Plugged In Email Newsletter: May 2004

Privatizing BC Hydro is already costing you money!

When the BC Liberals announced they were tearing apart BC Hydro and privatizing key functions and all future power supply, Citizens for Public Power predicted big rate increases.

Now, the chickens are coming home to roost. The government and BC Hydro want consumers to fork over another $229 million to pay for their misguided privatization experiment.

Currently, BC Hydro is defending a rate increase of 8.9% before the BC Utilities Commission. This rate increase means an additional $229 million from British Columbians' pockets. In documents released to the BC Utilities Commission, BC Hydro points to a number of cost increases that are a result of bad government policy:

* higher cost of buying private energy at market rates (private power is ten times what it costs BC Hydro to produce its own power);
* breaking up BC Hydro and creating a new transmission company (an increase of $20 million in one time capital cost and almost $18 million in annual operating costs);
* Accenture restructuring ($40 million in restructuring cost and $2 million in "contract maintenance", no benefits realized in the next two fiscal years);
* RTO West development and participation ($3 million a year to participate in an American organization that will eventually dictate BC transmission decisions.

The BC Liberals are preventing BC Hydro from developing any new power projects, despite the fact that BC Hydro has an excellent credit rating and operates well below the debt limit established by the provincial government.

In 2003, electricity from private energy companies cost $58.59 MWh while electricity generated through BC Hydro cost $5.43 MWh. The cost of private electricity purchases has increased by 77% in the last ten years compared with only a fraction of percent change in BC Hydro generation costs.

In 2003, private power purchases of 4,950 GWh cost $290 million dollars. BC Hydro produced 47,655 GWh at a cost of $259 million.

Buying power from private energy companies is already costing consumers. Unless this policy changes, we can only expect to see more rate increases.

We enjoy affordable electricity prices today because the government made a prudent investment forty years ago. Now, the BC Liberals are refusing to invest in BC and are instead turning us into renters when we could be owners. Not only are we paying higher rates, but we will own no assets at the end of the day.

What's worse is that BC Hydro is signing these contracts and refusing to disclose the terms of the deals to the public. We know that these contracts are for power at market rates rather than our historic system of cost based rates, but we don't know the terms of each individual contract. While BC Hydro is required to be reviewed by the BC Utilities Commission, the private energy companies selling power to BC Hydro are not. We don't know if they are acting efficiently and if the rates the BC Hydro is paying (and passing on to us) are justifiable.

Rate Hikes hurt BC economy

According to Statistics Canada, the B.C. economy is already feeling the pinch of electricity rate hikes only a month after BC Hydro began increasing rates. BC Citizens for Public Power thinks many of the costs driving the rate increase are completely avoidable and this bad economic news should give the government pause to reconsider.

In April 2004, B.C. consumers saw a 1% increase in the price of good and services from March. Stats Canada identifies increasing energy prices - specifically electricity - as a major source of the increase in B.C.

"Electricity is used in everything we produce and sell in this province. When you increase electricity prices by $229 million, the price of everything is going to rise," says Mark Veerkamp, Executive Director for the BC Citizens for Public Power .

"We think these rate increases are unnecessary and given the bad news from Stats Canada, they should be reconsidered," said Veerkamp.

While the government can't do much to control oil or gasoline prices, it can make an impact on electricity prices.

"Even a small jump has its ef fects. If the B.C. Liberal government continues with plans to purchase all new power from private sources, we are will see rates continue to rise and inflation will rise with it."

"The government is making bad decisions that are hurting consumer and the economy," said Veerkamp. "It's time to take a step back before it is too late."

The Statistics Canada study can be found under The Daily at: http://www.statcan.ca/Daily/English/040520/d040520a.htm

Electricity rate increases "music to our ears" says private power association

At the annual meeting of Independent Power Producers (IPPs), private energy companies were grinning from ear to ear as experts predicted steady price increases over the next few years.

IPP Association Steve Davis was clear this was good news for BC's growing private sector electricity producers. "It's music to our ears," said Davis to a room of over 200 happy private electricity company representatives.

"I think it's repugnant that while consumers get dinged with rate increases, the private energy companies are shamelessly smiling all the way to the bank," said Mark Veerkamp , Executive Director for the BC Citizens for Public Power who attended yesterday's meeting.

The IPPs had more than just higher prices to make them smile.

Powerex representative Brian Mogdaham told the meeting that Powerex, the marketing and trading arm of BC Hydro, is on the verge of an agreement with two IPPs to export power to the lucrative American market. According to Mogdaham, these IPPs have asked to have their names remain confidential.

"This is historic. We hope this will be the first of many deals like this," said Mogdaham.

"I thought IPPs were supposed to supply B.C., not export power to the U.S. ," said Veerkamp. "What happened to our alleged electricity shortage the government keeps talking about? Why is the government letting IPPs export to the U.S. instead working to meet our domestic electricity needs?"

"Why would an IPP sell power to BC Hydro when it can get a better price in the U.S. ? Once the floodgates open, our prices will rise to American levels and we will never be able to go back because IPPs will only want to sell at the highest price, and that's south of the border," said Veerkamp.

The Association also congratulated the BC Liberals for their Energy Plan that broke up BC Hydro, increased private sector involvement, and increased rates.

Energy Minister Richard Neufeld told the audience that he was prepared to do more for the private electricity sector including exploring tax breaks.

Liberal MLA Barry Penner, a private electricity booster, warned the group of the consequences of not supporting the Liberals and gave them a call to action. "There are powerful groups opposing all the good things we are doing. Unless you get out there, all those good things might be gone after the next election," said Penner.

"The government wants industry to do its dirty work of promoting increased privatization," said Veerkamp. "I guess since they are the only ones who will ben ef it, we can expect a lot more action from the IPPs who want the profits to keep flowing."

Citizens for Public Power fight privatization, rate increase at BC Utilities Commission

The BC Citizens for Public Power has made a strong argument to the commission opposing the rate application. To download the submission, click here..

BC Hydro has begun its first revenue requirement hearing in over ten years. BC Hydro is applying to the BC Utilities Commission to raise rates by 8.9%. The first installment of the increase (7.23%) has already been conditionally approved by the commission, pending the outcome of the hearing. At the annual meeting of Independent Power Producers (IPPs), private energy companies were grinning from ear to ear as experts predicted steady price increases over the next few years.

We believe that much of the increases in costs to BC Hydro are a result of bad decisions by the provincial government - decisions that we warned them against. We don't feel that BC ratepayers should be forced to pay for the increased costs of private power and the restructuring association with an ill advised deregulation experiment.

The hearings will take six to eight weeks with a decision expected in September.

Class action lawsuit still moving ahead

Citizens for Public Power launched a class action lawsuit to stop the break-up and privatization of BC Hydro. The lawsuit is still moving ahead and we expect to have a certification hearing this fall. There's still time to sign on in support!

This hearing is a crucial turning point that determines whether or not we can proceed as a class action and we need as much support as we can get. As of today, we have over 75,000 British Columbians signed on to support the action. It's still not too late to sign on to support the action. If you haven't signed on or you know someone who would be interested, click here.

We also need financial help to keep the campaign going. To make a contribution to the campaign, click here.

There's two other pieces on news we want to share with you.

First, the "Charter Challenge" launched by the Office and Professional Employees International Union (the union representing BC Hydro workers) was not successful.

You'll recall that by launching the Charter Challenge in BC Supreme Court, OPEIU was hoping for full disclosure of Gordon Campbell's dealings with Accenture in a BC Utilities Commission hearing . The presiding judge, however, ruled that because of Liberal legislation the OPEIU did not have the legal right to have a BCUC hearing .

Importantly, the Charter Challenge will not prevent our class action lawsuit from proceeding , and, as mentioned, it is still on track to be heard in court this fall. (The Charter Challenge is a setback, yes, albeit a minor one. Indeed, the OPEIU will not appeal the judgment.)

But there's another piece of news that we find even more telling than anything that is happening in the courts right now. And that is that MLAs across British Columbia are telling us that "the BC Hydro issue" has become the number one issue of complaint amongst their constituents. Some MLAs say their phones are literally ringing off the hook!

We need to keep up the pressure on MLA's, particularly in light on the recent rate increase. To send a message to your MLA opposing the rate hike, click here.

Does the Accenture deal give the FBI access to our personal files?

On Friday May 28 th , BC's privacy commissioner David Loukidelis announced he was investigating concerns that the American Patriot Act would erase privacy protection for British Columbians when U.S. corporations run government services like MSP or BC Hydro.

Although the impetus for the investigation is the deal for an American company to take over MSP administration, there is growing concern that the Accenture deal may also place British Columbians privacy in jeopardy.

While Accenture is registered in Bermuda, it has major holdings in the United States .

Loukidelis is looking for input from British Columbians by July 23rd and will report by August 13 th . The BC Citizens for Public Power will be making a submission to the commissioner. For information on the investigation or to make a submission, visit www.oipcbc.org/new/

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Accenture deal just like BC Rail?

Despite promising British Columbians that they will be able to see the Accenture deal, the provincial government still refuses to release the financial information of the contract. What are they hiding?

If you visit BC Hydro's website at www.bchydro.com, you can download a copy of the Accenture contract.. Too bad all the important information is blacked out! So much for transparency!

When Citizens for Public Power pressured the government to release the contract, the public was told that the BCUC would have an opportunity to review the deal. Instead, the BCUC r ef used to review the deal prior to the agreement being signed, despite the fact that Terasen (then BC Gas) was required to go though a hearing for essentially the same type of outsourcing. At the time, Richard Neufeld, the Minister of Energy and Mines, told the public that the agreement would be reviewed at the BCUC rate hearings.

Guess what? All the documents submitted to the hearing, including the business case presented to the board, have been blacked out. Clearly, there were several options including keeping the services in-house and the government and BC Hydro don't want you to see them.

Given the BC Rail deal and the Coquihalla fiasco, British Columbians don't have confidence in the government's privatization schemes. Just what is the government hiding in the Accenture deal?