B.C. suffering power failure - North Shore News

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B.C. suffering power failure

By Elizabeth James, North Shore News May 18, 2011

“BC Hydro will no longer produce its own energy: instead it must purchase it from private power developers through expensive, long-term energy contracts. Yet despite paying very high prices, B.C. customers get no assets, no price protection, and no guarantee of future security of supply.” SFU professor John Calvert, June 2007

From the fact-filled chapters I have read so far, John Calvert’s book Liquid Gold promises to be a primer for anyone who strives to understand the fiscal and operational metamorphosis underway at BC Hydro.

As an associate professor in public policy at Simon Fraser University and a member of BC Hydro’s Integrated Electricity Planning Committee, Calvert understands better than most “the broader implications of what the government is now doing to both BC Hydro and our electricity system.”

And what the government is doing isn’t pretty.

Calvert sounded his warnings in 2007, and nothing has improved since then. Indeed, the long-term viability of our heritage public energy asset appears less certain now than at any time since the Crown corporation was formed in 1961.

As retired economist Erik Andersen has described in our frequent discussions, “Since mid-2007, audited financial statements show that the provincial government has forced BC Hydro to assume $3.5 billion in long-term debt for no economic gain in productivity for that investment.”

“Over the long term,” Andersen said, “taxpayers must also repay the estimated $50 billion in ‘principal’ or secondary debt burden assumed under contracts the province has signed with independent power producers.”

The third Hydro obligation, which involves operating lease contracts, is difficult to quantify because, despite the urgings of our federal and B.C. auditors-general, it is not yet required to be disclosed under generally accepted accounting principles.

Although those secret legal agreements were negotiated by the Campbell team, it is doubtful our newly crowned premier can break them without incurring huge penalties — and the costs of restoring our rivers.

As Andersen noted, these are “exorbitant premiums to be paid for power that, despite all we have been told, is not required for domestic use.”

To put that in context, Andersen explained that, “while current cross-border electricity contracts are priced at $25 per megawatt-hour, B.C. consumers are already paying $85/Mwh, and Hydro has asked the B.C. Utilities Commission to approve an increase to $100/Mwh.”

So do we take this lying down and allow what remains of our public assets to be dealt away to out-of-province corporate interests?

And as was the case with BC Rail, will we only complain when it is too late to stop the government’s juggernaut of privatization?

Since 2001, when the B.C. Liberals were first elected on the basis of their New Era promises, we have lost to privatization much of BC Hydro, BC Ferries, all but the track-bed of BC Rail and BC Gas.

In addition, we have lost to corporations our direct control over a significant number of hospital services, highways, bridges and transportation systems.

More to the point, even if transparent due process had preceded the original off-loading of provincial assets — it did not — the people of B.C. had absolutely no say when Kinder Morgan traded BC Gas to Fortis BC, or when Australia-based Macquarie sold off its interest in the Sea-to-Sky highway to a consortium headed up by Fiera Axium Infrastructure.

Of interest is that the Fortis name also appears on our Hydro bills.

Since taxpayers must pay for political decisions and corporate profits, and jobs are created whether a project is public or private, where is the benefit?

For what is only a partial answer, we must return to BC Hydro and heed what the legislature was told on Mar. 9 by Stikine MLA Doug Donaldson, the NDP critic for Energy, Mines and Petroleum development.

After making the point that it was bad provincial government decisions that left BC Hydro little alternative but to announce its intended residential rate increases, Donaldson said:

“A mere two years ago, the province removed about $350 million from BC Hydro dividends. In 2011/12, they’ll take $611 million.”

I agree with Donaldson that when an amount equal to 80 per cent of Hydro’s projected deficit is transferred “directly into the province’s general revenue, to pay for more bad decisions” it is “not good financial management.”

More serious than that, however, is that when BC Hydro bills have, as Donaldson claims, become merely “another form of general taxation,” to the point where neither the corporation nor consumers can sustain its debts, privatization becomes inevitable — either that or bankruptcy.

Calvert, Andersen, Donaldson and others have provided us with many of the facts as they are, not as politicians would have us believe.

Will the information be put to good use, or will we just shrug and pay the bills?

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