Marvin Shaffer: BC Hydro Problems Stem from Bad Government Policy


Read this op-ed by SFU’s Dr. Marvin Shaffer in the Vancouver Sun, putting the blame of skyrocketing hydro rates squarely on the shoulders of the BC Liberal Government as opposed to BC Hydro’s management. (June 7, 2012)

Though presented as part of its effort to protect families, the government’s recently imposed cap on BC Hydro rate increases will not help British Columbians – families or other-wise. The cap on rates does nothing to reduce costs. At best it provides a short-term gain, but sooner or later BC Hydro will have to increase rates to match the increase in its costs.

British Columbians will benefit only when BC Hydro is able to plan and operate its system more efficiently. And as much as the government would like to blame the BC Hydro board and management for rising costs and rates, the fact is that the government’s own policies are largely to blame.

In an unprecedented series of directives, the government forced BC Hydro to acquire more power than it needed to ensure reliable supply, or could otherwise justify. It also dictated that all new customers, including large electric-intensive industrial loads, would pay the same standard rate, even though that rate is less than half the cost of the new supply BC Hydro has to acquire to meet the new customers’ requirements.

Through new legislation the government authorized BC Hydro to make major investments in smart meters, new transmission lines and other projects without any independent assessment of their costs and benefits or business plan. That same legislation also directed BC Hydro to develop plans to buy and export private power, and enabled cabinet to force BC Hydro to do so regardless of the costs of the back-up and other services BC Hydro would have to provide and the market risks it would have to assume.

These measures have already had major impact. In its rate application, BC Hydro reported that by 2014 it will be buying over five million megawatt hours of private power as a result of the government’s policy. This is power that BC Hydro does not yet need, would not otherwise have acquired and the BC Utilities Commission would not have approved. The average price BC Hydro will be paying for this power is well over $100 per megawatt hour and its value, based on BC Hydro’s latest forecasts of its market value, will be less than $50 per megawatt hour. The financial loss to BC Hydro will be well over $250 million in that year alone.

The government cannot reverse the costs and losses it has already imposed on BC Hydro. Rate freezes only mask, they do not undo what has been done. What the government can and should do, however, is to change its policies and rescind the legislation and directives that have prevented BC Hydro from planning and operating its sys-tem more efficiently.


About Damien Gillis

Damien Gillis is a Vancouver-based documentary filmmaker with a focus on environmental and social justice issues - especially relating to water, energy, and saving Canada's wild salmon - working with many environmental organizations in BC and around the world. He is the co-founder, along with Rafe Mair, of The Common Sense Canadian, and a board member of both the BC Environmental Network and the Haig-Brown Institute.