SOURCE: Watershed Sentinel

Watershed Sentinel

March 09, 2016 17:27 ET

Editorial Exclusive - How BC Hydro Wound Up $76 Billion in Debt

COMOX, BC--(Marketwired - March 09, 2016) - As British Columbians wonder how they will shoulder the cost of the proposed Site C Dam, BC Hydro is quietly wrapping up the final stages of its application for approval of a Debt Management Regulatory Account to deal with its skyrocketing debt, which now totals $76 billion. It has taken a decade and a half of mismanagement to get to this point. In a recent article, How BC Hydro Wound Up $ 76 Billion in Debt, in the Watershed Sentinel, Arthur Caldicott describes the "…haemorrhage of cash which is now flowing out of ratepayers' pockets through BC Hydro to IPPs [independent power producers]."

Shortly after coming to power on their "New Era" platform in 2001, the BC Liberal government set out their first energy plan, Energy for Our Future. Caldicott points out that overruns in the billions occurred when departments were outsourced and transmission projects went over budget. Transmission was also carved out of Hydro to become the new BC Transmission Corp. -- eight years later and $65 million down the drain, this unnecessary action was undone, and BCTC was reintegrated into BC Hydro. Yet the decision to transform the role of private power so that it would dominate BC Hydro's electricity costs is the main source of crippling debt that BC Hydro now faces.

BC Hydro has signed agreements with IPPs which require BC Hydro to pay the IPP whether or not it takes delivery of the power. When electricity markets have hit low points in recent years, the utility "…curtailed production at its own heritage generation facilities, spilling water instead of using it for generation, while taking all the unneeded high-priced power IPPs could churn out."

Hydro is locked in to paying high-end prices for power it may not even use. "Electricity exports from BC trade mainly through the 'Mid-Columbia' price hub. The average through 2015 was $26.06 per MWh, and for the first six weeks in 2016 has been $22.73. It's not a winning business proposition when the power BC Hydro is selling costs $79.54 per MWh."

As well, California -- a prime BC Hydro customer -- refuses to accept BC's power that is produced by IPPs as eligible 'green' power under the state's renewable portfolio standard, which pays a premium price for electricity.

BC Hydro has deferred its debts into accounts to be paid off in the future by BC Hydro consumers. Site C Dam, the proposed third dam on the Peace River, already has its own deferral account totalling $441 million. Caldicott argues that "BC Hydro needs a series of significant rate increases to repair this economic disaster," but reminds us that "… fearing the electoral consequences, and ignoring the economic consequences, Premier Christy Clark has put a lid on rate increases until well after the 2017 election."

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Contact Information

  • For further information or to arrange an interview about this media release please contact:

    Arthur Caldicott
    Watershed Sentinel Writer and Independent Energy Analyst