Monday , June 21 2021

BC Hydro's private energy projects are losing billions, the new report says

BC Hydro.

Gerry Kahrmann / PROVINCE

VICTORIA – B.C. Hydro loses billions of dollars because the provincial government is forced to sign contracts with private power generators for the wrong power at an excessive rate, according to a new report.

The independent report, commissioned by Energy Minister Michel Mungall, concluded that private power contracts "would cost solvers of approximately $ 16.2 billion over 20 years, with the projected period during which B. Hydroenergy probably will not needs the energy government to make him buy.

"The annual impact of this excess energy on BCs. Hydroplusers are estimated at $ 808 million a year, or $ 200 a year for residential tariffs, equivalent to $ 4,000 per homeowner over 20 years, "the report said. "It is estimated that the $ 16.2 billion estimate is conservative."

The author of the Ken Davidson report, who heads government treasury officers in the 1990s, puts the accusation on the policies of the former BC. The liberal government is placed in the BC. Hydrat is energy self-sufficient, using clean energy sources.

This led to Hydro's rapid purchase of about 8,500 gigawatt-hours of IPP energy. However, many of the projects are a river that generates intermittent power and a spring peak when Hydro has an abundance of such power, read the report. This is combined with contract conditions that have led Crown Energy to be locked in decades of overpayment, Davidson writes.

"When I see that (the tariffs) pay an extra $ 200 a year for this scheme, for a total of $ 16.2 billion, a scheme where 80% of that money goes outside the province … not only is it a huge enormous concussion. , but that's just scandalous, "Mungal said. "This is unacceptable."

IPP contracts are often over 30 years, with conditions that could cost Hydro even more if the corporation tries to get rid of them to stop their financial losses, Davidson wrote in the report. Three IPP contracts are almost 60 years long.

"We can not break them," Mungal said. "We will have to review them when we can. And I do not think it is appropriate for the solvent to pay more than the market value for that. … The market value is $ 25 per megawatt hour and in some cases we pay over $ 100. This is a $ 75 mismatch. "

The IPP contracts contain inflation protection conditions that Davidson writes "could potentially add another $ 1 billion to cost estimates over the next 20 years," plus another $ 7 billion for long-term contracts.

"The government directed the BC. Hydro to buy an 8,500 GWh energy company B. Hydro did not need it, "Davidson wrote.

However, the government said it needed more power as part of its CleanBC plan to electrify the province and meet its pollution reduction targets. This is in addition to the power supply from the S lake dam project.

"This is the kind of interrupting power we buy," said Mungall. "The reason why site C is something we will need in the future is that it is a firm power. We can pick up the spill doors as needed and let the generators go if needed, which you can not do with many of these smaller IPPs. "

The report comes as a BC. the government finishes the first phase of Hydro's review of its practices in an attempt to find savings and lower rates. The results of the review are expected on Thursday. The NPD freeze promised in the 2017 elections was rejected by the independent BC. The Public Utilities Commission, as it was considered inaccessible to Hydro.

Davidson recommends Hydro to be more difficult when future IPP contracts appear for renewal that generates intermittent energy and only the price of a bid is the actual market value of the energy produced.

He also called for reversing Hydro's other self-sufficiency policies, which could have the added benefit of releasing Hydro for energy trade, Powerex to make more money.

Davidson also called for greater transparency with regard to future IPAs and the restoration of the power of control of the commission for utilities under the hydro contracts that were surrounded by the former liberal government.

Currently Hydro has a moratorium on Hydro's ongoing proposal for IPP. But the government will have to change the law to cancel the program.

Mungall said some of the first nations or partners in the IPA, and any change the government would make in the program, should consider the financial impact on their communities.

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