The price of power

Inevitable increases in our Hydro bills mostly stem from bad government policy and bad BCUC decisions

BY JIM QUAIL
BC Public Interest Advocacy Centre
Vancouver Sun
March 3, 2008

The days of cheap electricity in British Columbia are coming to an end. BC Hydro bills will rise dramatically every year for the next decade and beyond.

Some of the cost is unavoidable: The best sites for large power dams have been used up. Any new power resources will cost more. Climate change policy will also push energy prices up.

Clean power sources are more expensive and are unreliable: Wind power is available only when the wind blows, and run- of- river hydro is available only when there is lots of water in the stream.

But the bigger part of the story is the cost of bad policy by government and bad decisions by the B. C. Utilities Commission.

They are needlessly loading cost onto households, and will place those with fixed or limited incomes in a dire situation. Within a couple of winters, many seniors and tenants will have to choose between going cold or going hungry.

The biggest problem is the government’s policy of “electricity self- sufficiency.”

It sounds like a great idea. Why should we rely on our neighbours for energy if we don’t have to?

It’s a nice slogan, but it’s a dumb idea, especially the way Victoria has defined it.

Our need for electricity fluctuates through the year. We use lots to keep warm in the winter, but our demand drops off in the summer. It’s the other way around in California. Their peak is in the summer when air conditioners are going full blast. During the summer our reservoirs are brimming with the spring runoff, and we have far more capacity than we need.

So B. C. imports electricity during our peaks, and exports to the U. S. when our needs are low.

Although we have been net electricity importers, we buy when power is relatively cheap and sell when it’s expensive, so we make money on cross- border trade. The first $ 200 million profit each year is used to keep our Hydro bills down.

The government’s self- sufficiency policy means generating far more than enough to meet our own needs, even in dry years. We will pay for generation resources that will sit idle most of the time, or be used for exports. And we will pay far more than we can hope to get on the international spot market when our glut is sold.

Sounds crazy, doesn’t it? The winners are private sector electricity generation companies that the provincial government is forcing BC Hydro to buy from.

As if this isn’t enough, the government wants BC Hydro to install “ smart meters” on all our homes. They can tell what time of day the power is flowing.

The idea is to design rates so you pay more during peak demand hours (around dinner time) and less in off- peak (the middle of the night.)

In theory this will encourage us to run appliances off- peak. However, it does not actually result in any energy conservation — all it does is move the time of day when we consume it. The atmosphere is no better off.

The price tag for these electronic toys is a half a billion dollars and rising. The savings? They will eliminate employing meter- readers, whose wages cost far less than the new meters. And, judging by reliability issues it will cost lots to keep them running.

In case that wasn’t bad enough, the BC Utility Commission recently decided to shift millions of dollars of cost from businesses to households. It said this was so that customer groups would each bear their full share. However, it admitted that its calculations include a margin of error that accounts for roughly half of this 11- per- cent increase over the next three years, on top of all the other increases in the works. After the commission refused to hear an appeal from the decision, the government announced that it will intervene and quash it (the second instalment will come less than two months before the next provincial election.)

And still more bad news: The Commission wants BC Hydro to change its rates so people who heat their homes with electricity will be hit far harder.

It’s not as though people with baseboard heating in their homes could afford to retrofit gas furnaces and ducts to avoid a Hydro rate increase. They will have no choice but to absorb the new high cost, or shiver through cold nights.

Add all this up, and Hydro bills are set to double in less than a decade.

Some of this is inevitable. A large portion is the direct result of shortsighted decisions by Victoria and the BC Utility Commission.