increased its investment in fixed assets to $15.211 billion and taken total liabilities to $16.599 billion. In the course of this period BC Hydro managed to invest and borrow 60% more money to get a smaller amount of product output and delivery than in 2006. This change is a breathtaking example of loss of productivity of capital.

Just to reiterate, BC Hydro’s “Fixed Assets”(real) total is now surpassed by “Total Liabilities” by nearly $1.4 billion. This real asset shortfall is covered by fictional assets such as “Goodwill” and the “Regulatory Asset Account” (receivables from ratepayers from pending rate increases).

So how is this reckless use of capital showing up as pain? For a natural monopoly it always is translated into what we all are forced to pay. To ensure independence the data that follows is taken from an annual report prepared by Quebec Hydro carrying the title “Comparison of Electricity Prices in Major North American Cities”. This report covers 22 major cities and is prepared in the 4th quarter annually. The values are as at April 1st in each year and do not include “rate-rider” amounts nor taxes.

For Vancouver:             Residential (1,000 Kwhs)    Small Power (10,000)   Medium (up to 400,000)   Large (above)                                           
(CDA cents per KWhr)

2006                                6.41                                      7.02                                 4.92                                   3.53
2007                                6.65                                      7.27                                 5.10                                   3.65
2008                                6.98                                      7.63                                 5.35                                   3.84
2009                                7.13                                      8.02                                 5.62                                   4.03
2010                                7.79                                      8.76                                 6.15                                   4.40

The data above shows that over the 5 years rates have risen by between 21% and 24%. According to the latest BC Hydro Annual Report they are seeking rate increases of 9.73% in each of the years 2012, 2013 and 2014. If BCUC and the Government accommodate this request then residential rates in 2014 would be over 10.1 cents or nearly 60% above those in 2006.
These rates also show small businesses in BC are penalized just for being small. As to “Large” (industrial) customers, they enjoy rates that are about a third or less what BC Hydro is currently proposing to pay new IPPs and less than half what is estimated for Site C costs of production.

This summary provides evidence that our Government has pursued policies that sabotaged the energy competitiveness we used to enjoy. BC had an energy “edge” that has been and is being lost because of policy mistakes. Command economics, as practiced in BC, will never bring financial and social optimization just because this approach is always designed to serve narrow self-interests ahead of all others.


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.

2 thoughts on “The Financial Pain Produced by Campbell/Clark’s Energy Policies

  1. We should also remember the power line debacle in Tsawwassen has cost taxpayers over $25 million. That’s what the governments has admitted to. Into those costs, the taking of residents to court, expenses of the government spin doctors who stayed in Tsawwassen, the cost of a company hired to spy and report on residents, policing costs and ultimately the loss of tax money that resulted in the devaluation of 125 homes. And that was just in Tsawwassen. Add to that the fact they couldn’t sell the power to the Americans and that the Isalnd didn’t need it either the costs just keep adding up
    I’m sure other Hydro infrustructue projects were just as expensive and only built to serve the narrow interests of the Liveral friends and cronies should make each and every BC resident demand a public enquiry into the whole BC Hydro BC Transmission Corporation business. Sadly, like the BC Rail business, unless there is a change in government the people will never know the truth and not one person will be held accountable for all the illegal and damaging acts of this government.
    This Liberal government lives in a glass house whenever t

  2. Christy said, she was going to fix, Campbell’s foul hydro debacle. Obviously she reneged on that too. Well, what else is new?

    The Campbell/Clark BC Liberal Slime Family, is continuing, Campbell’s foul legacy of, lies, deceit, corruption, theft and dirty tactics.

    I live too far away, to greet Campbell in Victoria, if the OBC actually have the gall, to present Campbell the crook with the OBC.

    This time, there could be a riot. The BC citizens are in a state of outrage, over this. Hopefully everyone signed the petition. Campbell isn’t even valid for the OBC, he was still in office at the time. It was bad enough, Harper giving that scum Campbell, the High Commissioner to England appointment. The anger has exploded, by the OBC naming Campbell the crook, for this award.

    The eco damage that monster of a Campbell, has done to this province, he should be tried for treason. He belongs in prison also for, the theft and corrupt sale of the BCR. And the theft and sale of our rivers. The filthy diseased fish farms, allowed in BC, are disgusting.

    Everything Campbell touched, he fouled and dirtied. Give me one good reason why, that bas-turd, deserves the OBC?

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