Oh, to have been a fly on the wall at BC Hydro’s head office as one dismal financial report after another was released this month.
The first shoe dropped when Auditor General Carol Bellringer made the first announcement official: BC Hydro is in debt to the tune of $5.5 billion with respect to what she called rate-regulated accounts. These have also been called deferral accounts, which BC Hydro has been using in order to smooth out its operating costs over time. These deferred accounts simply delay the present payment into the future, for your kids.
If that wasn’t bad enough, within the week another report called Zapped, by Ken Davidson, became public, the first phase of an official review concerning BC Hydro’s finances and performance. This review is a stinging indictment of a utility bordering on bankruptcy. Davidson tells us that BC Hydro has a whole other layer of debt that is rarely even talked about: The independent power producers and their contractual agreements with BC Hydro.
BC Hydro had been contractually mandated by the previous Liberal government to buy massive amount of electricity from about 130 private companies, each with their own agreement on the amount of electricity delivered and the price per megawatt-hour received. Davidson tells us in the report that the average price from these IPPs hovers around $100/MWh, when the average open market selling price has been consistent at $30/MWh. We the ratepayers will have to buy the IPP power, by government decree, which is a much higher-priced electricity than the going rate from Hydro’s own heritage facilities. This differential between the prices is what BC ratepayers are legislated to pay, at some point.
The majority of IPPs are producing power from either run-of-the-river projects or wind. Regardless, BC Hydro was already awash in excess electricity production from its own heritage dams, such as WAC Bennett, Peace Canyon, etc. Yet, the government of the day created a false need for more electricity and, empowered by legislation, requires that BC Hydro purchase this artificially high-priced IPP power.
These contractual agreements made with IPPs have significantly long-term financial implications for every ratepayer in the province. Over the longer term, each and every British Columbian will pay an additional $4,000 for this particular IPP debt alone. BC Hydro is contractually committed for up to 60 years with some of these companies. This is in the order of another $51 billion.
Another commitment that seems to slip under the financial radar of many journalists comes from BC Hydro’s Integrated Electricity Plan from 2016, where it requested, and received, the go-ahead to spend $2 billion per year for the next 10 years. There is a total of $20 billion in expenditures for repairs, retrofitting, and updating the grid. No one would suggest that there isn’t a necessity for regular maintenance, but it comes with a price.
One final white elephant in the room is Site C, where, about a year ago, the NDP increased its overall cost to $10.7 billion. Some independent experts are now telling us that this will exceed the $12 billion mark very soon.
So, herein lies the problem. We are getting piecemeal information from the Auditor, from Davidson, trickle downs from the ministry, and fewer scraps from BC Hydro. Nowhere do we see the math on a simple spreadsheet showing us the whole, dismal picture of BC Hydro’s financials.
1) Deferred Regulated Accounts: $5.5 billion
2) Long term Contractual IPP costs: $51 billion
3) IEP grid/facility maintenance: $20 billion
4) Site C capital costs: $10.7 billion
So, without knowing about any other extraneous costs, it’s fair to say BC Hydro (aka the ratepayers of B.C.) will be responsible for a whopping $87.2 billion debt load.
The reason that any additional costs are unknown is quite simple. B.C. citizens do not have the legal right as shareholders of BC Hydro to any specifics about those 29 deferred accounts. Similarly, we are forbidden any financial details about the 130 IPP contracts presently in operation. It is not available in the public domain.
You can ask, but they will not tell. Why would this be?
Clearly, there’s no transparency coming from the NDP-Green government or BC Hydro. The BC Liberals are equally guilty for this cover up. We are given their version of BC Hydro’s fiscal problems and then simply told to just shut up and pay.
There is no doubt that we are paying dearly for the past sins and transgressions of present and previous governments. No one is blameless. Yet, no government or agency is willing to give us the full story concerning the dire condition of BC Hydro.
The bigger issue right now is transparency and financial clarity of the BC Hydro story. We are simply given snippets and tidbits of information about its finances. It is very much like the story of the blind man trying to describe what an elephant looks like, simply by touch.
Sadly, we the ratepayers can no longer recognize our own elephant in the room, BC Hydro, once so highly regarded and respected.
Mike Kroecher is a long retired resident of the Peace, expressing his deep roots in the land through his art. Rick Koechl is a recently retired teacher of the Peace with an enthusiasm for politics and energy.