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.

When I’ve finished you will see why I call the Gordon (Pinocchio)
Campbell government gigantic fibbers – to avoid the more appropriate “L”
word.

Let’s go back to what Finance Minister Colin Hansen had to say about
private energy projects and if you “Google” “Colin Hansen power” you
will see and hear for yourself. It is a tissue of fibs.

1. He says BC is a net importer of power. That’s a falsehood. BC Hydro
is a net importer some years but BC as a province is a net exporter,
That can be proved by looking at the figures from the National Energy
Board which monitors exports. Moreover, when BC Hydro imports from
Alberta it does so at “off peak” hours thus very cheaply and because
Hydro can “store” energy as water in their reservoirs, it exports that
power below the line during “peak” periods making a very tidy profit. To
think that our Finance Minister doesn’t know that, explains a lot about
financial affairs he and the premier have grossly mismanaged and told
fibs about. Hanson says that independent power producers are small
outfits and that the rivers continue at “their normal stream”. This,
again, is an outrageous falsehood! Look at our website at
www.thecanadian.org or www.saveourrivers.ca and see the visual evidence
for yourself through Damien Gillis’s videos.

2. Hansen says that only .03% of rivers will be used. The actual
figure is double that but the important fact for British Columbians is
that at least 600 rivers are targeted all of which have substantial fish
values and the power plants will kill the ecology these rivers sustain.
He neglects to mention the very substantial clear cutting required for
roads and transmission lines.

3. Hansen says these projects are widely supported by many
environmentalists. I can think of three – Tzeporah Berman who is seen by
most environmentalists as a turncoat for her own profit, Dr. Marc Jaccard
who is in the pay of the BC government and Dr. David Suzuki who only
supported it if rivers were safe and, as I understand it – David can
speak for himself, of course – he has serious reservations about the
Energy Policy as being implemented.

4. Hansen says that these projects are “clean and green”. It is safe
to say that when you see the words “clean and green” the very opposite
is true and that very much applies to the bunch who call themselves
“Citizens for Green Power”, an organization which shills for the private
power producers.

See the video yourself – the only true statement is the minister’s
name.

Also remember that Pinocchio himself and the three who have been Energy
Minister over the past several years have maintained that this private
power is to give BC energy sufficiency by 2016.

Let me now tell you the real story.

I have spoken around the province, written in articles and stated on
radio and TV the following:

1. BC is not in need of energy and won’t be for a very long time to
come if we practice conservation, (a word foreign to us, sadly), upgrade
present facilities, put generators on flood control dams and take back
the power we’re entitled to under the Columbia River treatment.

2. BC Hydro is forced by the government to enter contracts with
private producers to buy power, on a take or pay basis, at double or
more what they can sell it for on the export market.

3. I have said that this private power must be sold by BC Hydro
because it can only be produced during the annual run-off thus is not
available to BC Hydro in the colder months when Hydro can use it. Don
McInnes, Head of Plutonic Energy, partnered with General Electric,
stated that you would “have to have been on Mars not to know that this
energy was for export”.

4. I’ve stated that because BC Hydro must lose huge sums a year
financing private energy producers (the contracts total about $40
BILLION at this point), it will no longer be able to pay its handsome
annual dividend to the BC Government but that they will still pay the
dividend by increasing rates to us the BC public!

What we have not heard from Pinocchio and his ministers is an admission
that this power is not for BC use as claimed, has nothing to do with
making BC self sufficient and moreover is being subsidized by the public of
BC through its crown corporation, BC Hydro.

Now, however, the truth is out, though you had to read it in the Globe
and Mail, not Canwest which is the laundry for the BC government’s dirty
linen.

On Page S3 of the Globe and Mail for July 30 there is an interview under
the headline POWER POLITICS, Will the Clean Energy Act clear the way for
British Columbia to become a significant exporter of renewable energy?

Bill Bennett, the Energy Minister, the cabinet blab, states “we are
actively working toward developing export opportunities to markets such
as California. Many states and provinces want to reduce their emissions
by replacing energy generated from carbon intensive fuels and we are in
a unique position to offer these jurisdictions clean and reliable power
generated at competitive prices. (I’ll say!! RM) We will need to work
with independent power producers as we seek and advance these
opportunities.”

“BC Hydro, as required under this act (the so-called Clean Energy Act –
RM) will present to government an integrated resource plan on export
opportunities. In the meantime, the government is committed to working
collaboratively with the independent power industry.”

To digress for a moment, you are probably asking yourself, as I have
asked, if this is such a terrific idea, why isn’t it being done by BC
Hydro, our own company, so that all the profits would flow to the BC
Treasury?

For the purposes of this article I simply underscore the obvious – what
I’ve been saying and writing has been absolutely true – this private
power is not for BC consumption and that all the profits of this swindle
go to private companies, not to the public of British Columbia where
they belong.

We also must conclude, on the evidence of the minister responsible, that
the sobriquet “Pinocchio” is indeed fitting for Gordon Campbell, the
premier of this province who is justifiably shown by our cartoonist
Gerry Hummel with his pants on fire.