VICTORIA — BC Hydro is on track to lose more than $1 billion over the next four years by paying private companies to generate electricity the province doesn’t need, New Democratic Party energy critic John Horgan said Monday.

 

“BC Hydro’s fiscal situation is dire,” Horgan told reporters, offering his assessment of numbers released by the Crown corporation last week, which projected an energy surplus for the next 10 years. For the coming year, Horgan pointed out, the surplus will be so large it could power 472,000 homes.

 

The Sun reported last year that British Columbians paid $676 million for IPP power in the year ending March 31, 2012 — more than twice the price of imported electricity at that time.

 

Horgan said the problem stems from contracts signed by the B.C. Liberal government that now force BC Hydro to buy energy from independent power producers at above-market prices, despite the fact the Crown corporation is predicting a 10-year energy surplus.

 

“That’s a tragedy for BC Hydro and it’s a calamity for ratepayers who have already seen their rates go up in the neighbourhood of 36 per cent over the past number of years,” said Horgan, adding the problem could lead to a price shock for consumers.

 

But Energy Minister Rich Coleman disputed the numbers, saying he believes the complex energy market will change over time and that the four-year issue Horgan spoke about Monday could be resolved within about two years.

 

The province can mitigate losses by holding back power and issuing it at periods of peak usage, when it can get a better price, Coleman said.

 

“John (Horgan) is just taking a snapshot of today and saying nothing is going to change,” he added.

 

“This could quite easily balance itself over a two year cycle and get to where it’s taking care of itself.”

 

Coleman acknowledged that some of the contracts his government inked with independent power producers (IPPs) now have BC Hydro paying above the market rate, but he said that’s because they were signed in 2007, when the economy was strong and both the demand and price for power was high.

 

“We have some IPP power project contracts that may be higher than they should have been if you look at today’s market, but in the market of the time they were pretty reasonable, they were quite competitive,” he said.

 

“Now, will they be competitive over the life of the 20 years that they are a contract? I think so.”

 

According to Hydro’s 2011-12 annual report, IPPs earned $676 million from Hydro in the 12-month period ending March 31 — at a price per megawatt of power that was more than twice the cost of imported electricity during the same period of time.

 

Coleman added things are likely to change in the years to come, including an expected uptick in demand from power-hungry mines and liquefied natural gas plants.

 

BC Hydro did not return a request for comment.

 

Horgan said that if the NDP wins the next election, it will review the IPP contracts signed by the Liberals, but will not tear them up.

 

He added an NDP government would restore full power to the British Columbia Utilities Commission, a regulator that he said could have caught some of these issues had it been given the ability to conduct a full review before the contracts were signed.

 

“The absence of a regulator in this instance allowed Hydro to get so far ahead of themselves that they have a 10-year surplus at a time they were claiming that the lights were going to go out because we had shortages,” said Horgan.

 

Horgan added the newly disclosed surplus numbers should also have the province thinking seriously about how soon it needs to construct the $7.9 billion Site C Dam.

 

“On the surface of this information, Site C certainly would not be needed in the next couple of years,” he said, pointing to the projected 10-year energy surplus.

 

“I’m confident that in the first two years of an NDP government we won’t be building Site C.”

 

Coleman labelled this as short sighted.

 

“This is probably the last opportunity we have to do a dam that will give us long-term, firm, reasonably priced power that will stand economic up and downswings on the electricity market in North America for generations to come,” he said.

 

“I think it’s still a good investment.”