VICTORIA, B.C. – A newly released report by the British Columbia government says BC Hydro customers will pay $16 billion over the next two decades because the Crown utility was pressured to sign long-term contracts with independent power producers.
Minister of Energy Michelle Mungall commissioned the report, which blames the previous B.C. Liberal government for creating the problem.
The report says the Liberals manufactured an urgent need for electricity but restricted BC Hydro from producing it, forcing the utility to turn to private producers and sign lengthy contracts at inflated prices.
Former B.C. Treasury Board director Ken Davidson authored the study, which estimates the cost to the average residential BC Hydro customer will amount to about $4,000 over the next 20 years or about $200 per year.
Davidson recommends all future energy purchases be made at market rates and finds BC Hydro must be allowed to meet supply obligations through a reasonable level of market trading, rather than by generating all electricity within the province.
The NDP government launched a two-phase review of BC Hydro last June, in an effort to identify cost savings at the utility and a government news release says results of the first phase will be announced Thursday.
Davidson’s recommendations informed the BC Hydro review.
Mungall says he also concludes the long-term deals forced upon BC Hydro were mainly with run-of-river producers, whose power is primarily available during spring runoff when B.C. doesn’t require it.
“B.C. didn’t benefit. BC Hydro customers didn’t benefit. A small number of well-placed independent power producers benefited, and customers were stuck with a 40-year payment plan,” Mungall says in the news release.
Government and BC Hydro staff warned the former Liberal administration against requiring lengthy contracts with independent producers, but the advice was rejected, the minister says.
“As a result, these contracts have already cost customers $3.2 billion and are set to cost billions more over the next two decades,” she says.