BC Hydro

BC Hydro BuildingAfter the second World War, demand for electricity increased throughout British Columbia. The BC Power Commission was formed in 1945, beginning the legacy of our publicly owned utility. The Commission acquired small generation and distribution systems, primarily in remote and rural areas, upgraded the systems, and standardized the plants. BC Electric, the province’s largest private utility company, built and maintained larger facilities.

During the 1950s, Premier WAC Bennett wanted to develop the Peace River area and open up industry in the natural resource sector. Since BC Electric was not willing to assume the cost to bring power to the region, the BC Energy Board recommended the development be undertaken as a public project. In August 1961, the legislature unanimously passed Bill 5, the Power Development Act, which facilitated the merger between BC Electric, the Peace River Power Development Company, and the BC Power Commission, subsequently renamed BC Hydro.

The creation of the large publicly owned power authority allowed for expansion of the system, with widespread and affordable rural electrification. Since government could obtain financing at lower interest rates than private industry, the public sector undertook the major development projects on the Peace and Columbia rivers.

In the 1980s, with privatization and deregulation emerging in numerous sectors, BC’s Social Credit government sold the gas division of BC Hydro (BC Gas, now Terasen). At the time, the government prohibited foreign control of BC Gas; however, the present Liberal government removed these restrictions, and the company was subsequently sold to US-based Kinder Morgan. The Social Credit government also established a Task Force to review privatization options for Crown Corporations, and arranged for BC Hydro to purchase power from private producers. These early deals involved only a limited amount of energy and did not create any reliance on privately produced power. BC Hydro still produced more than enough electricity for the province’s needs.

Throughout the 1990s, the for-profit sector pressured the BC government to investigate privatizing our utility. Knowing they could not produce electricity at BC Hydro’s low rates, private power producers lobbied for market pricing—a shift that would have resulted in astronomical rate increases. Another Task Force was formed in 1997 to investigate electricity market reform but was unable to reach consensus. On that basis, the NDP government of the day determined it would be unwise to further deregulate or privatize BC Hydro.

Still, the lobby persisted. When the BC Liberals came into power in 2001, independent power producers saw a new opportunity to profit from private generation. And the government responded.

First, one-third of BC Hydro’s operation was sold off to Accenture Inc., a Bermuda-based company that assumed most of the administrative functions of the utility. Details of that contract were not made public, raising concerns about what had been given away.

It was at this time that BC Citizens for Public Power was formed in response to overwhelming public outcry. Polling conducted in 2002 showed that more than 75% of British Columbians were opposed to privatizing BC Hydro. And more than 75,000 individuals signed onto our class action lawsuit.

Next, the British Columbia Transmission Corporation (BCTC) was carved out of BC Hydro—a separate Crown Corporation—responsible for maintaining, upgrading, and managing the province’s transmission system. This left BC Hydro with responsibility only for power generation.

In spite of public protest, the BC Liberals pursued their privatization agenda. In the government’s 2002 Energy Plan, BC Hydro was prohibited from creating any new power generation facilities, with the exception of Site C in the Peace River district, subject to Cabinet approval. The government also significantly increased BC’s reliance on high priced privately produced power through its decision to obtain new sources of energy exclusively from private power developers, thereby handcuffing British Columbians into paying market rates for electricity. Market rates were estimated at $50/MWh for the next decade. Yet BC Hydro has negotiated agreements to pay over $80/MWh today, as per the government’s 2007 Energy Plan.

By contrast, as a publicly owned utility, BC Hydro generates revenues through the sale of electricity and profits are reinvested into the province, subsidizing public projects and vital social programs. Today, BC Hydro's facilities generate between 43,000 and 54,000 Gwh of electricity annually and serve over 1.7 million customers. About 80% of that electricity comes from the major hydroelectric facilities on the Columbia and Peace systems. BC Hydro Annual Reports show that since 1994, the public utility has paid more than $8.8 billion to our provincial government. In 2006, the crown corporation had a net income of $266 million—revenue that remains in the province’s public coffers.

But this public benefit is dwindling as BC Hydro is required to buy power from private companies. Although the power is purchased for a set price according to fixed terms, once these contracts expire there is no guarantee that the power will be sold within the province, or that British Columbians will have access to it. Private companies will be able to sell their power anywhere in North America, and demand the highest price amongst competing bidders. Future generations of British Columbians will have lost the benefit of low cost electricity.

Our current low electricity rates are a result of a legacy created in the last century. Our present government is not acting to protect or maintain this legacy. We are selling off water licenses to private power producers for remarkably low costs. We are permitting the development of private power plants which damage BC’s precious natural resources. We are purchasing electricity for well above market rates. And we are not investing in new technologies or resources for BC Hydro to meet the growing energy needs of the province. This does nothing to develop BC or to protect public interest in the future. We should be developing new sources of electricity through our public utility, and continuing the legacy of reliable, low cost, and green energy that is owned by the people of British Columbia.

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