A new independent report commissioned by B.C.’s energy minister concludes BC Hydro ratepayers will shell out at least $16.2 billion over the next two decades to pay for electricity they don’t need.
That’s because the previous BC Liberal government forced the Crown corporation to sign decades-long contracts guaranteeing it would buy overpriced electricity from independent power producers (IPPs), many owned by BC Liberal donors.
The waste will cost each ratepayer about $4,000 over 20 years, for energy that’s out of sync with when it's needed, because IPP run-of-river operations surge with power during months B.C. is already flush with energy, and not the peak use times at the heights of summer and winter.
Somewhere up there Rafe Mair is smacking clouds together to make them thunder: “I told you so!”
Excerpted from a piece Mair wrote in September 2013 is this:
“We British Columbians are the ongoing and apparently disinterested victims of a world-class deception and it has gone on since 2002 when Gordon Campbell announced British Columbia’s new Energy Plan.
“Let’s start there because that’s where the decade of incredibly stupid policy regarding BC Hydro began. From that moment on BC Hydro wasn’t permitted to bring on new sources of energy, ‘Site C’ excepted. All new power was to be made by private companies. Which meant:
- BC Hydro would be forced to contract out all its new power.
- Each contract was on a “take or pay” basis, meaning that Hydro would have to take the power whether or not it needs it (most of the time it doesn’t), or pay for it anyway.
- Electricity is in short supply in the months leading up to the “run-off” and thereafter until the next run-off. Because water levels are for the most part too low for independent power producers (IPPs) to produce, this means that virtually all private power is delivered to BC Hydro when they don’t need it!
- This means that BC Hydro, because the contracts imposed on them say so, must pay IPPs more than double the market price! And up to 10 times what they can produce it for!
- BC Hydro, under government imposed contracts, must pay IPPs for this power they don’t need.” (Mair put the excess bill at “$50 billion over the next 25 to 30 years, meaning about $2 billion per year, indexed to the cost of living. This assumes that no more IPP contracts are let — yet new ones are being negotiated now.” That’s more than twice what the province’s new report predicts. Then again, the report acknowledges its “estimate is believed to be conservative.”)
Mair adds a kicker that isn’t so easily measured in dollars:
“It must be added that the adverse effect of IPP projects on the rivers can be devastating. And yet, for reasons unknown, they are not penalized for breaking the environmental rules there are.”
And then, because he is irascible Rafe: “I pause here to point out that so far as I can find, the Province, the Vancouver Sun and its main political columnists, Mike Smyth and Vaughn Palmer, have said nary a peep critical about all this.”
In releasing the report, written by former B.C. Treasury Board director Ken Davidson, Minister Michelle Mungall said: “This is the type of thing the BC Liberals have done — let their rich friends get away with British Columbians’ dollars, and it’s B.C. that has to pay. If we had not gone into these private power schemes, people would be paying $200 less on their hydro bills right now.”
What was she driving at? Hmmm, let’s return again to Tyee archives. Will McMartin laid it all out in several articles back in 2010.
They connect the dots including:
- The lousy economics of IPPs
- The BC Liberal-connected outfits with little experience or assets getting the contracts
- And how those contracts – licenses to print money, really – made it easy for their recipients to flip them quickly at great profit to energy giants outside B.C.
These headlines tell the tale:
Is This Any Way to Finance Clean Energy? BC Hydro borrows capital at 1 per cent, private power firms pay 12 per cent or more. Campbell chose builders sure to make green power far more expensive.
Plutonic Tops List of Power Firms Donating to Libs. Of the 14 successful firms in BC Hydro’s latest call for power, 10 have made contributions to the Liberals totaling nearly $385,000.
BC’s Energy Independence? Don’t Believe It. Minister Lekstrom is wrong. Most new energy projects controlled by big firms outside BC.
Vancouver Law Firm a Big Player in BC Hydro’s Clean Energy Call. Stikeman Elliott partner sits on Hydro board; another a major player in Finavera Renewables.
Edmonton Profits Big from BC Private Power. For trio of independent power plants, net-profit margin is a whopping 26.8 per cent.
Read ‘em and weep.