Tuesday, January 08, 2008

Privatization of BC Hydro's power production will cost you billions - new book Liquid Gold shows

The B.C. Grits' great golden age

Bill Tieleman’s 24 Hours Column

Tuesday January 8, 2008

I hope that I am not the only member in the house alarmed by this road now taken towards the privatization of B.C. Hydro.

- former B.C. Liberal MLA Paul Nettleton, 2002

Did you know that the B.C. Liberal government has undertaken the most massive privatization in Canadian history, worth up to $60 billion?

Did you know that B.C. Hydro is already paying more for the 10 per cent of electricity produced by private energy corporations than the 90 per cent supplied through public power facilities?

And did you know that provincial electricity rates will likely double and even triple because of the government's decision to privatize future energy production?

Probably not, but those facts are convincingly laid out in a new book about what author John Calvert argues is B.C.'s impending electricity disaster.

Liquid Gold: Energy Privatization in British Columbia [Fernwood Publishing, $24.95] explains how the government has quietly privatized electricity production, taking that role away from publicly owned B.C. Hydro and giving it to multinational corporations and friends of the B.C. Liberal Party.

It's an ironic tale, given that right-wing former Social Credit premier W.A.C. Bennett nationalized private electricity production in B.C. in 1962 to create publicly-owned B.C. Hydro and now Premier Gordon Campbell is reversing a move which gave the province the second-lowest power rates in North America.

Calvert outlines an almost-secret policy: He shows that B.C. Hydro's residential consumers are subsidizing the construction of private power facilities by paying higher electrical rates - and that once these high-cost contracts end, the companies can export their power to U.S. markets.

Liquid Gold shows that long-term contracts signed by B.C. Hydro with so-called "independent power producers" are already worth $15.6 billion for just one-third of future energy needs.

If the other two-thirds also come from IPPs as planned, the total cost could exceed $60 billion.

And that will mean skyrocketing B.C. Hydro rates as our power supply eventually becomes part of the continental energy market, where consumers in San Francisco already pay triple B.C.'s electricity rates.
Calvert, a Simon Fraser University professor, says the story hasn't gotten the attention it deserves because the B.C. government has deliberately obscured it by talking about buying "green" power rather than privatization.

But Calvert says that wind power and run-of-the-river projects are often environmentally problematic and are not being adequately regulated.

And the book also shows that between 1994 and 2006 alone, B.C. Hydro provided the government with $8.8 billion in revenue.

Sadly, Calvert fears the energy privatization may soon be irreversible due to long-term contracts and international trade agreement restrictions.

[Disclosure: I provided Calvert with my master's thesis on B.C. Hydro and he is a board member of B.C. Citizens for Public Power, one of my clients.]


Budd Campbell said...

BC Hydro is being asked to subsidize these small producers who are riding the green wave. Once the projects become small in scope, doing a full environmental work up of each of them becomes rather expensive and problematic. So much for the small is beautiful dogma.

There are choices. We could build Site C. We could re-open the question of damning other far northern rivers, such as the Liard, Iskut and Stikine that in the 1970s were considered eventual prospects for hydro development. We could use coal-fired thermal with carbon sequestration. We could build a nuclear plant.

Each of these alternatives will excite vigorous even violent opposition, but it's either that or else let this great mass of little projects go ahead without proper investigation of environmental impacts and mitigation measures. The giveaway pricing Hydro has offered them is a different matter that should be stopped at once. Net metering to allow all independent producers access to the grid is the better route for these small scale renewables.

If we are going to be using more electricity for urban transportation (cars, trolleys, rail transit), and if more people go over to electric heat and heat pumps because of oil and gas prices, then no conceivable amount of conservation is going to close the gap between supply and demand as BC’s population continues to climb. There will have to be more electricity generated somehow, and I just don't buy the silly-bugger story-line that Hydro should be doing none of it, or that central generation (large-scale hydro, coal with carbon capture, nuclear) cannot be cost effective and environmentally acceptable parts of the mix.

The simple fact is that too many populist blowhards and outhouse philosophers, most of them fronting for some commercial or other interest group, have dominated the debate and the public interest has been the loser.

Anonymous said...

The last major project undertaken by BC Hydro was the Revelstoke dam, with its 1984 completion date.

So, over the past 23 years, what has BC Hydro done in terms of future capital projects? The only thing that comes to mind is the now-defunct Duke Point gas generating station.

BC Hydro could have looked at developing run-of-the-river facilities during the '90's but they didn't.

Kudos to those with the foresight in the private sector that have done same, each of which are required to pass an environmental assessment to bring further electrical generation onto the grid.

Otherwise, that clean energy would continue to remain untapped.

So, what would the cost per 1,000/kWh be from a ~$5 billion Site C dam versus one of the current run-of-the-river projects? I would wager more.

Anonymous said...

If there is a way for the socred/liberals to give away our resources, they will find the way, and still try to tell us it's cheaper that way

Anonymous said...

How much electricity is Hydro thru its subsiduary selling to the US?

Anonymous said...

Another thing to keep me up at night. I did not know about Hydro. Well, I did but really only in a peripheral way.

So what's the answer. These guys will have it all sold off well before the next election (just in case) or signed sealed and as good as delivered. What do we do?

I keep hoping that this trial will blow it all open in such a way as to show the world just how corrupt Gord and his gang are. It won't I know, but I can hope.

Electricity; what would be a good long term approach for us, or even a good medium term to get us to the long term??

Anonymous said...

Geo; It's called blackmail for a song! 'Save the future and blow the whistle'...

Bill Tieleman said...

Thanks for the posts and questions.

Anonymous 10:50 p.m. asked about exports to the US.

BC Hydro's revenue from "trade" in 2006 was $1.4 billion according to its annual report, including $904 million from electricity.

As the report states: "Exports are made only after ensuring domestic demand requirements can be met."

Here's something from BC Statistics in December 2005 that may also be of interest:

"After a slow start early in the year, BC exports of electricity surged in the second half of 2005 to their highest levels since the energy crisis that hit California back in 2000 and 2001.

At year end, exports of electricity to the United States were up 128% compared to the value of electricity transmitted over the border in 2004.

The largest component of this increase was price inflation, but growth in demand also played a role as quantities exported climbed as well, rising 44%."

It should be noted that BC Hydro, due to our dam storage capacity, can sell to the US when prices are high and buy when they are low.

As BC Stats itself notes:

"One may wonder how British Columbia is able to export power to
other destinations given that BC Hydro, which is by far the largest
electricity supplier in the province, has claimed it does not have sufficient resources to meet the needs of British Columbians and
that there is a need to develop new power production capacity
within the province.

A possible explanation for this apparent contradiction is that the province is also a significant importer of electricity.
Since most electricity in BC is hydro-electricity generated from
water flowing through dams, the province has an advantage over
those regions where electricity is mainly generated from nuclear
facilities, or gas or coal-fired operations.

While it is fairly simple to
turn the flow of water going through the dams on and off, it is quite impractical to regulate the flow of electricity from other
generation sources, such as nuclear power, in this manner. This
means that the electricity generated using these other methods
cannot be stored. It is more or less a “use it or lose it” situation.

This allows BC Hydro, through its subsidiary Powerex, to purchase
power from these sources in off-peak periods when the spot
price is lower and “store” its own electricity by shutting off the
flow of water through its dams, then sell the excess stored power
in the high-peak periods when prices are higher."

Budd Campbell said...

It is indeed true that BC Hydro's mostly hydro system can be dovetailed nicely with other thermal systems, and it works both ways.

Alberta's coal fired thermal stations can turn off most of their generators at 2 in the morning, since few Albertans need power at that point. But they have to keep the boilers hot and the steam up and the coal burning in readiness for 8 in the morning. It's not practical to fire them up in a short time frame. So coal is being burned round the clock whether any electricity is needed or not.

BC can shut off its dams at night and buy this power from Alberta quite cheaply.

One of the results is that for a more or less given amount of GHG and other air pollution arising from the coal burning, more useful electricity is produced, a valuable step in terms of climate change.

Anonymous said...

As a born and bred BCer and a retired BC Hydro middle manager, the direction that the Liberals have taken BC Hydro and power generation in this province is criminal. I wish that our citizens would latch on to this issue and seriously take the government to ground on it. I say ‘government’ and not BC Hydro, because, of course, BC Hydro is dictated to by the Liberals who are sympathetic to their friends who want a 'piece of the action' and are pushing small run-of-river power projects, and even worse, the burning of coal.

For years the citizens of BC have benefited incredibly from the foresight of WAC Bennett and the Columbia River Treaty that he championed through the enormous profits that have been realized from this project. And one of the primary reasons that we have benefited so much is that our system of storage reservoirs allows us to store water during spring and summer and use it to generate and sell millions of dollars worth of power to our American customers in the winter…..without affecting our own supply. BC Hydro would actually buy power during these periods to supplement domestic need, while we filled our reservoirs and, I might add, doing this when the price of power was typically low on the spot market.

The proliferation of small independent power projects does not provide this flexibility and hence we are buying more and more power. The government uses this situation to justify the approval of more and more independent power projects, without any public involvement and/or input, and to justify possible coal-fired generation, of all things.

We need the Liberals to step away and let BC Hydro have the autonomy to run the system for the benefit of providing power to its citizens and not for the benefit of private interest groups. Notwithstanding the obvious negative effects of large hydro-electric projects, BC needs to build Site-C and, in the future, other sites that still offer incredible hydroelectric potential for us all. The mitigation of environmental effects of these projects is a major priority of BC Hydro and its contractors and the public must trust in that.

By privatizing many operations to Accenture Business Services and the creation of BC Transmission Corp. the Liberals have devalued the ‘jewel’ that was OUR BC Hydro and I don’t believe that they will be finished until BC Hydro becomes a kiosk in some shopping mall in Surrey. They will justify the creation of BCTC as being a requirement of our selling power into the U.S. but that became a non-issue with the Americans. Further, they have successfully created more bureaucracy with BCTC and destroyed efficient working relationships between it and BC Hydro departments, such as Engineering.

I hope we can stop the rip-off artists before it's too late....but we will deserve what we get for our apathy.

Bill Tieleman said...
This comment has been removed by the author.
Bill Tieleman said...

I want to particularly thanks the last poster - the retired manager from BC Hydro - for their extremely articulate and succint analysis of the problem we face in BC with the Liberal privatization of our public power.

I have also received emails asking what individuals can do to fight this massive giveaway.

There is no simple solution and while letting BC Liberal MLAs know you oppose the privatization, I believe at this point they are quite aware of that and have successfully been re-elected in 2005 anyway.

I urge you to contact BC Citizens for Public Power, the group formed in 2002 to fight BC Hydro privatization, for more information and suggestions on what can be done. Their website, also linked in my column above, is
BC Citizens for Public Power

Thanks again and let's hope we can reverse some of the disastrous results of this short-sighted privatization.

Anonymous said...

This is good discussion and the comments provide great insight however new PR channels are needed.

While BCPP has done much to raise awareness and combat privatisation they unfortunately lack sufficient credibility because the majority of the board are union / labour folks. It smacks more about protecting jobs than looking after the interests of BC Hydro consumers. The protest lobby needs to move more into the public eye by way of news media and public petition.

Privatisation per se is not necessarily bad many potential supporters of this lobby will shy away because it paints a black picture of privatisation and the labour connection will only serve to make that worse - the only way to get wide public support is via the economic argument - its the long term economic of power generation distribution and demand that need to be simplified & published.

Keep up your good work.

Bill Tieleman said...

Thanks to Anon 2:05 p.m. but I have to disagree on BC Citizens for Public Power in this regard - the organization was originally founded to take over from the campaign launched by the Canadian Office and Professional Employees union local 378, representing inside BC Hydro workers.

The union realized that it would be perceived as you suggest - out protecting jobs - and therefore helped form Citizens as a broad-based coalition.

Since its inception Citizens has had environmental, community, church, advocacy and other group support, as well as signing up 75,000 British Columbians who backed their fight against privatization.

Naturally labour remained supportive as well and both COPE 378 and the International Brotherhood of Electrical Workers Local 258 at BC Hydro are involved, as they should be.

While I don't disagree with the need to be broadly representative I also don't think you can succeed if you are afraid of the "big labour" tag that BC Liberal government MLAs and supporters invariably use.

The fact is that most British Columbians support public power and the province is squandering its legacy.

But I do agree that using the economic argument is the most powerful way to win.

Anonymous said...

Great dialogue on this very important issue, Bill--and others.

I encourage any of your readers of your column and blog to support our efforts at BC Citizens for Public Power. While our work has been supported by the labour movement, our 75,000 supporters and donors represent the diverse face of British Columbia.

Our current work is focused on public education and advocacy, but we hope to expand our efforts in the coming months with a larger campaign.

Melissa Davis, Executive Director
BC Citizens for Public Power

Unknown said...

Are people really that fooled by the privatization lie that they think it’s a benefit to privatize all services?
For those who are; think about this in a government run program the Unions makes $10- 20 an hr but the top earner only make around 60-70 gs a year but in a private co. The CEO makes 150- 300 gs a year while the employees make $8-10 an hour the same money is spent yet less goes to the service and the Service provider and more goes to the CEO so in a very short amount of time service suffers and prices rise just look at BC transit the BC hospitals and you will see the results of privatization in action.
DON’T be fooled by the same rich families that have done these things since the end of imperialism do we want Canada to be a colony again?

Anonymous said...

...please where can I buy a unicorn?