On one level, the B.C. government's new Review of BC Hydro marks an about-face by the Liberals under Christy Clark, calling quits to Gordon Campbell's fantasyland of a "green energy powerhouse." On a deeper level, however, it represents a deepening of the Campbell agenda to privatize the public utility. Campbell's fantasy was that we'd become massive exporters of clean electricity mined from our rivers and wind, sold at a premium into the power-hungry California market. This represented a major shift in the mandate of BC Hydro.
From its inception, BC Hydro's mission was to provide safe, reliable, low-cost electricity to British Columbians. Campbell changed this: Hydro was to become a booster and sales agent for private sector electrical generation corporations. This role was given such priority that the government was happy to sacrifice affordability. That's because Hydro's customers would be forced to underwrite the profitability of the private electrical industry.
The reality was that BC Hydro was forced to sign long-term contracts for high-cost, low-value power generated by Campbell's pals, the corporate "Independent Power Producers." IPPs are guaranteed revenue streams for decades to come, selling electricity at inflation-adjusted prices starting between around $70 per megawatt hour and $130 per megawatt hour. Because IPP run-of-river projects (which actually involve extensive damming, diverting and disruption of rivers) are environmentally damaging, they do not meet California standards for "clean." That means we have to dump the high-cost power on the spot market, where it competes with coal and natural gas generation, for prices ranging from near-zero to about $50 per megawatt hour (and most of the time, around $35 or so).
The result? Hydro customers pay through the nose for what is essentially junk power that we have to re-sell at a huge loss. IPPs provide only about 15 per cent of BC Hydro's electricity, but that little slice constitutes nearly one-half of the utility's entire cost of energy.
In short, Campbell's schemes transformed British Columbians into a vast feeding-trough for IPPs.
Add to that a billion dollars they want us to waste on so-called smart meters, which achieve little except to enrich the corporate friends who are supplying them, and you have electricity bills rising about 50 per cent over the next 5 years.
Enter the Review. A committee of deputy ministers was thrown together in April, and issued its report to the cabinet in June. It was released to the public early this August. This whirlwind venture had only one real goal: to help the government survive the next election in the face of public furor about the surge in electric rates -- a surge that critics (including the undersigned) had warned of ever since the government adopted its buy high/sell low strategy (code-named "electricity self-sufficiency"). And a hasty job it was -- apparently working backward to try to end up with politically-palatable rates, identifying everything that might be thrown overboard to keep the Liberal ship afloat.
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The report seeks to remove the government's head from the bulls-eye of public wrath by gently questioning the more extreme boundaries of the administration's misguided policies, but for the most part aims at short-term ways to save money that leave the main thrust of government's schemes for BC Hydro intact.
For example, it calls for Hydro to shelve some capital projects, but leaves the really big ones -- Smart Meters, the Smart Grid, the Northwest Transmission line (a huge subsidy of a mining development) and the Dawson Creek-Chetwynd Transmission Project (a huge subsidy of shale gas extraction). It calls for the sacking of 20 per cent of Hydro's workforce -- 1,000 employees -- but gives no clue how this would be done while still leaving behind an electrical utility which is capable of functioning.
Hydro's employees did not cause the problem. But as usual, the people who pay the price for the crisis were not the ones who caused it.
Critically, the report leaves intact the lucrative power purchase agreements the government forced on Hydro and its customers. The Review lobbed a gentle rebuff toward the government's policy of so-called "self-sufficiency" -- but by now the damage has been done. We've already been committed to more power than we can use from the IPPs at overpriced rates for many decades to come. That horse left the barn a while ago.
Not only does the Review leave the Smart Meter program intact, but it confirms that BC Hydro is moving toward the adoption of "time-of-use" rates, where customers pay higher rates for peak-time consumption (like during supper-hour). Both Hydro and the Minister have been steadfastly denying any such intention, but in fact time-of-use is what Smart Meters are for: they measure and transmit how much energy is consumed at intervals through the day.
The government had an opportunity to shift gears and hold back the pressures on Hydro rates in a truly meaningful way last year, when Campbell announced his resignation as premier. Remember how they cancelled his promise of a 15 per cent tax cut, to take effect on New Year's Day? I was sure they would make a similar move to can the Smart Meter program, but instead they ordered BC Hydro to sign the meter contracts in December 2010. Similarly, they could have called a halt to new IPP contracts last autumn. Instead, BC Hydro has been proceeding as instructed by its political masters to sign up for more and more overpriced surplus power.
So let's take a few steps back and look at the overall picture. First, the government creates a large niche for its corporate friends to profit enormously at the expense of Hydro customers. Then when the resultant huge rate hikes start to hit consumers, the government responds to the public outcry by eviscerating the publicly-owned utility, but leaves the private encroachments intact.
I'd say that Christy Clark is not reversing Campbell's policies for BC Hydro. Instead, she's finishing off the butchering job.
