Wild Rivers Breathe a Sigh of Relief

VANCOUVER – The provincial government’s cost-cutting report on BC Hydro, released publicly yesterday, resulted in the Crown Corporation requesting a 50 per cent reduction in proposed rate increases and the elimination of up to 1,000 employees. The report recommended deferring capital projects and also flagged major problems with the government’s definition of “self-sufficiency” which is driving private power purchases.

The report was frank in acknowledging that the government’s current definition of “self-sufficiency” and the requirement to purchase an additional 3,000 Gigawatt hours of electricity by 2020 was problematic from an efficiency, planning and business perspective and would place an “undue burden” on ratepayers.

“The government panel was right to be critical. The bloated self-sufficiency definition is nuts because it forces BC Hydro to buy IPP energy it doesn’t need and that would be sold at a loss south of the border,” said Gwen Barlee, Policy Director with the Wilderness Committee. “The fact that the panel acknowledged this definition is a ‘burden on ratepayers’ and a ‘significant planning constraint’ to BC Hydro is very telling.”

Currently, the self-sufficiency requirement is based on every year being considered “a critical low water” year forcing BC Hydro to purchase far more electricity than it needs from private power producers. BC Hydro is already on the hook for $30 billion in energy purchase agreements to power companies and would need to spend billions more to reach the current artificially high self-sufficiency definition.

On April 7, 2011 Energy and Mines Minister Rich Coleman struck a panel of government bureaucrats to review BC Hydro’s rapidly rising costs. The review was prompted by Hydro’s three-year 32 per cent rate increase proposal and plans for a $6 billion capital works initiative. The report was submitted to the BC government in June.

“The recommendation to re-evaluate the inflated self-sufficiency requirement should take the handcuffs off BC Hydro and could stop scores of wild rivers from being put into pipes,” said Barlee. “It’s time for an immediate moratorium on run-of-river projects and the government needs wake up and pull the plug on the costly and unneeded Site C proposal.”

Private power projects, especially “run-of-river” developments, have been a hot button issue for the BC Government. The projects have been heavily criticized for lack of planning, low environmental standards and the impact to the financial viability of BC Hydro. According to the report, in Fiscal 2010 IPPs produced 16% of total domestic electricity requirements, while IPP electricity costs represented 49% of the overall domestic energy cost.

Contact:

Gwen Barlee, Policy Director, 604-202-0322 (c) or 604-683-8220 (w)