Government yanks BC Hydro's chain
Political squeamishness sinks Hydro's plans to talk about electricity
Political squeamishness sinks Hydro's plans to talk about electricity
By Vaughn Palmer
VICTORIA - The B.C. Liberals have intervened directly in the management of BC Hydro, forcing the giant utility to pull the plug on a major announcement about the development of electrical power.
The announcement, set for today at 10 a.m., would have seen the release of Hydro's long-in-the-works integrated electricity plan.
CEO Bob Elton, flanked by business leaders, was scheduled to "reveal B.C.'s path to energy self-sufficiency for the next 20 years" as well as "outline the future of the highly debated Site C dam."
But even as the media advisory for those coming attractions circulated in provincial newsrooms, the Liberals were at work derailing it.
Though the plan had been in the works for months and the announcement for weeks, the politicians only got wind of the details Tuesday afternoon.
They didn't like what they'd heard, especially regarding Site C. Hydro was proposing to move to full-blown public consultations on the enormous and controversial third hydroelectric dam on the Peace River.
The public wasn't ready for this discussion. Heck, the politicians weren't ready, and some of them hoped to see the dam built in their lifetimes. Given the lack of extensive groundwork, the debate would surely be dominated by the critics. The premature launch could eliminate any chance to develop public support, and doom the project once and for all. In the space of a couple of hours, the Liberals decided to order Hydro to back off.
Though the decision was ultimately driven by Premier Gordon Campbell, it fell to Energy Minister Richard Neufeld to deliver the message.
It must have been tough for him. Neufeld has represented the Peace River region for more than a decade and has long advocated building a dam at Site C.
But the experience must have been far more bruising for Elton. The Hydro CEO had reason to think he'd gone about this in the right way.
Preliminary consultations with stakeholders and the public throughout the fall. Extensive planning. No big secret about Site C being one of the options.
Hydro even tried to keep the premier's office in the loop. But a briefing at the senior official level did not result in a briefing for the politicians on where this thing was headed -- until it was too late for them to do anything but slam on the brakes.
That, in turn, translated into a second media advisory from Hydro, sent out Wednesday afternoon.
"As you know, we intended to release our integrated electricity plan on Thursday," it said. "In consultation with government, we have now decided to postpone this release."
The "in consultation with government" was a nice euphemism. As opposed to "after having our chain yanked by Victoria" or "because the politicians weren't ready for a public debate on this issue now or maybe ever."
Hydro phrased it differently in a memo that went out to a committee of stakeholders who'd been invited to participate in a conference call before the release of the plan. "We apologize for the short notice but we will be cancelling the call," it said. "At the present time we are still engaged in an internal review process and in consultations with the shareholder."
The shareholder being me and thee, since Hydro is publicly owned. But in this instance we are represented, like it or not, by the politicians.
Cryptic as it was, the brief notice left no doubt that the electricity plan has been overtaken by a political agenda.
"Both government and BC Hydro have a strong desire to ensure the plan is fully reviewed in the context of government's energy policies," it said. "This will be accomplished in the coming months."
That raises a concern about the fate of a process that has, up to now, been monitored the B.C. Utilities Commission.
"We will bring forward the integrated energy plan in the new year, as required by the utilities commission," vowed Hydro, even as its scrubbed today's release.
But the whole point of delegating the planning process to the commission, is that the BCUC functions as an independent regulatory body.
The Liberals repeated that theme ad nauseam during the recent debate over a U.S. firm's purchase of Terasen gas.
The government wasn't going to step in and block or even delay the takeover. The decision was up to the utilities commission, which would render a verdict ("Yes," as it turned out) without political interference.
The Liberals said the same thing about Hydro. Decisions would be governed by the province's energy needs, by markets for power, and the public interest.
"The days of political interference are over," -- the Liberals said it again and again.
Perhaps Bob Elton and his team at BC Hydro believed them. Which must have made this week an important learning experience for all concerned.
Government concern about Site C dam stalls power plan
By Scott Simpson
Hydro officials had little to say. Bob Elton, Hydro president and CEO, issued a brief statement by e-mail that the plan, which was to be unveiled today, would be delayed until an unspecified date next year.
Hydro's "Integrated Energy Plan" was expected to include a mix of small, private sector hydroelectric projects, electricity conservation initiatives, upgrades to large government-owned facilities -- and a decision to proceed with the controversial Site C dam on the Peace River near Fort St. John.
It was not immediately clear if the province's concerns were attributable to soft cost estimates for Site C -- which would cost taxpayers a minimum $3.5 billion -- or strong opposition from first nations in northeast B.C., or a conflict with independent power producers who were promised in 2002 that all new power projects in British Columbia would be developed by the private sector.
"In consultation with government, we have now decided to postpone this release and will be doing further work to ensure that this plan meets the needs of ratepayers," Elton said.
Earlier this week, some B.C. Liberal MLAs told Vancouver Sun political columnist Vaughn Palmer that they had concerns about Hydro's ability to shepherd the controversial Site C hydroelectric project -- the cornerstone of the new plan -- through to completion.
NDP energy critic Corky Evans said the province's 11th-hour involvement casts a shadow across more than a year's worth of community consultation and preparatory work by BC Hydro.
"What I find really bizarre is that it flies in the face of the Liberal mantra, maintained all through the public debate about the sale of Terasen Gas and the controversy about the [CN] railroad and all kinds of stuff, that it was not their intention to manipulate public processes or commissions or Crown corporations," Evans said.
Energy Minister Richard Neufeld was tied up in a series of meetings and could not be reached for comment.
Hydro goes through a similar planning exercise very two years, submitting details to the B.C. Utilities Commission as per its regulatory requirements.
However, this year's version of the plan was considered to be its most ambitious effort in more than a decade, in light of British Columbia's growing dependence on imported electricity to supplement a provincial resource that has not grown significantly in volume since the Revelstoke Dam was built in the early 1980s.
Earlier this month, Treaty 8 first nations in northeastern B.C. advised Hydro that they "adamantly" oppose Site C.
The construction of two earlier dams on the Peace, the W.A.C. Bennett and Peace Canyon dams, led to flooding of millions of acres of traditional hunting and fishing territory for the bands.
A BC Hydro summary of a meeting with the aboriginals reported that they "made it clear that they are adamantly against the development of Site C."
Hydro's a political animal once again
By Paul Willcocks
The Liberals' big commitment to keep politicians' hands off Crown corporations like B.C. Hydro is fading fast.
B.C. Hydro's brightest and best have been labouring away on a long-term energy plan, with the Site C dam as the centrepiece. This week was supposed to be the big unveiling.
Hydro CEO Bob Elton announced a press conference where he would be flanked by business types, and vice-presidents were fanning out to meet with the media. And then 20 hours before the big announcement, the politicians pulled the plug.
"In consultation with government, we have now decided to postpone this release and will be doing further work to ensure that this plan meets the needs of ratepayers," Elton said in a terse news release.
Hydro's future also needs to be "fully reviewed in the context of government's energy policies."
The order was not well-received in Hydro. The 20-year Integrated Energy Plan has been more than a year in the making, with a high-profile advisory committee, public meetings and lots of consultants and studies. It was to be the definitive look at energy needs for the next two decades, and the best way to meet them.
The B.C. Utilities Commission was set to review it.
Something has gone seriously wrong when the politicians step in at the last minute, stepping all over Hydro's board and management. Energy Minister Richard Neufeld said the government wanted more time to review the plan, which was presented to Liberal MLAs at a caucus meeting this week.
The Crown corporation just got a little ahead of itself, he said. But Neufeld didn't rule out changes before the plan goes to the utilities' commission.
The explanation leaves a few questions. The government has known for a year that the plan was going to the utilities commission this month, and for days that the announcement was scheduled for this week. There were no big surprises in the document, as energy ministry officials have been involved with the process all along.
So the last-minute cancellation suggests someone -- the caucus, the premier's office -- got nervous.
There's lots to get nervous about. Hydro's assessment of energy needs and the solutions it backs will have huge implications for the provincial economy.
If it underestimates demand, B.C. will need to buy more expensive power from the U.S. If Hydro overestimates, the corporation will build power plants it doesn't need. Both would cost consumers money. If it makes the wrong choices on issues like big coal-fired plants vs. small hydro projects, the province's economy is affected.
Hydro's preferred plan is likely based on building the Site C dam across the Peace River near Fort St. John, as well as energy conservation measures and additional power from private producers.
Site C makes a lot of people nervous. The $3.5-billion project was already scuttled by opponents once, in 1991.
Independent power producers don't like the proposal, because they want to supply the electricity. First Nations have issues about lost hunting land when thousands of acres are flooded. And the accuracy of Hydro's cost projections have come under fire.
The Liberals have made much of the need to let Crown corporations operate without political interference, never missing a chance to talk about the $460 million lost thanks to the NDP's half-baked fast ferries project. But there's been increasing recognition that leaving Crown corporations to their own devices carries its own risks and missed opportunities.
The B.C. Progress Board, a business panel appointed by the premier, weighed in last month with a report saying government, not B.C. Hydro, should be setting energy policy.
"B.C. Hydro is seen by many concerned parties to heavily outweigh the ministry in staff and resources, which puts the government in the position of not being able to provide adequate oversight and direction," said the panel, chaired by Victoria newspaper mogul David Black.
The last-minute scuttling of the launch of B.C. Hydro's energy plan suggests the government has come to the same conclusion, and is reining in the Crown corporation.
Footnote: Things will get complicated quickly if the government wants significant changes to the plan. Hydro is supposed to present it to the utilities commission within the next three months. Any major reworking could make it tough to meet the deadline -- especially if B.C. Hydro's co-operation is less than enthusiastic.
Cabinet says it needs time to review Hydro energy plan
By Scott Simpson
British Columbia's increasing dependence on imported electricity was behind the provincial government's decision to order a halt to BC Hydro's plans for a multi-billion dollar system makeover, Energy Minister Richard Neufeld said Thursday.
Neufeld says the government cancelled Hydro's announcement of an Integrated Energy Plan because of a general concern that the B.C. Liberals haven't had enough time to mull all the implications of Hydro's plans.
He says Hydro has done laudable work in preparing the plan, which is supposed to outline a 20-year effort to restore British Columbia to a position of independence from U.S. electricity suppliers who now serve about 12 per cent of B.C.'s annual electricity consumption.
But he added that cabinet was not willing to green-light the plan on the basis of a 30-minute briefing on Tuesday afternoon by senior Hydro officials.
Neufeld noted that Hydro had spent "well over a year" preparing its plan, "but we didn't see it in its complete form until late Tuesday afternoon."
A proposal to build a major new dam at the Site C location on the Peace River near Fort St John, at a cost of at least $3.5 billion, was expected to be a major component of the new Hydro plan.
That project is expected to attract opposition, particularly among first nations and non-aboriginal residents of northeast B.C. who say the region already contributes more than its share of power to the provincial electricity grid.
Opponents of Hydro's plan for a gas-fired electricity generating plant at Duke Point on Vancouver Island helped kill that project, at a cost to taxpayers of $125 million.
Neufeld said cabinet believes it is important for all B.C. residents to fully appreciate the pros and cons of all proposed new major projects so that they can make an informed choice about how the province should proceed to lessen its dependence on import power.
He said the government does not want to begin to address the situation without the public first understanding what's at stake -- and does not believe most residents are aware of the problem or the government's desire for energy self-sufficiency.
"We are facing some significant challenges and I don't think that on the basis of a half hour presentation by the crown [corporation] that provides almost all the electricity in the province, that you just run with it. I think that's a recipe for some real disaster," Neufeld said.
"I don't think I want to be tied to imports for 12 per cent of our energy like we are this year. I think to be perfectly honest that's nuts because it holds us ransom -- maybe not today but at some point in time.
"We buy most of it from south of the border, and when they get to the point where they are consuming all of that electricity themselves and perhaps they haven't built any new generation, they're not going to sell to us."
Hydro had informed the media earlier this week that it would announce the plan on Thursday, but instead issued a brief statement on Wednesday to say that the announcement was cancelled.
Hydro did not elaborate.
Neufeld said he regards Hydro's plan as one of four contributing reports that will guide cabinet deliberations about a possible revision of its 2002 energy plan -- and added that cabinet is still awaiting two of those reports, one on B.C.'s alternative energy options and the other from the province's competition council.
We need bright lights to develop hydro projects
The Liberal government and B.C. Hydro have stumbled badly in the development of a crucial plan to maintain an ample supply of electricity for the next 20 years.
At the last minute this week, the government ordered Hydro to cancel the unveiling of its Integrated Energy Plan, which has been under development for more than a year.
The government's intervention is disturbing at a number of levels. First, it flies in the face of the Liberals laudable promise to end political interference in Crown corporations.
If government officials have no confidence in the executive and board of directors of B.C. Hydro, they should replace the board with one in which they can have confidence. By undercutting the board, the government has further damaged Hydro's reputation as a stable partner for private sector investors in energy projects.
Hydro's credibility in that regard was already in some doubt following its astounding decision last year to pull the plug on the Duke Point project, leaving its private partner in the lurch and its customers with a bill of $125 million for which they will get nothing in return.
Just as importantly, this debacle comes on the heels of another report last month from the B.C. Progress Board that pointed out the urgent need for developing new electrical production capacity to protect our standard of living.
In the past, we've been been pretty smug about our energy resources, especially our hydro dams. But no significant new capacity has been added in the past two decades while our population has grown by a third.
B.C. still makes money by exporting power during peak demand periods in the U.S. and importing it when spot rates are lower. But we are now in a slow squeeze, with the imported portion of our electricity supply growing more costly every year. More urgently, as is happening in Ontario, any dependency on external power generation can lead not only to inconvenience and expense for consumers, but also sabotage the economy.
After a record-hot summer tested the limits of supply in Ontario, the president of Canadian Manufacturers and Exporters Association warned that firms will simply move elsewhere if they can no longer be assured of a reliable and affordable supply of electricity.
One controversial component of the new B.C. Hydro plan was to have been an examination of the possibility of building a major dam at Site C on the Peace River near Fort St. John. Energy Minister Richard Neufeld says cabinet wants the public to have a better understanding of the looming electricity shortfall before the government starts discussing major new projects so it will understand what's at stake.
Fair enough, but more than 18 months have already passed since Hydro started talking about Site C and Neufeld has been energy minister for almost five years. How much time does he need?
The dams that produce our clean, cheap electricity now were built by leaders who could see not only what British Columbia was, but what it could be.
We need that kind of leadership again today, before the lights go out.
Victoria finally notices Hydro's bumbling
By Brian Lewis
Somewhere deep within the B.C. Legislature's stone walls last week a light bulb suddenly burst into brightness, thus illuminating a growing problem this province has with electricity and B.C. Hydro.
Word is that the "somewhere" was the premier's office, where it suddenly dawned on the backroom that its policy of letting Crown corporations like B.C. Hydro run their own show is flawed.
A policy of no political interference is laudable given what the NDP did with Fast Ferries, but the Liberals' response also holds risks, as we're now seeing with Hydro.
Here's the background: Since the mid-1980s B.C.'s abundant domestic electricity surplus steadily declined to the point where in 2000 we became deficient and now must import about 12 per cent of our electricity to meet domestic demand.
This means that one in eight houses on your block runs on higher-cost electricity imports. The last major domestic power generation project came on-stream in 1984.
The problem began under the NDP, who used Hydro as a cash cow, siphoning off mega-dollars for other flights of fancy instead of upgrading and expanding the B.C. electricity grid to keep pace with growing demand.
But the Liberals have failed too, by allowing the province's largest Crown corporation too much independence without offsetting accountability.
As the recent Premier's Progress Board report on B.C.'s energy future noted: "B.C. Hydro is seen to set its own policies on electricity supply or responding to matters of public interest, such as the Energy Plan, in its own time and manner . . ."
Consequently, Hydro's track record on increasing power supply has been dismal indeed. Witness the now-shelved Duke Point/Vancouver Island natural gas pipeline fiasco that cost ratepayers $120 million.
Late last week Hydro was supposed to release its much-touted Integrated Electricity Plan, a 20-year blueprint for bringing B.C. back into a surplus electricity position, which the utility had been working on for a year.
Less than 24 hours before this plan was to be unveiled with all the pomp and circumstance of a B.C. budget, it was unexpectedly killed by Victoria.
The official explanation was that a review of the government's existing Energy Plan is awaiting a number of reports so that all of them, including the IEP from Hydro, can be studied together.
The energy ministry also said it didn't have enough time to study Hydro's plan before its scheduled release last Thursday.
Believing the latter explanation is akin to believing in the Tooth Fairy, since energy ministry officials have been involved in the IEP all along.
The real reason for pulling the plug, I'm told, rests with the 20-year-plan's central plank -- the Site C hydro-electric project.
Simply put, if Victoria allowed Hydro to proceed with this Peace River project as outlined in its IEP, there's a high risk that it would become another Fast Ferries fiasco -- only one with much higher cost consequences for taxpayers.
The problem is that Hydro's cost-estimates for Site C are not only all over the map, they're incomplete, sources say.
Last May, the utility was touting Site C at a construction cost of $2.26 billion with electricity costs of about $48 per megawatt hour. Last week it was talking about a $3.5 billion capital cost with electricity costs of $43 per megawatt hour. A higher capital cost with a lower cost for the electricity?
Nor have many other costs including transmission-line upgrades to the Lower Mainland, inflation or First Nations treaty costs, been included in the costing, sources say.
Realistically, they add, electricity costs in the $60-$70 per megawatt hour range are more likely.
Add up all these deficiencies and no wonder the premier pulled the plug. Even with transparent costing, Site C is going to be a very tough sell politically.
In the meantime, as B.C. power planning stumbles and bumbles along, the need to import electricity increases and that means much higher electricity bills are in store for everyone.
Brian Lewis is Money Editor of The Province. He can be reached at email@example.com
Hydro needed to have its plug pulled
By Les Leyne
Full marks to the provincial cabinet for embarrassing B.C. Hydro by putting a last-minute hold on the utility's grand release of its 20-year-plan.
They should have done it sooner.
The Liberal move has provoked some alarm about political interference in the highly technical field of electricity supply. But if there's one area where a dash of political meddling would go well right now, it's in the area of energy policy.
B.C. Hydro has a huge reservoir of technical expertise and a headquarters full of experts who know what they're talking about. There's no doubt the integrated electricity plan they've been working on for more than a year will be a comprehensive document.
But writing a good plan is one thing. Executing a plan is another. And that's where B.C. Hydro has been falling down lately, and that's why the politicians stepped in.
It would be very surprising if they actually interfered in the plan itself during the delay period imposed on the release, which could last six months.
What they're planning to meddle in is the communication plan leading up to the execution of the long-range vision.
And looking at Hydro's record of executing plans and building things over the last while, it's clear they badly need some help on that front.
There's no clear record of whether it was that or something else on the government's mind. But something prompted them last week to blow a very abrupt whistle on Hydro's long-awaited release of the plan.
At the last minute, Hydro CEO Bob Elton said that after "consultation with government," it was all postponed until spring.
"Further work" is needed to ensure the plan meets the needs of ratepayers, said a statement put out in his name.
Behind the scenes, it's been reported that the Liberal cabinet looked at the plan's recommendation to proceed with another big-league dam on the Peace River and decided that a lot more prep work has to be done before that socially complicated project can proceed.
That's essentially what the Progress Board report said the week previously. It urged that B.C. become self-sufficient in electricity -- a luxury lost about five years ago. And it recommended the government step up and start, well ... interfering.
"It is the role of the B.C. government to speak for the public in this regard, and it is the role of B.C. Hydro to follow the direction of government."
But the report said exactly the opposite is the norm: Hydro has the government out-gunned in any energy discussions, and sets its own policy "in its own time and manner."
Elton's statement last week after the rug was pulled out from under him tried to smooth everything over, saying both government and Hydro have a strong desire to ensure the plan is fully reviewed in the context of the government's energy policies.
You'd think that's exactly what they've been spending the last year doing, but apparently the master plan was a big surprise full of new revelations to the provincial cabinet. It's obvious there's a gulf now between the government and Hydro. It's not about whether to build that multi-billion dollar dam, though.
It's about how.
First Nations and other residents in the area have to be brought on side, much firmer cost estimates have to be established and the need for the power has to be explained to people before the bulldozers move in.
In the back of the politicians' minds is Hydro's track record when it comes to embarking on major projects. The problem is that they don't have one any more. The days of the utility's mega-projects are far behind us. Hydro has made incremental increases to its generating capacity, but it hasn't made a major addition to the energy supply since 1984.
And even when it comes to building smaller projects, like the Vancouver Island Generating Project, the utility got bogged down in a wild-goose chase up and down the Island that cost 10 years and $120 million before it fizzled out last summer with nothing to show for it.
If an outfit like that showed up at the door with a 20-year plan for the province's energy future, you'd want to think twice about it, too.
The danger in some minds is that -- now that the ice is broken -- the politicians will take to this new policy of intervening and start throwing their weight around on technical questions, as well.
That's the habit previous New Democrat governments fell into, and let's just say it doesn't work out.
Cabinet is expecting two more substantial reports on energy, one on alternative energy prospects and one from the competition council.
They need to digest those early next year, get a better idea from Hydro on how to pitch the Site C Peace project as doable, make some informed guesses and then get out of the way.
But there's no harm so far in jerking B.C. Hydro's chain.
Also of interest: Leyne's 24-Nov-2005 column, "Who's got the power with our power?" (link)