B.C. could lose $450 million a year, critics warn

British Columbia's biggest industries are challenging the provincial government to prove that its electricity export scheme won't turn into a major money loser.

In a submission to the government's Green Energy Advisory Task Force, the industrial group calculates that the export plans will cost B.C. taxpayers $450 million a year in money-losing power sales transactions.

It says the scheme will commit BC Hydro to pay independent power producers about twice the value that their electricity would fetch on the North American spot trading market -- $120 per megawatt hour to buy B.C.-produced power that will trade on a western North America market where the projected long-term price averages $60.

The Vancouver Sun obtained a copy of the submission presented to the advisory group by the Joint Industry Electricity Steering Committee, which represents all of BC Hydro's largest industrial customers.

"The government devises a policy and BC Hydro implements it," JIESC executive director Richard Stout said in an interview.

"If the government causes BC Hydro to purchase power under long-term contracts that are very expensive, north of $100 megawatt an hour, and is then forced to sell it for 20 years on an export market where the spot price might only be $50 or $60 a megawatt hour, it just builds in a huge burden for taxpayers."

The province believes it can sell a portion of surplus power at a profit through long-term contracts.

Energy Minister Blair Lekstrom has acknowledged that some will sell at a loss, but says that overall, it will work to B.C.'s advantage.

The government has ordered Hydro to make B.C. electricity self-sufficient by 2016.

The industry committee notes that the government is using a worst-case scenario to determine the amount of new power needed to meet the self-sufficiency target -- based on the single driest year in the past six decades.

The industry committee says that in most years Hydro will have a substantial electricity surplus.

It notes that because of the self-sufficiency requirement, Hydro will be unable to strike a long-term contract with another utility to sell the power at a more favourable price.

"BC Hydro will lose $450 million/ year, or $9 billion over 20 years on exports of planned surpluses," says the industry committee's submission.

"BC Hydro is on the hook to pay the [independent power] producers, so the producers' profits are guaranteed," Stout said.

"I'm sure the lumber industry would love it if the B.C. government guaranteed to buy all their lumber from them at a guaranteed price for 20 years."

The industry committee wants a review of the government's export scheme by the B.C. Utilities Commission.

"If there are studies that suggest that exports are economically viable they should be made public and subject to review," the industry committee says.

Submissions to the advisory group, which was struck last November to undertake a sweeping review of the B.C. electricity sector, have not been released by government.