John Calvert on Bill 17: BC's Clean Energy Act

Cleaning Out BC’s Hydro Assets 
By John Calvert 

BC’s Bill 17 - egregiously named the Clean Energy Act – represents a dramatic escalation of the provincial government’s electricity privatization agenda. The Act will gouge ratepayers, needlessly damage the environment, violate the principle of government accountability and undermine public finances. It includes so many bad public policies that it is hard to know where to begin an evaluation of its impacts. 

Perhaps the best place to start is to view the Act as the next major step in the Government’s long term agenda of restructuring BC’s electricity system. The foundations of this plan were laid with the 2002 and 2007 Energy Plans. These privileged private power developers at the expense of BC Hydro and triggered a "gold rush" of new private power projects effectively funded through generous long term, "take or pay" contracts with BC Hydro. Rivers and streams across the province were transferred into the hands of private developers. The policy was also intended – and has succeeded – in changing the politics of electricity in BC, as dozens of new power corporations set up shop in the province for the first time.  

The new Act furthers this agenda by requiring BC Hydro to meet so called ‘self sufficiency’ targets based on unrealistically high assumptions of future electricity requirements. It will force Hydro to purchase even greater volumes of new private power, significantly expanding its commitment to supporting the private power industry. And it will do so at outrageously high prices - prices close to double, possibly more – what many forecasters project will occur in the Pacific Northwest electricity market in the coming years. BC’s ratepayers, not the private power developers, will be on the hook to pay for the losses that are almost guaranteed from this policy. 

To take advantage of the Government’s politically driven targets for new electricity supply, private power developers will dam up dozens of additional rivers all across the province, imposing enormous – and entirely unnecessary – damage to some of BC’s most precious wilderness areas. And Hydro will have to build thousands of kilometers of new transmission lines to service the new power projects, which will do even more harm to BC’s environment. 

The Act is also designed to promote private sector exports of electricity, exposing the misleading nature of the Government’s earlier assurances that it’s Energy Plans were designed only to meet BC’s domestic energy requirements. The export agenda will require BC Hydro - and its ratepayers - to accept the enormous price risks associated with paying a premium for the developers’ new private power in the hope that they can recoup this expenditure when selling into the US market. Contrary to the claims of Minister Lekstrom, this is a recipe that guarantees private profit by making the public bear the risk. 

It appears that the Government also intends to provide private interests with access to BC Hydro’s storage reservoirs. If so, this would constitute yet another subsidy to developers. Storage is the crown jewel of BC Hydro’s system. It is what differentiates a hydro based system from almost all other types of electricity generation. It enables BC’s ratepayers to benefit from Hydro’s ability to purchase energy in the US and Alberta markets during periods when prices are low and sell back when they are high, to the benefit of BC’s ratepayers. Allowing private interests access to storage will reduce the ability of BC Hydro’s ratepayers to take full advantage of this beneficial arrangement. But it will enhance the bottom line of investors who wish to access reservoir storage to firm up – that is increase the value of - electricity generated from run-of-river or wind farm power plants. 

Ironically, the new Act acknowledges the major mistake that the Government earlier made in splitting off BC Hydro’s transmission system into a separate company, the BC Transmission Corporation. This decision, based on the US electricity deregulation model was always questionable in the context of BC’s system and should never have been made in the first place. 

The Act’s confirmation that the Government intends to push ahead with the $400 million Northwest Transmission Line is yet another highly questionable policy decision. The main purpose of this line is to supply subsidized electricity to potential new mines in the region. To incent mining expansion with the promise of BC Hydro’s low cost Heritage priced electricity is to reinforce a model of resource development that is directly at odds with the goal of energy conservation. Moreover, the policy will force BC Hydro to purchase even more private power. And, construction of the new line will inflict even more damage on the province’s environment.  

To push through these and other elements of the Government’s energy agenda, the Act exempts its major initiatives from review by the BC Utilities Commission and gives Cabinet a wide range of new powers. Public – and legislative – oversight will be critically impaired, allowing the Government unprecedented control over the implementation of its energy agenda.  

There are many other elements of the new legislation that bear further scrutiny. But the big picture is clear. The Government intends to charge ahead with its misguided private power policies. The impact on BC Hydro will be profound. It will be used - or rather misused - as the vehicle for shifting the benefits of BC’s electricity system into private hands at the expense of ratepayers, the environment and the broader public interest. In sum, Bill 17 is arguably the most damaging piece of legislation to be brought forward by any BC government in recent years. A better name for the ‘Clean Energy Act’ would be an “Act to Take BC Citizens to the Cleaners”  

John Calvert is an associate professor at Simon Fraser University, the author of Liquid Gold: Energy Privatization in British Columbia (2007), and a longstanding Board member with BC Citizens for Public Power.