Hydro Report: Death Knell for BC’s Public Power?


This will be a short blog because the point is simple…and devastating.
Mark down August 12, 2011 as the day BC Hydro all but concluded its suicide mission, with the Campbell/Clark government and the Review Panel playing the role of Dr. Jack Kervorkian.
When you sort through the announcement by Rich Coleman and the verbose report itself, you learn that BC Hydro will cut its future costs by 50%, which in practical terms means this: Hydro will be unable to upgrade its facilities and build generators on flood control dams which means they will buy more and more power from more and more private power producers – which is surplus to their needs – buggering up more and more rivers and streams, thus fulfilling the Campbell/Clark government’s ambition to privatize power in BC.
BC Hydro, in taking all this unneeded power from Independent Power Producers (IPPs), must either export it or use it instead of its own vastly cheaper power. This means that BC Hydro will use power at at least double what it can make it for or export it at half to a quarter what they were forced to pay for it. Last year Hydro wasted $600 million buying IPP power it didn’t need – that money was our money, folks.

This comment on the report by former BC Hydro board chair and SFU political scientist Marjorie Griffin-Cohen. She said that the review – which also called for the utility to cut its proposed 50% rate hikes by half – distracts from the utility’s real problem: that  the real burden of cost is the government’s policy on private power. “Basically, what they have required to happen in BC is for new power generation to be in the private sector, BC Hydro to buy that and their hope was that this could spur exports of electricity to the United States,” she said.

“It was a very serious miscalculation of what was going on. So what we have now is a lot of private power that is extremely costly.”

Griffin-Cohen said private power projects produce 16 per cent of domestic power, but account for 49 per cent of energy costs. (emphasis added)
The much esteemed SFU professor and energy economist Marvin Shaffer had this to say:

“The real story in the review panel report, although gingerly and cautiously stated, is that it is government itself which bears major responsibility for driving up BC Hydro costs and rates. It was the government that directed BC Hydro to acquire all new sources of energy from Independent Power Producers (IPPs) except in the refurbishment of existing projects or developments like Site C on existing BC Hydro-controlled river systems. (emphasis added)

It was the government that legislated self-sufficiency requirements that have forced BC Hydro to buy more power than it needs to ensure reliable supply. It was the government that imposed debt/equity provisions that exaggerate the cost of BC Hydro financed investments. And it was this government that raised water rentals in a way that directly affected BC Hydro and its customers, but that would not impact private power producers, including Alcan and Teck.
Anyone who’s run a household budget knows that leads to the poorhouse and bankruptcy.
What this means is that the Campbell/Clark government, as advised by the right wing Fraser Institute, see their dream come true – the end of public power in our province with the ruination of our rivers in ever increasing numbers.
We at The Common Sense Canadian have been saying this for close to two years and as individuals nearly four. I have faced audiences all around the province and have seen disbelief in the faces of the audience saying to me, “No government would do anything so stupid!” Well they have and are about to make it worse.
BC Hydro is the egg that’s become the omelette. The dice were cast and they turned up snake-eyes. The Campbell/Clark government privatized BC Ferries and BC Rail and now it’s moments away from privatizing power by bankrupting our crown jewel – the much coveted BC Hydro and Power Authority..
The story Damien and I and many others including our adviser, economist Erik Andersen, have been telling since 2008, has been difficult to believe.
Well, folks, BELIEVE IT!!!

Postscript – to Vaughn Palmer and Mike Smyth – repeat after me: “The problem with BC Hydro is the massive sweetheart deals made with private power companies where under Hydro must buy ever increasing amounts of power at a huge loss.” Now, having spat it out, PRINT IT!


About 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 is the co-founder of The Common Sense Canadian and writes a regular blog at rafeonline.com.

13 thoughts on “Hydro Report: Death Knell for BC’s Public Power?

  1. I hate to change the subject, but this is still to do with BC Hydro. I am told we are to get a 1 billion dollar refit of our power meters to Smart Meters in BC. I also have heard that these are to be wireless, which I understand is not good for us. Perhaps this is worthy of a look, especially by impartial experts in this area, which I am not. Entire communities in California have sucessfully said NO to these Smart Meters. Any thoughts?

  2. Second bit of history. A huge dam was built on the Peace River. Not being a humble man WAC Bennett named the dam after himself. Behind the dam is the huge Williston reservoir – a publicly funded asset used to generate hydro. Now we learn that Christy Clark has recently given permission to some of her private sector gas fracker cronies to stick a pipe into the reservoir and draw off billions of gallons of free water (a gruesome necessity of their environment destroying fracking technology). That is our water, in a reservoir constructed with our money, and she is giving it away.

    Ever wonder why you don’t see these stories all over the CBC News. Well, if you consider that CBC’s lead political reporter apparently sleeps with Christy Clark’s press secretary, we should not be surprised at the lack of scrutiny by our “public broadcaster”.

  3. Here’s a couple of additional considerations that I have been told about – but I do not profess to have all the facts. Perhaps someone can confirm?

    First bit of history. The U.S. wanted to dam the Columbia River. A deal was made. Each year the U.S. reimburses the BC government for constructing hydro generation on the Columbia River. Here’s the rub .. BC can either take cash or BC can take electrical power as our form of compensation. Apparently BC has routinely been taking the cash payment. If this is true, then any claim that BC needs more generating capacity would be a blatant lie. That extra power supposedly is already there for the taking.

  4. To understand what is going on at Hydro you have to consider Dan Doyle’s influence and power. Doyle was appointed Chairman of BC Hydro by Gordon Campbell. His power and influence has only increased since he left Transportation where he was the Godfather of Highways privatization. John Dyble, Christy Clark’s deputy minister and Peter Milburn, deputy minister of finance are two of Dan Doyles’s carefully selected executives from his days in highways – hence the reference to highway engineers. They both owe their positions to promotions received from Dan Doyle and now conveniently also were the ones who conducted the review of Hydro. Dan Doyle is basically running the Province. The Godfather of the private sector is in control. Will an NDP government do something about him?

  5. The need for the rate increases is real, Scott – as we’ve been predicting for years. But they’re certainly being used to crap on BC Hydro, whereas the problem is clearly that we’re paying 49% of our power costs for just 16% of our power (IPP power) – for power we don’t need, can’t use, and must dump on the market at a serious loss. And it will only get worse from here, as more of this power comes online (from approx. $600 million worth last year to over a billion within a few years). Naturally, the Libs pretend like they had no idea and pin it on poor management at Hydro – and if they’re able to hoodwink enough folks and get re-elected, then they will proceed with this reasoning to dismantle our public utility. We need to be sure that what we change is the government overseeing Hydro, not our public utility itself – which was just fine for 40 years until these clowns came along.

  6. I think the provincial government (Liberals) are manufacturing these rate increases for many reasons but here are two of them. They and former governments have raided Hydro of their financial wherewithal to actually make the upgrades to the electrical distribution system leaving them twisting in the wind. Hydro needs billions to fix things, go to the rate payers. I also think the Provincial government is manufacturing these rate increases to try to sell to the public that if Hydro was a private enterprise that we’d be saving money, blah blah blah. I think they have an inkling they about to lose the referendum on the HST and they need something to raid to pay Ottawa back the 1.6 billion they owe them and selling Hydro would probably do that. Jerks!

  7. The BC Liberals were clearly reelected with a strong mandate back in May 2009, and they are free to do as they please untll May 2013.

    Ms. Clark has a clear mandate, from her party and her constituents of Vancouver-Point Grey, to govern as she sees fit.

    BC voters could have chosen to elect an NDP government back in 2009, but didn’t.

    Governments are given mandates to govern and set public policy; Those who disagree have the right to air their complaints, but must resign themselves to the fact that majority rules.

    British Columbia does not want to return to the despicable have not days of the 1990s.

    The NDP, under Adrian Dix, are a dangerous lot; they would lead BC down the same path which Greece has been following.

    I am very ashamed of Rafe Mair, a former Socred, cozying up to the socialsts that he used to fight against and abhor.

    I guess Rafe just wants to find something, anything (no matter how stupid or useless or infantile).

    We have true parliamentary democracy that is fully alive and well here in BC

  8. The Review Panel would seem to confirm what you have been saying about the purchase of power from IPP’s. But, the other big issue is the impact of the other government policies on hydro rates.

    Water usage rates chargeable to large hydro projects(aka Site C) are up to more than 5 times of that chargeable to small power projects? In my view, that is outrageous considering BC already pays a premium for IP power. That seems to be another covert form of favour to IPP’s. And, BC Hydro pays more than 2 times what other jurisdictions charge. If that were reduced accordingly, BC Hydro could save $150 million out of the current $312 million.

    The Panel points out that the government is free to alter the payout rate to “meet joint objectives.” An important point, that stresses the inherent obligations of a government-owned utility, is made by the Panel. “Delivering reliable low-cost power is generally seen as more important than maximizing the return to the shareholder.” I sent both Bill Good and Vaughn Palmer an analysis of the amounts of capital projects that could be financed if BC Hydro were allowed to reinvest its earnings. Currently, the government is employing BC Hydro, not only to provide power at a future high cost, but to serve as an instrument of fiscal by siphoning off large amounts of money. That is a double-edged sword and wrong.

    In my view, the cost of power to ratepayers is more leveraged to the amounts BC Hydro pays both as a water-usage charge and a dividend than the other areas of potential cost savings internal to BC Hydro. The Panel, however, gives the government lots of slack in addressing these concerns regarding government policy. The government can easily say that it will fully comply with the recommendations…”as the economy improves…” But, I wouldn’t hold my breath on that critera.

    So BC Hydro has more than 6 times the engineers employed by the Ministry of Transportation. With highway maintenance essentially privatized and all new infra-structure acquired on a design, build and maintain basis through PPP’s, why does the Ministry of Transportation have any need for an engineer? Consider the engineering requirements to run an electrical utility. My comments regarding the MOT are not intended to slag any member of my profession.

    Tosh Suzuki

  9. why doesnt anybody hold our currupt polititians and civil servents liable for the decissions and penelize them for anything they do without the concent of the people,there must be a law somewhere?then they will understand that they cant do what they whish,also our news systems the press or tv should report those things to the puplic and not lie about it.

  10. Harper is shoving off some of his responsibilities, to the provinces. He wants to be rid of health care. Also meat inspectors. Once Harper cements the HST, be prepared for an onslaught of horror being brought to BC.

    Harper sees himself as an energy giant. He craves that power and glory. He won’t give a s..t, if he pollutes the entire planet, to achieve his dream. His wars, jets, ships, and his gulags, is all he focuses on. And, to hell with the people, except he wants, BC’s tax money, to finance his war machine.

    Campbell thieved and sold our BCR. He thieved and sold our rivers. The eco damage on those rivers is stupendous.

    Harper and Campbell are best buddies. They have more pollution plans for BC. Campbell’s reward for doing Harper’s dirty work for him is, a cushy, High Commissioner to England. Harper is in trouble with Europe, he is passing the dirty tar sands as clean energy.

    The Brits are against the dirty oil. They protested at, the High Commissioners office. There are two M.P. doing time for corruption and theft, in England. All the info on Campbell and Harper, has been sent to England.

    The Brits, are not going to welcome Campbell.

  11. I believe you Rafe & have been telling people for the last 2 years as well and you’re right. Most people just look at me and say, You’re exaggerating. They wouldn’t do something like that & besides the NDP were the ones who messed things up. I guess people will remember the past in the way that suits their needs. I know that nothing the NDP ever did comes close to the blood sucking the Liberals have perpetrated on BC. I thought this kind of thing only happened in the States! The world just seems to have so many selfish people in power now. Is main roll of Government really about helping Corporations? It didn’t used to be like this. When did the majority of citizens stop watching and let those in power take all the cream and leave the sour milk for the rest of us?

  12. I believe it, Rafe. The BC Liberals have been selling all our resources to their corporate friends for a decade. But how do we stop them? If they succeed in keeping the HST, I’m afraid that they will continue to run roughshod over us until May 2013. Christy will consider it a mandate, and in two years, what will be left of ‘the best place on earth’? Will we ever recover from the actions of the most corrupt party in B.C. history?

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