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EDITORIAL: Following in our footsteps

The Muskrat Falls generation dam’s spillway and powerhouse are shown in Oct. 2017.
The Muskrat Falls generation dam’s spillway and powerhouse, October 2017. — CP file photo

Misery loves company, right?

Maybe not.

In fact, sometimes, misery just lets you commiserate with people going through the same thing.

And while the final numbers aren’t quite as bad, as we look forward to our future romance with Muskrat Falls electrical rates, we might spare a thought for the ratepayers of British Columbia as well.

Because, just as our politicians demonstrated that they couldn’t learn from past mistakes, B.C.’s government put on a good show of not learning from our Muskrat mistake.

What happened is that the former provincial government in British Columbia decided it wanted more in-province power, and ordered its provincial utility to change the way it calculated demand for energy — changes that created a sudden increase in demand. On paper, anyway.

The report prepared for the B.C. government says, because the demand for power has not materialized, BC Hydro ratepayers will have to pick up a big tab.

Any of that sound familiar?

As a report into B.C.’s energy issue now outlines, “Government directed changes to the parameters that drive BC Hydro’s energy planning, creating the appearance that more energy was required. Government policies then resulted in BC Hydro being unable to add internal generating capacity or to rely on trading in external markets to buy the energy required to meet domestic needs. … (The) only option left available to BC Hydro to meet the new load levels projected was to acquire large volumes of additional IPP energy.”

IPP energy is energy from independent power producers. BC Hydro had to go out and make long-term power purchase agreements with suppliers who knew the utility had no option except to buy from them. (Once again, anything sound familiar? After all, Newfoundland and Labrador Hydro had no choice but to deal with the power arrangement offered by Nalcor Energy, NL Hydro’s corporate parent.)

The BC Hydro long-term power agreements were, like Muskrat Falls, all take-or-pay deals — that means that the utility has to pay for the power even if it can’t use it, meaning there’s no way to displace the power purchase with cheaper power from somewhere else.

One of the key arguments that the B.C. government made — just like here — was the need for new, green energy.

But getting that green energy will cost a different kind of green. The report prepared for the B.C. government says, because the demand for power has not materialized, BC Hydro ratepayers will have to pick up a big tab.

A conservative estimate, the report says, shows the purchases will “cost ratepayers an estimated $16.2 billion over 20 years, the estimated period during which BC Hydro will likely not need the energy government directed it to buy.”

The three main conclusions of the report?
“BC Hydro bought too much energy and energy with the wrong profile, BC Hydro paid too much for the energy it bought, and BC Hydro undertook these actions at the direction of government.”

Listen: they’re playing our song.

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