Rivers for debt: a bad deal

Posted June 22nd, 2010
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This blog posting elaborates on the third issue that is exposed in the first edition of REXpert Opinions, namely: what a bad dead the BC Energy Act is for the residents of this province: economically, socially, and environmentally.

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“Find out just what people will submit to and you have found out the exact amount of injustice and wrong that will be imposed upon them.” - Frederick Douglass  

British Columbia’s rivers represent natural and public assets. The BC Energy Plan transfers the rights to these assets into private control, including foreign ownership. Those rights allow the private companies to harvest profits from the rivers while depleting and damaging the watershed ecosystems.  

Normally, when one sells an asset, one expects something of value in return. You normally trade an asset for an asset and everyone wins. The citizens of BC might rightfully ask, therefore: What do we receive in return for our rivers? The answer might shock us: We get the bill. We trade an asset for a liability.  

That’s right. You give your rivers to General Electric, Plutonic, Hawkeye, Selkirk, Ledcor, Cloudworks, and other private firms, and you get an invoice for overpriced electricity. If we made deals like this in our private lives, we’d go broke. 

The government claims that privatization is necessary because investors assume a “financial risk.” But when the government hands over the rights to your rivers to these companies, they also force BC Hydro – your public power company – to guarantee to purchase the private power at exorbitant rates.  

The long-term contracts – Energy Purchase Agreements – forced on BC Hydro by our Liberal government eliminate any risk for the companies by guaranteeing that BC citizens, through BC Hydro, will pay for electricity at inflated rates regardless of the province’s domestic requirements. We are promising to pay $80 to $125 per megawatt-hour for energy that BC Hydro can generate for $20-$30 per megawatt-hour. The plan protects the private companies from risk and transfers that risk to the public utility and its owners: BC ratepayers.  

You are being asked to subsidize private power developments. You trade your natural and public asset for a liability to pay more. You pay the thieves to steal your natural heritage.  

The recent residential energy rate increases expose this bad deal: A three percent rate hike, followed by a two-tiered rate structure, and a provincial budget that tacks on an additional 33 percent increase over the next three years. The first increase, – 9.11% – has already been implemented. These rate hikes pay for private power and represent a transfer of wealth from public to private hands. That’s your reward for giving your rivers to private companies.  

The Liberal government’s BC Energy Plan privatizes the profits and socializes the costs of developing our resources. The plan creates a financial burden on BC Hydro to buy unfairly priced power, which (according to research from the Joint Industry Electricity Steering Committee) will cause BC Hydro to lose $450-million per year, a recipe for the bankruptcy of public power.  

In the end, our Crown utility accumulates debt while ratepayers subsidize private power projects with inflated energy costs, and the power companies run off with the profits. In the meantime, private corporations have seized control of rivers and damaged valuable ecosystems. That’s a bad deal.  

The solution is not complicated: We should retain control of our rivers and all our public assets, protect our natural assets, and allow our public utility, BC Hydro, to produce the power we need.  

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Rex Weyler
June 22, 2010