BC Hydro accused of electricity supply conflict

Scott Simpson,
Vancouver Sun
March 20, 2009

Producer wants independent bid process for new energy

An independent power producer is accusing BC Hydro of an apparent conflict of interest over its management of bids for private sector electricity supply.

Brookfield Renewable Power says Hydro should not be in a position of developing new public energy resources -- such as the proposed Site C dam on the Peace River -- and simultaneously soliciting private sector bids for power that could compete with Hydro's own plans.

Brookfield, which operates five small independent hydroelectric facilities in British Columbia, is calling on the government to turn the job of soliciting private power bids over to an independent agency.

Brookfield says Hydro's dual role is responsible for the huge attrition rate among independent power producers bidding into the Crown corporation's periodic calls for new sources of electricity -- 61 per cent in 2006.

Hydro issues the calls to augment its own sprawling roster of heritage dams and generating stations around the province.

"Few other jurisdictions in North America suffer the same attrition rate in bringing in new, renewable generating projects on-line," Brookfield Renewable marketing director Jack Burkom says in a March 6 filing with B.C. Utilities Commission.

The filing is part of a lengthy BCUC hearing that examines Hydro's long-term electricity acquisition plan.

"This high rate of attrition may create the appearance of a conflict of interest for BC Hydro.

"As more projects fail, BC Hydro by default becomes the only remaining option to ensure there is construction of the needed electric generating infrastructure in British Columbia."

Burkom goes on to say that "removing any appearance of a conflict of interest will greatly serve to improve the confidence in the market signals driving investment in renewable energy in British Columbia."

It is unusual that an independent would take such an aggressive stance about Hydro's dual role -- given its need to maintain a business relationship.

Brookfield is one of the largest independents in B.C. and according to the document, the company has almost 100 years of experience as owner, operator and developer of hydro power facilities around the world.

B.C. Minister of Energy, Mines and Petroleum Resources Blair Lekstrom rejected Brookfield's contention.

"I don't think there is any conflict here whatsoever. With all due respect to this group as well as all IPPs, our bottom line is the ratepayers in British Columbia. That has always been and will always be our priority,"
Lekstrom said in an interview.

"We are working with IPPs. . . If you are bidding the call, do your best, be competitive, and we will look at those options."

New Democratic Party energy critic John Horgan said Brookfield was "in the business of generating revenue and returns for their shareholders, not in the public interest of British Columbians, in my opinion."

"They are already getting above market value for their product."

Craig Orr, executive director of Watershed Watch Salmon Society, suggested Brookfield's suggestion would cause even less public scrutiny of independent power projects than is available at present.

"If you set something up that had true public interest reflected in it, that would be good. But I don't see it happening -- the public does not have a say on energy issues right now in British Columbia.

"It's veiled as a conflict of interest but they're advocating making it easier to develop these projects."

The Vancouver Sun reported in January 2008 that Hydro had fired a fairness commissioner, Michael Asner, who had strong concerns about Hydro's apparent decision to give consulting accountant firm Deloitte Touche an inside track on a major contract to rework Hydro's system of soliciting contract work.