By Vaughn Palmer, Vancouver Sun, April 29, 2010
B.C. Liberals seize control of all major decisions about projects and pricing
-Portrait of a power grab.
Premier Gordon Campbell and his B.C. Liberals came into office in 2001 promising to restore regulation of electricity rates in B.C. by a fully independent B.C. Utilities Commission.
Arm's length relationship. No more "playing politics" with rates, projects and electricity needs from the cabinet room.
The commission would determine the province's electricity needs and set rates accordingly in open public hearings where BC Hydro would have to defend its plans against well-informed interest groups.
But virtually all of that independent arm's-length scrutiny would be swept aside with passage of the proposed Clean Energy Act, tabled Wednesday in the provincial legislature.
Oh, Energy Minister Blair Lekstrom rejected suggestions from reporters that the commission's role has been greatly "diminished." On the contrary, he insisted, the commission has the same authority it always did to set rates.
But, frankly, it is depressing to hear that claim coming from a minister who has a well-earned reputation as a straight shooter. Even a cursory read of the enabling legislation reveals it as a naked power play by the cabinet at the expense of the commission.
Here's what the legislation says about the commission's future role: "In setting rates, the commission must ensure that the rates allow the B.C. Hydro and Power Authority to collect sufficient revenue in each fiscal year to allow it to recover costs incurred with respect to ...."
Then comes a long list of things covered by the "respect to."
First of all, the commission must approve whatever rates are necessary to make B.C. self-sufficient in the production of electricity -- a goal set by the cabinet, defined by the cabinet, and regulated exclusively by the cabinet.
The target date for self-sufficiency is 2016, just six years down the road. By 2020, Hydro must be self-sufficient-plus, for the legislation requires that the giant utility obtain an additional 3,000 gigawatt hours of energy annually, above and beyond the basic requirement.
By an amazing coincidence, 2020 is the earliest likely completion date for the Site C dam, with its projected ability to provide 4,600 gigawatt hours of energy annually.
Second, the commission must go along with whatever rate increases are needed to pay for a lengthy list of projects, which are themselves exempt from scrutiny and approval under all relevant sections of the Utilities Commission Act.
Those projects include not just Site C but pretty much everything on Hydro's to-do list for the next decade: The Northwest Transmission Line. Additional turbines (four in all) for the Mica and Revelstoke dams. Smart metering and the smart grid. Plus a lengthy list of projects approved under a trio of calls for green, clean and bio-energy.
About $10 billion worth of projects according to Hydro's own estimates, plus unspecified additional billions for those included in the three power calls.
All of it approved by cabinet fiat through this legislation. All the utilities commission can do is double-check the math and green-light whatever rate increases are necessary to pay for the works.
The legislation further directs BC Hydro to produce an "integrated resource plan," covering its anticipated needs in order to achieve electricity self-sufficiency, reduce greenhouse gas emissions, meet anticipated demand, and encourage economic development and job creation in every part of the province, well into the future.
The plan is also supposed to assess the prospects for developing electrical resources for export, carefully segregating the pricing for those projects from the pricing for power that is generated for domestic consumption.
The plan is to be submitted to the minister -- that's Lekstrom -- within 18 months. It is then subject to approval or rejection by the cabinet.
The utilities commission has been the regulatory authority for Hydro's long-term planning. Now it is out of the picture. Indeed, if the cabinet decides to go ahead, it can issue further exemptions from the Utilities Commission Act in order to expedite parts of the plan.
The legislation would also exclude the commission from any say over the government's revisionist decision to again combine the BC Transmission Corp. and BC Hydro, which were separated by cabinet order early in the B.C. Liberals' time in government.
As if that were not enough to put the Liberals in the driver's seat, the bill delegates a further four pages worth of regulatory powers to the cabinet and the minister.
Those powers cover virtually all matters conceivable under the legislation, a truly breathtaking range of possibilities.
After scanning the list of powers the cabinet has taken onto itself with this legislation, I'm tempted to say that the commission could readily be reduced to one clerk sitting at a desk with a pocket calculator in one hand and a rubber stamp reading "approved" in the other.
"A historic day in British Columbia," Lekstrom called it. That it is. And a historic power grab by the premier and his ministers.
vpalmer@vancouversun.com
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