Private power purchases, expensive restructuring drive rate increases says BC Hydro watchdog group

Vancouver, BC - BC Hydro and the provincial government are making bad decisions and trying to force consumers to pay for unnecessary restructuring and expensive private power, says Mark Veerkamp, executive director for the BC Citizens for Public Power.

Vancouver, BC - BC Hydro and the provincial government are making bad decisions and trying to force consumers to pay for unnecessary restructuring and expensive private power, says Mark Veerkamp, executive director for the BC Citizens for Public Power.

BC Citizens for Public Power has made a submission to the BCUC arguing that consumers shouldn't have to pay for these needless expenditures. The submission can be found at www.citizensforpublicpower.ca.

"At the government's direction, BC Hydro is incurring unnecessary costs and we shouldn't have to pay for these rate increases when we have less expensive options available," said Veerkamp.

BC Citizens for Public Power notes the high cost of purchasing power from private energy companies as a major source of increased costs. BC Hydro now spends more on purchasing private power that it does on producing its own electricity.

In 2003, it cost BC Hydro $250 million to produce 47,655 GWh of electricity. In the same year, it cost BC Hydro $290 million to purchase 4,950 Gwh from private energy companies. The unit cost for BC Hydro power is $5.43 MWh while the cost of IPP purchases is $58.59 MWh (in F2003).

"BC Hydro has been directed by the government to buy all future power from private companies despite the fact that BC Hydro continues to be our best choice," said Veerkamp. "This is a mistake that will hit consumers and industry hard."

In addition, breaking up BC Hydro and creating the BC Transmission Corporation (BCTC) will cost $20 million in one time capital costs and $17.8 million annually. There is another $3 million a year in costs associated with plans to participate in RTO West, an American organization that will eventually make key decisions about our transmission system. And privatizing 1/3 of employees and operations to Bermuda-based Accenture has resulted in restructuring costs of $37 million.

As the BC Utilities Commission hearings open, BC Hydro will be facing tough questions from all sides as BC's largest industry group, the Joint Industry Electricity Steering Committee (JIESC), are also calling for the BCUC to reject Hydro's rate hike.

Yesterday, the JIESC issued a statement opposing the rate increase. They highlighted 13 different ways BC Hydro could reduce costs and eliminate the need for a rate increase. "While our approaches may differ, consumer and industry share the same perspective that these rate increases are unnecessary and will hurt the economy," said Veerkamp.