This month, the B.C. government released Ken Davidson’s report politically titled report, Zapped - A Review of BC Hydro’s Purchase of Power from Independent Power Producers, for the Minister of Energy, Mines and Petroleum Resources.
Accompanying its release, Energy Minister Michelle Mungall said, “British Columbians are paying more on their hydro bills because of the previous government’s choices. Professional staff within government and BC Hydro warned them against that course of action, but that government refused to listen.”
Mungall commissioned this report and hired a former B.C. Treasury Board staff member who worked for the NDP government in the 1990s. It’s also been reported this was a sole-source contract. I point this out as the report’s primary focus appears to be to castigate the previous government and its handling of B.C.’s energy file. With that in mind, this report is very political in nature, and written with the express view of trying to make the Liberals look much worse than they actually may have been. At the same time, it tries to make the NDP look like knights in shining armour.
I read this report asking myself what was missing, and what did the author leave out? And, when I did that, the reasons behind Mr. Davidson’s conclusions come out a bit different than what he writes.
The report concludes that, a) BC Hydro bought too much energy and energy with the wrong profile, b) BC Hydro paid too much for the energy it bought, and c) BC Hydro undertook these actions at the direction of government. These are essentially correct—if we only apply hindsight and forget about the day-to-day realities of when and why decisions were made.
When the BC Liberals and Gordon Campbell came to power in 2001, they embarked on a made-in-B.C. clean energy strategy (my words), which included a number of initiatives to reduce our reliance on imported power and become self-sufficient, obtain power from green and clean sources, and obtain much of it from private sources. The exception was Site C, which would stay in the purview of BC Hydro.
Zapped is mainly focused on the view that the government’s political direction to BC Hydro was ill advised, meddling, interfering, or any other words you can so choose (once again, my words), and only possible due to the removal of BC Utilities Commission oversight. The report contains very little rationale as to why the government of the day chose to implement a green energy strategy, become self-sufficient in energy production, and outsource these new projects to independent power producers (IPPs).
Zapped tends to focus on power costs, generally through a rear-view mirror lens, where one can now evaluate yesterday’s decisions based on today’s knowledge.
I agree that both BC Hydro and the government of that day made some miscalculations, and that most of these miscalculations were regarding future load forecasting and anticipating future power pricing.
Much of the growth in electrical demand has not happened, either in B.C. or with our export customers. Given you can’t plan to be short of power, the strategy was to build enough capacity so we in B.C. never ran out — we haven’t, but today we do have a surplus of power. (No mention of the premier’s recent announcements about increasing B.C.’s use of electrical energy in our future.)
Interestingly, this report takes great offence that many of today’s IPPs are now owned by out-of-province corporations. Zapped makes this seem like a bad thing, but this follows a long-standing NDP philosophy that corporations that make money are evil, and even more evil if they are owned by a corporation headquartered outside of our utopian province.
Just as interesting, Zapped concludes that B.C. should not have become self-sufficient in power, but instead should have continued buying power on the open market from these same evil out-of-province corporations. Go figure.
Zapped spends little time addressing the political realties around why government made these choices. I was a mayor when we went through these changes. Remember the AES Wapiti Energy Corporation proposal for a 184-megawatt thermal coal plant northeast of Tumbler Ridge? Remember that its bid for an IPP was the lowest-cost applicant, until the government implemented the Clean Energy Act, and forbade B.C. from purchasing power from coal plants? Remember how most of B.C. celebrated that we would have no “dirty” coal plants in our province? I didn’t agree and, as a mayor, wrote despairingly about this decision to eliminate low-cost power producers in favour of higher costs.
It makes bare mention that the rationale in shutting down Burrard Thermal, fired by natural gas, was that most of the population in the Lower Mainland was pressuring the B.C. government to do just this, and rid them of the evils of greenhouse gases.
Not much mention of why the Northwest Powerline (Highway 37) was built, only that it cost BC Hydro money. Apparently, the author doesn’t believe we should use access to electric power to encourage mining investments, to which it has.
Likewise, Zapped makes statements that most independent run-of-the-river projects produce most of their power during spring freshet, when power isn’t needed (which isn’t totally true), that our windfarms can’t compete with Alberta’s (not true), and that solar energy is not all that practical due to our cloudy climate (this is likely true). No facts, no figures, no numbers, just the author’s rhetoric to fit his conclusions.
Likewise, not much mention of the political pressures from all over B.C. to open up IPPs to other producers so communities could take advantage of the prosperity these projects could bring them, to which the government directed BC Hydro to do.
Interestingly, now this report states that signing more IPPs with indigenous communities could be alright, as they may serve another purpose. Go figure. If the current government signs agreements with a different segment of the population that results in higher costs for BC hydro, that is alright? I was always taught, what’s good for the goose is good for the gander. Oh well. I digress.
Instead of a balanced report on what happened, Zapped is mostly about using dollars and cents to score political points for the masters who commissioned it. Not much is directed at how and why we reached this point, and very little is about the rationales behind the decisions that were made. Yes, costs and money are important, and when miscalculations are made, someone (including me) will have to pay. In this case, the report estimates an increase of $0.55/day for our residential electricity. The fact that the province achieved a whole bunch of other benefits is scarcely mentioned.
As to recommendations? Renegotiate IPP contracts lower when you can and have more transparency in BC Hydro’s contracting process (fair comments), restore the BCUC to its former glory (only for projects that are outside of government’s interest in building our economy), and go back to purchasing power from outside sources (not likely to fly with the NDP government, and certainly not good for our smaller and rural communities).
In my simple, flat earth view, this is another report that will be relegated to the dustbin as soon as the political interests die.
But I guess it did accomplish one thing: It must have kept Minister Mungall happy for a day. And to think House Speaker Darryl Plecas hasn’t yet asked her to justify this sole-source contract.
Evan Saugstad lives in Fort St. John.