Privatization & Deregulation

LightningIn an era of global warming and rising energy costs, most of us want to reduce energy consumption. That way, we can decrease greenhouse gases (GHG) while cutting the cost of running our household and building our economy. If we can do all that and lower energy costs at the same time, we’ll be doing well.

We did all those things here in BC—at least while BC Hydro was under public ownership and controlling our energy supply.

But the BC Liberal government’s privatization and deregulation of our energy system is headed in the opposite direction. It’s putting electricity generation in the hands of private corporations. These companies depend on energy consumption, not conservation, to drive prices up and increase their profits.

That’s why BC Citizens for Public Power believes so strongly that public power—generated by a Crown Corporation, distributed through our own transmission lines, and available at affordable rates to British Columbians—is the only way to go.

Privatization

Privatization, selling or contracting public assets to private corporations, has occurred in three ways.

First, the provincial government turned over key internal administration, and thousands of jobs, to Accenture Inc. in a massive privatization of BC Hydro’s operations. Accenture, a Bermuda-based firm with ties to Enron, has been guaranteed long-term revenues for performing services that BC Hydro previously carried out. The privatization of BC Hydro’s administrative operations effectively fragmented the Crown Corporation, reducing local control under the terms of a secret, long-term agreement.

Secondly, the provincial government split BC Hydro into two distinct companies, separating power generation from transmission functions. A new Crown Corporation, BC Transmission Corporation (BCTC), now owns the power lines that were previously owned by BC Hydro. Why the change? So that private power generators can use this public asset to transmit their energy anywhere along the North American grid.

Thirdly, the provincial government has prohibited BC Hydro from producing energy from new sources. Only private companies can do the job we previously did through our publicly owned utility. BC Hydro now buys energy from private producers, with whom they’ve signed long-term contracts to purchase power for very high prices. This means much higher electricity rates for us, the energy consumer, as well.

In the past, BC Hydro sold energy at the cost of production. Now it must buy from private suppliers at prices that will pay for the construction of new generation facilities and provide a profit over the 30 year life of the contract. In the end, we won’t own those facilities. In fact, we will have to negotiate new contracts. To give you a sense of the price difference, consider that BC Hydro was paying about $5.81 for a Mwh of electricity from its own supplies in 2006. Now it pays up to $58.59 for same amount of power from private producers. Confused? Just imagine your hydro bill increasing tenfold and you get the picture.

Deregulation

Hand in hand with these changes is the government’s shift to deregulation. BC Hydro must apply to the BC Utilities Commission to establish prices for consumers, but the Campbell Liberals have moved to create a market pricing systems in the sale of electricity by private suppliers. In part, this change is to ensure access to US markets for private energy producers.

But what about BC consumers and businesses? We will now pay the deregulated market price as well.

Only large scale resource industries, like the forestry and mining sector, were able to secure price protection under the so-called Heritage Contract when energy privatization occurred.

All of these changes are captured in the Campbell government’s Energy Plan.

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