Former B.C. premier Gordon Campbell’s rush into private electricity projects has turned into a high-voltage political battle over their long-term impact on B.C. Hydro rates.
As the NDP government gets ready to announce electricity rate increases to cover the $10 billion Site C dam and $5.5 billion in deferred debt from utility operations that kept rates artificially low during the B.C. Liberal years, it has issued a new report on the impact of run-of-river and other private power deals that Campbell’s government launched in 2002.
Those contracts with mainly run-of-river hydro, wind and biomass power producers, are expected to cost the utility $16 billion over the next 20 years, according to a new report commissioned by the government from former B.C. Treasury Board director Ken Davidson. Entitled “Zapped,” the report calculates the extent of what the opposition NDP said at the time, that B.C. Hydro was paying over market price for intermittent power that is generated mostly in spring when B.C.’s large dams are at full capacity.
Campbell’s 2002 B.C. Energy Plan set the direction, ordering B.C. Hydro to expand its electricity supply through long-term purchase contracts with private suppliers. The plan also required the utility to become self-sufficient in energy, rather than buying surplus power on the North American grid that may be from fossil fuel sources.
As Energy Minister Michelle Mungall prepared to release results of the NDP government’s review of B.C. Hydro performance Thursday, the political battle began with the NDP adding up $3 million in campaign donations collected by the B.C. Liberals from private power producers as their business boomed in B.C.
Campbell’s vision of B.C. as a climate change leader and clean energy exporter to California to replace fossil fuel sources was soon undone by technology and global events.
“Market prices for natural gas, and hence for electricity, remained strong until 2008,” Davidson’s report says. “The financial crash of 2008 reduced demand and prices. Unfortunately, this crash was timed with a major development in the oil and gas industry, which wasn’t fully appreciated until large amounts of new gas appeared in the market: shale gas and oil and hydraulic fracturing.”
B.C.’s private power contracts included biofuel cogeneration at sawmills and pulp mills, wind energy in the Peace region and the biggest player, run-of-river hydro. One of the largest-scale projects was by Plutonic Power on the Homathco River at Toba Inlet on the B.C. coast.
A second, larger phase with multiple river sites at Bute Inlet was cancelled as California and other major energy markets embraced gas-fired power.