BC Hydro’s plan to seek a 55% increase in domestic hydro electricity rates over the next 3-5 years from the BC Utilities Commission for “badly needed projects” is part of a continuing trend to bankrupt the crown corporation, says BC First party spokesman, Chris Delaney.
Delaney says BC Hydro has been engaging in a plan of reckless and deliberate financial mismanagement that is designed to severely diminish the value of BC’s “crown jewel” in order to sell it off to foreign interest. He says the evidence for this is found in the creation of Independent Power Projects (IPPs) with private companies whereby BC Hydro is tied to contracts that guarantee a rate that is double the market rate – resulting in taxpayers subsidizing corporate giants like General Electric in the United States.
“It is unbelievable. We are actually paying twice to prop up the failed “Run of River” model. First, by guaranteeing an unsustainable rate for power that is twice what the market will pay us. And second, by allowing private, mostly foreign owned companies to produce power at twelve times the cost we can produce it ourselves,” said Delaney.
Delaney says prior to the BC Liberals forming government, BC Hydro generated billions of dollars to the provincial treasury that was used by government to help fund a number of objectives such as health care, education, roads, and infrastructure. He says since the BC Liberals took over with promises to make BC Hydro more efficient, the reverse has happened.
“BC Hydro today has become a net importer of power, resulting in massive cost overruns that must now be paid by consumers. But it is the result of mismanagement, not market forces,” said Delaney.
BC First Economics Advisor Erik Andersen says that since 2006, BC Hydro has embarked on massive infrastructure costs totaling $6 billion, representing a 44% increase. But total domestic consumption of hydroelectric power decreased by 4.2% while rates increased by 18.3%. “This is a result of the creation of a special ‘Regulatory Asset Account’ that allows BC Hydro to spend money now that it anticipates it will receive from future rate increases.”
“They have embarked on a deliberate, systemic plan to spend beyond their ability to pay, which will result in either dramatic increases in rates and/or bankruptcy as consumers refuse or are unable to support the excessive spending,” said Andersen.
Andersen says the argument that BC Hydro’s infrastructure had been inadequately maintained and allowed to reach a critical state of disrepair does not explain the decision to increase expenditures beyond the capacity of the corporation or consumers to support it.
“Only complete fools would engage in such a financial vector, or people forced to act contrary to the best interests of British Columbia by a government that mandated ‘take or pay’ contracts for IPPs. Since the people running BC Hydro are highly educated professionals, only the latter reason stands up under scrutiny,” said Andersen. Watch a video on the mismanagement of BC Hydro with Erik Anderson HERE
Delaney says the BC Government is engaged in an extremely dangerous game of chicken designed to force BC consumers into a corner where the only way out will be to sell BC Hydro. “The devaluation of BC Hydro that will result from such incompetent management practices will ensure a ready buyer, most likely a multinational from the United States or Europe.”
BC First is committed to restoring BC Hydro as a fully publicly owned crown corporation, and to expanding its mandate to include the development, management and distribution of new forms of energy.