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Recent articles about some of the wrong-headed thinking by our government that has put BC Hydro in financial harm's way, suggest that it has just been a matter of over-enthusiasm and nothing more sinister. It is almost a description of our government as a victim that needs our sympathy not our ridicule - or worse.
Prior to 2008 publicly available indicators showed
commercial/economic global affairs were in trouble. It is not
unreasonable to expect those who we pay very well to know about these
developments and rein in their more bullish instincts. This is called
looking after the public interest. Out of the many such “situational
indicators” we all have access to, take a moment to look at one - the Baltic Dry Cargo Index, the 5 year chart. The index plummeted by 94% between
a record high in May 2008 and December 2008, when it hit its lowest
point since 1986. This should have sent a powerful warning to the people
forecasting our future energy demand.
BC Hydro’s most current forecast shows they expect the domestic need for electricity will become 64,000 GWhrs by 2017. GWhrs are the units of electricity their forecast uses so just think of them as units of useable electricity for discussion purposes. Now, most people I know, acting in a common sense way, would test this outlook against the best possible evidence of real demand available. Since the financial peak of 2008, BC Hydro’s record of sales shows demand collapsing, both in total and on a per capita basis. This reality has yet to be recognized by the “smartest guys in the room”. So for at least three years our Government and BC Hydro have been in denial of reality.
In fact, even as recently as this week, it emerges that BC Hydro is planning to buy even more private power contracts, through a 2,000 GWhr clean power call (see page 9 of Hydro's 2012 Draft Integrated Resources Plan); at the same time we learn that Alterra Power intends to take another run at its controversial mega-IPP in Bute Inlet, announcing a deal with the Sliammon First Nation to build transmission lines for the project.
So, over the last six to eight years how much new debt has BC Hydro
taken on in your name, as a citizen and owner; do you know or care?
Besides the formal amount of $8 billion in new total liabilities it has
added $2.2 billion of receivables from the ratepayer’s category. BC's Auditor General
reports that it looks like this category is programmed to balloon even
more. These obligations do not take into account the present value of
the secret IPP contracts that would probably add another $30-40 billion
to total liabilities.
In the face of evidence that no new electricity generation is needed in the foreseeable future, BC Hydro is presenting a story where it sees the need for 14,000 new units by 2017, not that far off. In terms of new borrowing and spending what does this mean? If we use the values associated with the Site C project, each new unit of useable electricity comes with a capital requirement of about $2 million. Your government/public corporation is planning to contract for or directly finance new generation that will produce a new liability of about $30 billion by 2017 and double that by the end of the forecast period.
You may ask, where does this insanity stop? What motive could possibly explain this outrageous mismanagement of our public asset?
Perhaps the explanation lies outside of BC. In 2006, a new corporation came into existence in the US, dubbed the “North American Electric Reliability Corporation” (NERC).