Energy Minister Richard Neufeld will be in on final report.

Panel chair Jack Ebbels was 'candid, adamant' at conference.

In spite of widespread criticism, the B.C. government's panel on energy policy is reportedly sticking to its guns that B.C. Hydro be privatized and provincial electricity rates hiked.

Two of the six-member, hand-picked Liberal body reportedly told a power industry conference last week that their final report will reiterate interim recommendations that B.C. deregulate its energy sector and adopt market pricing for electricity.

Officials from the main union at B.C. Hydro attended the industry gathering in Kelowna, titled The Dawn of Customer Choice -- On the Road to Market Reform, and said they were "stunned" to hear the task force was not reconsidering its interim recommendations given the outcry.

Jerri New, president of the Office & Professional Employees' International Union, said panel chairman and deputy energy minister Jack Ebbels insisted there is a pressing need for sweeping reform and a fully deregulated energy market.

She described Ebbels as candid and adamant the panel is committed to moving to market pricing for electricity. He described called the hostile reaction to the task force's interim report as "knee-jerk," New said.

"He wants the total breakup and sale of B.C. Hydro," said New, whose union has launched an aggressive legal challenge and lobbying campaign against the proposed changes.

"It's quite alarming if it unfolds the way they see it. It is going to be bad. It's pretty scary."

Home-owners, organized labour, the province's major industries, environmentalists and alternative power proponents slammed the task force's interim report, saying it was a recipe for more global warming and economic disaster.

B.C. industries complained that they faced price increases of up to 60 per cent and home-owners would be hit by 30-per-cent hikes if the interim report were adopted.

For big consumers such as mines, pulp mills and and chemical plants, electricity costs are a critical operating factor and there are fears such huge increases would lead to plant closures and thousands of layoffs across the province.

Some of B.C.'s largest resource companies, including Teck Cominco Ltd., Scott Paper Ltd., Canadian Forest Products and trade bodies including the Mining Association of B.C. and the Council of Forest Industries, asked the panel to reconsider its recommendations.

At Highland Valley Copper in Kamloops for example, market pricing would add $21 million to the company's costs and effectively shut the giant mine, throwing 950 out of work.

As a result of such fears and public concern, New said Ebbels said at the conference he was recommending Energy Minister Richard Neufeld sit on the panel's final report for a period of "public education."

"The government has tough decisions to make," Ebbels told the friendly, pro-privatization crowd, she said, and should not release the report until cabinet has decided how to proceed.

"He said Joe and Mary Public would need a ton of explaining before they would buy into the report," said Doug Hill, the union's vice president, who also attended the conference.

Nevertheless, the Hydro union officials said another panel member, Erik Westergaard, an electricity consultant who played a key role in deregulating New Zealand's energy markets, said at the conference the government is being advised to move quickly.

"You know when organized labour, Big Business and the public are all saying the same thing, maybe the government should listen," New said.

"There doesn't appear to be any advantage here for anyone but power producers. How do you deal with the fact that everyone -- consumers, labour, industry, small business, environmentalists -- everyone is saying this is bad for B.C. and bad for the economy? How do you deal with NAFTA implications? Once this is done, it's not just a failed experiment; it's irreversible."

Under the plan proposed by the task force, B.C. Hydro's generation, transmission and distribution divisions would be teased apart and established as separate businesses that could be privatized:

l Generation facilities would be split between two different companies, one controlling major dams and the large Burrard thermal station, and the other smaller hydro generators and other thermal plants.

l Transmission lines would be operated at first by a separate new Crown agency, similar to an airport authority, that would regulate what moves over the wires.

l The distribution system would be split into four separate companies -- one for the Lower Mainland, one for Vancouver Island, one for the Interior and the Columbia Basin and one for the North -- which would be separately regulated and structured to reflect regional needs and rate design.

While the transmission agency might be created and operating within two years, Ebbels said the government could adopt a phase-in period of as long as 20 years for market pricing to soften the blow for industry and home-owners.

"The task force has suggested that immediately moving to market prices was neither practical nor wise," said Hill. "They have also discussed time frames that would accommodate corporate planning cycles."

The forestry industry, for example, faces cost increases that would cripple any recovery in that sector, so the panel suggests staggered increases might be appropriate.

The panel, appointed last August, was initially to have finished its final report by Jan. 31.

However, Neufeld extended the deadline until Friday because of the outcry following the release of its interim report. (A ministry representative confirmed the final report was received Friday and said the minister expects it will be at least a month before he makes it public.)

Aside from Ebbels and Westergaard, task force members include Peter Meekison, a political scientist from the University of Alberta; oil and gas consultant John Bechtold; management consultant and former civil servant Doug Allen and Brenda Eaton, deputy minister to Premier Gordon Campbell.

One major issue that neither the panel nor the government has confronted openly is aboriginal claims on the water resource and transmission right-of-ways.

First Nations in B.C. are discussing plans to legally challenge any attempt to split Hydro or sell its right-of-ways without resolving native land claims, a move that could throw a wrench into the Liberals' privatization agenda.

In Canada, Ontario is following Alberta's lead in moving down the path of deregulation and privatization first blazed in England by former prime minister and free-market icon Margaret Thatcher.

Specialists are still evaluating what has happened in Alberta, where consumers have been buffered from exorbitant price increases by a government rebate program.

The B.C. panel recognizes a similar transition period may be necessary to prepare consumers who enjoy cheap power as a result of Hydro's extensive dam-building program in the 1960s and 1970s.

Opponents of deregulation and privatization say such low-cost power is an entitlement B.C. home-owners and industry deserve because they paid for that prudent development.

At the time it appointed the panel, the provincial government froze B.C. Hydro rates through March 31, 2003 "to allow time to implement improvements in British Columbia's hydro-electricity industry."

Ebbels was unavailable for comment.