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Who's pulling Hydro's 'compliance' strings?

By Elizabeth James, North Shore News, May 30, 2012

"You know, maybe in a 1970s British sitcom it makes sense to buy power at $60 to $100 (per megawatt hour) and sell it at 20 cents to $17.60, but it certainly doesn't make sense for the people of British Columbia."

Adrian Dix, Hansard, 14 May, 2012

WHY would the B.C. Liberals, a selfstyled business-savvy government, force BC Hydro into such a fiscally ridiculous position?

Having done so, how can energy minister Rich Coleman drive the corporation even further into a black hole of debt by eviscerating the independent authority of the B.C. Utilities Commission?

More to the point, why are we allowing this political and independent power profitmaking to happen right under our noses - for IPP power when Hydro has enough of its own?

Late in the evening before Mother's Day, I wrote to Auditor-General John Doyle: "On or about May 15, 2001, two California power corporations owed BC Hydro a total of approximately $475 million dollars for electricity they had received. The companies concerned were/are Pacific Gas and Electric and the international arm of Southern California Edison."

I explained I was uncertain whether the power transfer was "brokered through BC Hydro subsidiary Powerex," although I thought that was the case.

Then, believing he would know that the corporation's 1999 agreement with Powerex set a credit limit of $158 million for the subsidiary, I asked whether the A-G had "seen evidence that any or all of the $475 million had been repaid to BC Hydro," and, if not, whether "the Crown had made any attempt to capture it from the State of California."

Perhaps NDP Energy critic John Horgan knows the answer because, on May 15, 2012 Hansard recorded him saying that the balance owing is "$300 million."

My letter ended by asking Doyle whether Hydro had acquainted him with the details of its April 2012 Non-Treaty Storage Agreement with the Oregon-based Bonneville Power Administration and, if so, whether he was satisfied with its terms - particularly with respect to control of B.C. water.

I decided to see what I could discover for myself about another agreement between the National Energy Board of Canada and the North American Electricity Reliability Corporation (NERC) of New Jersey.

As is usual online, I triggered an avalanche of acronymic industry and political jargon. Agreements, implementation plans and media releases, all calculated to lull uninitiated fact-checkers into believing the only purpose of the organizations is to co-operate in balancing the delivery of electrical power throughout North America - all sealed with the friendliest of handshakes.

Only by moving through the acronyms can readers discover that one of those velvet gloves comes equipped with an iron hand - and it's not the red mitten with a Maple Leaf on the back.

Understandably, the entire continental power grid cannot be administered and monitored from New Jersey. Instead, the NERC board of trustees, which includes Kenneth G. Peterson, the former president of Powerex, has approved reliability standards against which the performance of North American providers and users - known as entities - can be measured.

The Western Electricity Coordinating Council has the delegated responsibility for compliance monitoring to "ensure reliability in the Western Interconnection."

Not only does this bring B.C. within arm's reach of New Jersey but on Nov. 1, 2011 our own utilities commission filed its implementation plan for monitoring compliance with WECC. Coming on strong out of the gate, the document notes the utilities commission is "responsible for monitoring and assessing compliance" with the reliability standards by B.C. entities.

But then, in full knowledge that the Utah-based WECC is legally bound by its contractual obligations to New Jersey, the commission signed an administration agreement that "grants WECC the authority to act as (the commission's) administrator" in the matter of compliance monitoring.

Was that another instance of back-room political interference with the B.C. Utilities Commission? If so, who knows how long those renewable agreements will survive.

Here is the abbreviated chronology.

October 2011: Canada's National Energy Board signs a memorandum of understanding with NERC ostensibly "to promote the reliability of bulk electricity supply in North America."

November 2011: Power being a provincial mandate, the B.C. Utilities Commission submits its 2012 Implementation Plan to WECC.

February 2012: WECC files its own 2012 Implementation Plan with New Jersey.

April 2012: BC Hydro signs its Non-Treaty Storage agreement with Bonneville Power

May 2012: Minister Coleman inserts the BC Liberal government into BC Hydro rate-setting and implies further interference to come over Hydro's capital plans.

With its own turbines sitting idle, how long can the corporation afford to buy IPP electricity high and sell low before it goes bankrupt? Does that constitute non-compliance?

The WECC 2012 Audit Schedule for B.C. lists nine compliance audits - one of which was an April audit of Powerex Corporation.

Is the failure of Powerex to pay its debts non-compliance?

If so, perhaps we should invite WECC and former Powerex president Peterson to have a chat with the auditor general - before WECC starts poking around to bring BC Hydro itself into compliance with New Jersey rules.

I'd sure like to be a fly on the wall at that meeting.

rimco@shaw.ca

© Copyright (c) North Shore News

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