LETTER: Re: Paying off B.C. Hydro’s debt, level the playing field

A letter to the editor by Abe Bourdon

To Energy Minister Michelle Mungall:

In their answer to then Premier Gordon Campbell’s 2008 long-term acquisition plan, the BC Utilities. Commission (BC UC) held that the purchase-contract rate being paid for electricity from the Independent Power Producers (IPP) – some of which were ten times the cost of that being produced by BC Hydro’s own infrastructure – was “not in the public interest.” On April 27, 2010 the Campbell government passed an Act that stripped BC UC of its powers with respect to 11 projects, including Site C.

The Act states that one of British Columbia’s energy objectives was: “to ensure the commission, under the Utilities Commission Act, continues to regulate the authority with respect to domestic rates but not with respect to expenditures for export, except as provided by this Act.”

One of the projects exempt from independent review was BC Hydro’s $2-billion ‘smart metering and grid’ program that allowed different rate charges at different times of day to level out consumer demand. Note that this Act only applies to domestic rates and that it is only these domestic rates that have been made wholly responsible for the total debt incurred by the government’s management of the Crown Corporation.

The BC UC approved the Liberal government’s two-tier price structure, with modifications. They hiked that higher rate, noting that the energy plan required rate increases – among other measures – to achieve a specific conservation goal: “that by 2020 half of the projected increase in electricity demand be met through conservation.” In other words, save power by making it too expensive to use.

Meanwhile, PowerEx, BC Hydro’s exporting arm sends electricity with a “blended” aggregate production cost of more than eight cents per kilowatt-hour to the United States for 2.33 cents. And the proposed Ajax mine at Kamloops, which according to their lawyers is still viable, had a contract with BC Hydro that would have supplied the mine with an amount of electricity equivalent to that used by the City of Kamloops, for 3.5 cents per kilowatt-hour.

It seems that in addition to having the responsibility for the payment of BC Hydro’s total debt-load, domestic rate-payers are forced to subsidize both American exports and selected industrial users like mines or LNG projects.

If the NDP-Green coalition government is really concerned about the massive debt that has been dumped onto BC Hydro, they should enact legislation that repudiates any and all existing legislation preventing BC Hydro from either exporting, or from supplying electricity to industry within the province, at a rate below the aggregate cost of production. If, when the price of domestic electricity in B.C. is based upon a “blended” rate, that same rate should also be applied to all of its customers – including the rates charged to LNG projects or for U.S. export.

Based upon the above, would your ministry consider setting the minimum rate charged for electricity from BC Hydro, whether for domestic, industrial or export, to be set at whatever the aggregate or “blended” cost to BC Hydro for that same electricity?

Thank you.

Abe Bourdon



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