SFU energy economist blasts critics of B.C.'s Energy Plan

Scott Simpson,
Vancouver Sun
Thursday, October 02, 2008

VANCOUVER - The most vocal critics of British Columbia's Energy Plan are relying on skewed research and "political propaganda" to bolster arguments against independent power producers, a former chairman of the B.C. Utilities Commission said on Wednesday.

Simon Fraser University energy economist Mark Jaccard, who served as BCUC chair from 1992 to 1997, said he found significant gaps in both facts and logic when he examined critiques of the emerging independent power sector in B.C.

He said there is no evidence to support critics' argument that electricity prices would be lower if BC Hydro, rather than independents, was responsible for all new power generation, nor will the government's decision to lessen dependence on cheap import power push prices up here.

Mark Jaccard is an SFU expert on energy and the environment.
Bill Keay/Vancouver Sun file

Jaccard was contracted last spring by the Independent Power Producers association of BC to review work done for IPP opponents by two SFU colleagues, John Calvert and Marvin Shaffer.

Calvert's 2007 book Liquid Gold suggests that the emergence of private producers to develop small-scale electricity generation means "needless environmental damage" and "much higher energy prices."

Shaffer last year released a series of papers, arguing that the B.C. government's push for electricity self-sufficiency by 2016 and surplus power by 2025 inflates Hydro's costs and ignores opportunities to buy cheaper import power.

Jaccard, who chaired a 1998 task force on B.C. electricity market reform, said he agreed to take on the job only after a commitment from the producers that they have no input into his work in advance of its public release.

He produced a 34-page report that was released Wednesday by IPPBC.

Jaccard said the principal thesis of Calvert's book is "that the B.C. Liberal government headed by Premier Gordon Campbell has, since its election in 2001, been executing a well-orchestrated plan to privatize the B.C. electricity system, by stealth if necessary. Calvert's book is best read as a political propaganda tract... . Indeed, facts are wrong and evidence is distorted in a manner that consistently supports a sinister conspiracy theory."

Jaccard says Calvert argues that IPPs transfer wealth from taxpayers to "private, profit-seeking friends of the government."

In rebuttal, Jaccard notes that technological developments have improved opportunities for small-scale electricity generation - but there remains a "high risk" that any single independent project may fail, and it's better to load that risk onto the private sector.

Jaccard also dismisses Calvert's claim that the "corporate interests" such as IPPs and industrial customers are the major beneficiaries of funding for intervenors seeking to advance their own interests at hearings of the B.C. Utilities Commission.

Jaccard, who founded the BCUC's intervenor funding system in 1992, noted that over the last 10 years, "corporate interests" received $2.2 million while "small non-profit organizations [unions, consumer groups, environmentalists, regional representatives] got $8.4 million.

"Calvert is wildly incorrect."

Jaccard had milder criticisms for Shaffer's work, but said it overlooks the risk that dependence on import power would leave B.C. consumers vulnerable to soaring electricity prices as higher consumer demand and new carbon taxes push market prices up - whereas IPP contracts lock prices in.

Citizens for Public Power, which actively promotes Calvert's book, found the timing of the release of Jaccard's report curious. The group, which advocates for BC Hydro to be the sole developer of new electricity resources, is staging a conference this weekend "to discuss the negative consequences of British Columbia's rapidly expanding use of private power."

The group's executive director, Melissa Davis, said Jaccard's statements were not particularly new. "Private power producers and the B.C. Liberal government have made similar criticisms," Davis said, "and this is to be expected, since these groups are focused on the advancement of business opportunities in B.C., while Liquid Gold argues the benefits of public control and ownership of BC Hydro."

Craig Orr, executive director of Watershed Watch Salmon Society, said that regardless of the criticisms, there's no denying that run-of-river hydro power developments by IPPs "can trump other values associated with rivers." Orr said he expects controversies about IPP developments to persist without a commitment by the government to "some kind of a watershed-based planning process. A lot of people have been asking for that, and they've refused."

ssimpson@vancouversun.com

Jaccard Assesses BC Electricity Policy in Peer Review of Two Controversial DocumentsIndependent Power Producers of BC (IPPBC)
October 1, 2008

Dr. Mark Jaccard, past BCUC Chair and SFU professor reviews two manuscripts that strongly criticize BC’s current electricity policy: Liquid Gold, by John Calvert, and Lost in Transmission, by Marvin Shaffer. Jaccard contrasts Calvert’s quotes “with real-world evidence and analysis to show that Calvert’s book is best read as a political propaganda tract.” The Executive Summary of Jaccard’s Review states that “the government’s current electricity policies appear to have sound ‘public interest’ rationales, and these policies are consistent with those of governments in other jurisdictions. The effort to expand electricity generation in BC makes sense in terms of security of supply for domestic consumers, even if the generation assets are not publicly owned. The increased role for IPP generation is a much-needed response to the high risk of electricity generation investment today as a way of reducing financial risk to ratepayers and taxpayers.”

For more information see attached Peer Review Report, Press Release and Highlight Quotes from the Report.

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Professors go to battle over our energy

It's the academic equivalent of a Code 3, screaming-on-the-front-lawn domestic dispute. They're staging World Wrestling Federation in the faculty lounge.

The subject matter is a bit dry -- B.C. Liberal energy policy. But the passion in the raging argument more than makes up for the mundane nature of the disagreement.

For the past year or so, critics of the B.C. Liberals' electricity plans have been relying on two eminent professors to support their contention that the government has got it exactly wrong.

Those critics know deep in their hearts that the Liberals have ulterior motives in backing private power and pursuing energy independence. They don't need books or papers to support their suspicions. But the books provide a convincing aura of legitimacy to their arguments, so they've been cited the length and breadth of B.C. as the definitive word on the topic.

One is Liquid Gold: Energy Privatization in B.C. by John Calvert, a professor at Simon Fraser University.

The premise is that -- despite fervent promises to the contrary -- the Liberals are quietly engineering the privatization of B.C.'s power system. It's designed to benefit corporate friends of the Liberal party here and elsewhere and it involves handing control of the grid to private interests and allowing power rates to go higher than they need to be.

The general premise has been enthusiastically endorsed by the New Democrat Opposition. Two NDP MLAs earlier this year cited it as a must-read for people who want to know what's really going on. And a Globe and Mail writer called the energy plan the worst policy in the history of B.C., just on the strength of Calvert's book.

The other is a series of three papers written by Marvin Shaffer, another SFU prof.

Lost in Transmission: A Comprehensive Critique of the B.C. Energy Plan shares the same outlook and makes the specific case that the Liberals are artificially hyping the market for independently produced power.

They're exaggerating the need for new supply from independent producers, which results in higher than necessary rate hikes. They're discouraging conservation and forcing B.C. Hydro to acquire expensive independent power.

Arguments over these views have simmered for quite a while. But they burst into the open yesterday at a carefully engineered news conference held by the Independent Power Producers of B.C. -- people with millions of dollars at stake in this argument.

That association of firms with contracts to build small power projects and supply Hydro with electricity hired a professor of their own to go after the SFU duo. And he's a big gun -- Mark Jaccard. He's an energy analyst, the philosophical father of the carbon tax, an editor of the pivotal international report on climate change.

Jaccard has shredded the work of Shaffer and Calvert to a remarkable degree. He's treated them like lazy first-year students who need detentions.

"Were I conducting this peer review for an academic publisher, my recommendation would be against publication until substantial revisions were made," Jaccard wrote of Shaffer's opus.

Ouch!

As for Calvert, his book "is best read as a political propaganda tract," Jaccard sniffed.

"The author does not present a balanced weighing of the evidence... Facts are wrong ... evidence is distorted in a manner that consistently supports a sinister conspiracy theory. That is why I would not recommend publication if this were a peer review for an academic publisher."

Jaccard's stinging critique was presented as a belated "peer review" of the two profs' work. Jaccard himself said peer reviews are an important part of academic publishing. But he acknowledges they're usually done anonymously, prior to publication.

This one kicked off with a big news conference at a Vancouver hotel. And he was hired by outside interests to write it.

It reads more like a drive-by shooting than an academic review.

One example from dozens involves B.C. Hydro's expensive decision to abandon the natural gas pipeline to Vancouver Island. Calvert blamed the $120-million loss incurred there on the newly elected Liberals, who ordered a utility commission review of the project, which eventually led to its demise.

Jaccard, however, said he entirely missed the point. The project was a dog from the beginning, invented with no risk analysis and no public involvement.

He uses it as an example of how a big publicly owned utility can run off the rails, and why more private involvement is needed.

There are enough cross-currents and differing interests at work to keep this argument going for years. The ferocity of the counter-attack launched yesterday is an indication of how big the stakes are.