Bill Keay, Vancouver Sun / Larry Bell, CEO of B.C. Hydro, sees a need to curb industry's traditional reliance on inexpensive electricity.

B.C. electricity consumers should not count on a long-term rate freeze, says the new head of B.C. Hydro.

And electricity deregulation -- which sent power prices soaring in Alberta and California -- would also be a bad idea for B.C residents, Larry Bell, chairman and CEO of the Crown corporation said Tuesday.

Bell, who took on the job last month, said Hydro has been able to prevent rates from going up because of its lucrative power-trading subsidiary and refinanced debt.

But Bell said he doesn't yet know if there are other things that can be done to mitigate rate increases.

B.C. Hydro's residential power rates have not changed since 1993 and have been officially frozen since 1995. The new Liberal government recently announced an extension of that rate freeze for up to 18 months.

In outlining his vision for the future of the Crown corporation, Bell said he wants to curb industry's sense of "historic entitlement" to cheap power and is skeptical about so-called "clean coal" generating technology.

At a time when many consumer, labour and industry groups are worrying about the future of Hydro, Bell all but ruled out deregulation of residential service and the privatization of Powerex, a profitable arm of B.C. Hydro that buys and sells electricity on international markets.

"Residential [deregulation] is way out there, the evidence is that, especially in low-cost regions, which we are, there's really no value . . . for deregulation with residential customers," Bells said. "Yes, we hear all this about competition and so on and so forth, but in jurisdictions that tried it, the consumer has seen it as a lot of risk in the upside -- getting the deregulation wrong -- and not much benefit," he said.

Opponents of deregulation often point to Alberta and California, where the process drastically raised electricity costs for all consumers.

Bell also played down the possibility that Hydro would sell off Powerex, which was instrumental in generating last year's $859-million profit. Premier Gordon Campbell has promised not to sell off any of Hydro's "core assets," leading some industry watchers to speculate the government would privatize Powerex.

While Bell acknowledged that Powerex's future will be determined by the government's current "core review," he said it would not make business sense to run either Hydro or Powerex without the other.

"It does not look like a viable commercial proposal to split it off," he said. "The structure of the industry in North America says that you have a trading operation with a generating company. Those two are married at the hip."

Bell added that even an arms-length trading company still owned by British Columbians would not work as well as one run by Hydro.

Bell must also grapple with how to balance conservation goals with B.C. industry's "historic entitlement" to cheap power, he said. According to Bell, Hydro's cheap industrial power prices encourage some businesses to use too much energy.

Bell suggested that Hydro could set up a program in which only energy-efficient plants would keep their low rates.

At the same time, however, Bell said he would consider whether to allow private power generators to sell electricity directly to industry in B.C.

He was more cautious about the possibilities of coal-fired power generation than his boss, Energy Minister Richard Neufeld. In recent months, Neufeld has said he hopes to examine the potential of so-called "clean coal" generation in British Columbia.

But Bell said he has not yet seen an example where the technology is both economically and environmentally sound. He's waiting to see if Alberta achieves that goal in a test project.

"If they are successful then I think it no doubt will bring coal back to the table," he said, adding that Canada has committed itself to reducing emissions that lead to global warming. Coal-fired generators have been blamed for producing greenhouse gases such as carbon dioxide.

Bell also promised to revamp the successful PowerSmart conservation program he began a decade ago when he last led B.C. Hydro. Bell was Hydro chairman between 1987 and 1991.

cnuttall-smith@pacpress.southam.ca