More governments are requiring some form of Indigenous ownership as a condition of approval for new energy projects. While providing a solid revenue stream for these marginalized communities is useful, it is not without risk.
Occasional Paper 94 provides a series of key operational and performance indicators from BC Hydo. This report encompasses the fiscal years 2018/19 to 2023/24.
This paper summaries the key financial items in BC Hydro’s 2023/24 annual report. The prolonged drought had a major affect on its revenues and costs, with a significant hit to the bottom line. Deferral accounting transfers these losses to the ratepayers in future years, allowing the government to mandate a rebate that reduces current year bills but is funded from the prior year “surplus.”
BC Hydro has announced a doubling of its energy conservation and efficiency programs, in keeping with the government’s CleanBC priorities. This commentary has a closer look.
This Commentary explores the looming collision between the government and the auditor general over BC Hydro’s accounting.
Richard Mason, a former appointed member of the BC Utilities Commission has published an article questioning the Commission’s independence respecting BC Hydro. It is reproduced here for information.
Last week Fortescue Metals of Australia announced a major retrenchment in the development of green hydrogen projects. One must suppose that this includes the proposed facility planned for Prince George.
In recent years BC Hydro has been adding more regulatory/deferral accounts. This Commentary suggests that the predominant reason is to insulate the government-mandated profit target.
Are the government’s objectives of dramatically reduced emissions, economic development and affordable electricity rates irreconcilable? Will the provincial government be forced to ration the supply of clean electricity? These questions are raised in the attached Commentary.
The Quebec government has decided that large new wind farm energy projects will be owned by Hydro-Quebec, rather than private power producers. Will BC follow suit?
The BC government has been championing the production of green hydrogen as a method to achieve its CleanBC emission targets. Given the technical problems with this process, this promotion is unwarranted.
The attached reproduces an interesting survey of the effects of the drought on the energy supply in the US Pacific northwest. Are there lessons for BC?
This paper reviews the supply of electricity and the GWh equivalent produced by natural gas for the 2022/23 fiscal year. It demonstrates the importance of natural gas to the province’s economy.
A number of environmental groups have called on the government to end the use of natural gas in residential and commercial buildings by 2035. Clean electricity would replace the natural gas. This paper shows that such a proposition is not feasible.
Links to media interviews.
This paper reviews BC Hydro's financail forecast for the current year-end, as well as the key budget assumptions for the coming year. The water inflows and revenues for 2024/25 may be optimistic.
The latest rebate ordered by the BC government again politicizes BC Hydro's finances. Note; I subsequently was informed that the government will fund $30 million of the $370 million cost to cover those customers who do not receive power indirectly from BC Hydro via their own utility.
The NDP government fired the CEO of Manitoba Hydro over the question of the utility's power procurement. Many similaris facing the future power demand in Manitoba also confront the BC government.
An article that questions the rush to produce green hydrogen to reduce CO2 emissions.
BC Hydro intends to use its accumulated Trade surplus to moderate rate volatiltity during the next few years buy smoothing at 2.3 per cent.
Drought conditions are having a major impact on BC Hydro's finances, as well as forcing the importation of fossil fuel generated electricity.
Manitoba Hydro and Hydro Quebec have seen their export revenues curtailed due to low water conditions thsi year.
Serious drought effects have had a profound effect on BC Hydro's first half financial results.
Recently, Premier Eby said that the 2024/25 budget may include a carbon tax rebate funded through BC Hydro. This paper has a closer look.
This paper reviews the possible use of some of the Canadian Entitlement under the Columbia River Treaty to address some of the growing demand for clean electricity. Note: The BC government sells the CRT benefits to Powerex, which then resells to the Americans (Bonneville Power), with profits being reported via BC Hydro.
This paper reviews comeof the cost and other implications if BC Hydro purchases electricity powered by wind. See also https://biv.com/article/2023/11/calculating-cost-new-power-generation-bc
A drier and warmer future poses significant risk for BC Hydro's generating capacity to meet future needs with clean and affordable electricity.
Recent announcements of large planned green hydrogen production plants near Prince George depend on hydroelectricity that BC Hydro does not have. See also https://biv.com/article/2023/09/mines-power-fossil-fuels-major-balancing-act-energy-minister
Occasional Paper No, 91 provides a five-year review of certain BC Hydro key indicators and is intended for reference purposes.
BC Hydro achieved a strong financial performance in 2022/23, led by majpr gains in Trade income and lower energy costs.
Some commentors and environmental advocates have suggested that BC has almost achieved the target of a clean electrical grid. The attached paper suggests that meeting future demand for a clean power grid will be difficult and expensive.
BC Hydro has advanced the timeline to acquire new clean electricity. This paper has a closer look and the possible implicatons.
Recent comments by Auditor General Michael Pickup suggest that the government cannot continue to freely issue directives to the BC Utilites Commission respecting BC Hydro's finances.
Will the lack of clean electricity to meet the government's net zero target doom the new LNG projects that are queing for approval?
BC Hydro reported a strong nine months primarily due to the effect of interest rate increases nd a jump in Trade income.
Hydro Quebec reported record sales and profits in calendar year 2022, mainly driven by high export prices and a cold winter.
Nelson Bennett's 28 December 2022 article in Business in Vancouver.
By ordering the Utilities Commission to approve BC Hydro’s new rebate regulatory account the government continues to substitute political imperatives for the economic-based rate setting oversight provided by the once independent regulator.
Premier Eby announced a credit/rebate but no total cost or funding plan was make public. This paper provides an estimate, and discusses two funding approaches.
The report highlights the weaknesses in planning, project management and accountability. There are many parrallels to the Site C project.
A five-year statistical summary of BC Hydro's finances.
BC Hydro no longer reports its Domestic electricity surplus or deficit, but it is possble to determine the annual totals from the service data in its annual reports. The over capacity in generation has costs for ratepayers.
Occasional Paper 83 summarizes the key aspects of BC Hydro's 2021/22 annual report, which was released some three weeks ago.
BC Hydro has extended the IPP contract for 4.5 years to maintain grid reliability.
A new directive reinforces the government's unwillingness to fulfill its 2018 promise to enhance the independence of the BC Utilities Commission regardsin BC Hydro's finances and rates.
A new cabinet order negates the previous commitment to restore full independence to the BC Utilities Commission to regulate BC Hydro. Will the auditor general again qualify the government's financial statements?
In a recent decision the BC Utilities Commission gave notice that it will regulate BC Hydro rates using an incentive sytem. This despite the warnings of BC Hydro and most of the consumer groups that such a system would not be effective for the Crown utility, and would reduce public accountability.
New information from BC Hydro shows the significant increase in operating expenditures as Site C becomes operational. A significant increase in Domestic sales reduces the pressure on rates caused by the $16 billion project. See also https://biv.com/article/2022/01/site-c-dam-require-87-rate-hike-over-2-years-analyst
In light of anticipated higher interest rates BC Hydro has re-instituted its hedging program. Better luck this time?
After six months BC Hydro's finances show improvements from the prior year, partly due to improved economic activity.
The government's plan to restrict old growth logging could have a significant effect on BC Hydro's sales and rates.
New reports by Ontario's Financial Accountability Office provide a useful overview of the effect of the taxpayer subsidies on the price of electricity in that province. Update with Globe and Mail editorial https://www.theglobeandmail.com/opinion/editorials/article-the-hydro-subsidy-washing-machine-keeps-spinning-in-ontario/
To date, most of the discussion of the cost of the Site C project has focussed on the total cost. Occasional Paper No. 77 estimates the operating losses over the first fifteen years could total $5.5 billion. Some funding options are also discussed.
Should the BC Utilities Commission be broadened to address social policy issues? This paper says this would be highly problematic.
In a recent filing with the regulator, BC Hydro is slowly disclosing details on the cost of the Site C dam project. The impact on customer rates has yet to be disclosed.
The government of Manitoba has decided to increase Manitoba Hydro rates by 2.5% per year for the next three years. This has resulted in less transparency and accountibility.
Occasional Paper No. 76 discusses the highlights of BC Hydro's recently released 2020/21 annual reportt, including the growing mis-match between Domestic power generation and sales.
A recent cabinet order has blocked any attempt by the BC Utilities Commission to lower BC Hydro's excessive profits. This is another example of the government's manipulation of the utility and the BC Utilities Commission.
Recently, the Ontario government expanded its program of subsidizing the price of electricity for residential and smaller commercial customers to include larger commercial and industrial users. Given the likely operating losses of Site C, will the BC government also subsidize BC Hydro's rates when this project is operational?
Part way into the BC Utilities Commission's review of its 2022 rate request BC Hydro has asked that any decrease to its net income be delayed. This paper reviews the situation.
The Manitoba government has sidelined the province's regulator of Manitoba Hydro, and legislated a 2.9% rate increase for the coming year. This action mirrors that of Quebec, which also "simplified" rate setting by eliminating the regulator for five years. Is there a trend?
This paper reviews how the BC government manipulated the rate-setting process to produce a high return on equity at BC Hydro. It's time to eliminate the excess profits to help stimulate the economy.
A recent report suggests that BC Hydro is winding down its costly interest rate hedging program. This paper updates earlier commentaries.
This Commentary reviews the highlights of the first six months of BC Hydro's 2020/21 fiscal year, including the effect of COVID-19 and lower interest rates.
This paper argues that the net losses for Site C (whether it proceeds or is cancelled) should be covered by the taxpayer rether than expecting the ratepayers to pay the cost by increasing the cost of domestic power sold.
Occasional Paper No. 73 provides a summary of changes in a number of BC Hydro's key financial and service measures for the last five years.
BC Hydro's first quarter report to June 30th shows that the losses on the hedging gamble have now reached an astonishing $1.0 billion. This paper reviews the hedging program, and how the losses will prevent ratepayers from benefiting from lower borrowing costs. See also
The Tyee of September 11, 2020, published Ben Parfitt's commentary on the geological and other risks associated with the current constructon of the Site C dam.
Occasional Paper No. 72 reviews BC Hydro's financial and operational results for 2019/20. Once again, the reliance on regulatory accounting to defer expenditures assured a high net income.
The prospect of continuing low interest rates will place further strain on the financial statements of ICBC and BC Hydro. The poor financial health could twart government attempts to lower insurace rates or provide cheaper electricity.
BC Hydro released a report that claims its strong financial position despite a dramatic drop in sales. This is not true; its has high debt and relies on deferral costs and recording unearned revenue to produce a high profit.
BC Hydro's net income is protected against any reduction in revenue by the public utility's recording of unearned revenue in a deferral account. The resulting increse in debt is a liability for future generations.
This paper argues that the governent should reduce BC Hydro's profit (net income) target by 50 percent to provide $350 million in direct relief to BC residents and businesses.
The attached paper discusses the Saskatchewan government's and SaskPower's moves to reduce the dependence on coal to generate electricity. Certain financial comparisons of SaskPower and BC Hydro are also discussed.
On 29 November 2019, BC Hydro released disappointing results for April to September 2019. Transfers to regulatory accounts converted an initial operating loss of $611 million to a $25 million profit. Losses from hedging future interest rates remain a concern.
B.C. Hydro's interest rate hedging program incurred dramatic losses from April 2018 to June 2020. The shareholder was protected by a regulatory account. How did the hedging program begin and why is it failing the ratepayers?
The new Quebec government has significantly dminished the role of the independent body that regulated the operation and the rates of Hydro Quebec. The change is reviewed in the attached paper.
This Commentary reviews the government's assumption that B.C. Hydro ratepayers will subsidize the cost of electrifying the production of oil and gas in the noeth east reagion. It is a sudsidy because the cost is greater than the anticipated revenue. The social benefit of reduced carbon emissions should be paid by the government, not the ratepayers.
In the August edition of The Broker magazine Chuck Byrne, the exectutive director of the Insurance Brokers Association, wrote an editorial in support of the public model for the provision of compulsory insurance. Exerpts of this editorial are attached.
This paper provides highlights of B.C. Hydro's 2018/19 annual report. The finances are now based on public sector GAAP and reflect the one-time loss caused by the windup of the revenue deferral account.
Auditor General Carol Bellringer has accepted the government's pledge to fully restore the B.C. Utilities Commission's authority to regulate B.C. Hydro and removed that part of her qualification on the government's 2018/19 financial statements.
Despite the clear opinion of the province's auditor general to the contrary B.C. Hydro asserts that the B.C. Utilities Commission is independent. This paper looks at the issue.
Both Manitoba and B.C. public power utilities are facing major cost increases as large capital projects near completion. The Manitoba regulator is raising prices to smooth the transition, but the B.C. government has chosen to keep the rate increase below the increase in B.C. Hydro's costs. The NDP approach has many parallels to that of the previous government.
B.C. Hydro has generated or contracted for power in excess of domestic sales for a number of years, and forecasts surpluses for a number of years to come. This Commentary reviews the acquisition and sales.
This Commentary reviews the recent report by the special committee of the Ontario legislature on financial transparency. The committee was struck to examine how the previous Liberal government ignored public sector accounting standards to lower electricity rates while still claiming to balance the 2017/18 budget.
Occasional Paper No. 67 reviews B.C. Hydro's new three-year financial plan and the F20 to F21 rate request filed with the B.C. Utilities Commission. The government has loosened the constraints on the independence of the regulator, but is it sufficient to satisfy the requirements of the public sector accounting standards?
This commentary reviews the new five-year rates plan for B.C. Hydro, as well as the government's plan to restore the B.C. Utilities Commission's authority to regulate the public utility.
On 13 February 2019 the government released a comprehensive review of the purchase of private electricity by B.C. Hydro https://www2.gov.bc.ca/assets/gov/farming-natural-resources-and-industry/electricity-alternative-energy/electricity/bc-hydro-review/bch19-158-ipp_report_february_11_2019.pdf. The review concluded that a) BC Hydro bought too much energy and energy with the wrong profile, b) BC Hydro paid too much for the energy it bought, and c) BC Hydro undertook these actions at the direction of Government.
See also https://vancouversun.com/news/politics/b-c-hydros-private-power-projects-wasting-billions-says-new-report and
https://vancouversun.com/opinion/columnists/vaughn-palmer-ratepayers-zapped-by-hydro-report-that-reveals-shocking-interference and the response of Clean Enery BC https://www.cleanenergybc.org/reports-publications/response-to-davidsons-report
In early February Auditor General Bellringer released her report "Rate-Regulated Accounting at B.C. Hydro" (http://www.bcauditor.com/sites/default/files/publications/reports/OAGBC_RRA_RPT.pdf, which provides more explaination for her decision to qualify the government's financial statements for the last two years; see https://vancouversun.com/news/politics/political-directives-have-undermined-b-c-hydros-finances-auditor-general-says. On 7 February 2019 Vaughn Palmer commented on some of the implications at https://vancouversun.com/opinion/columnists/vaughn-palmer-hydros-deferrals-problem-about-to-become-a-political-problem.
This paper reviews the testimoney of former Ontario Premier Wynne at the legislative committee on transparency, and compares the practice in Ontario to that practiced in B.C.
My comments on the results and the lack of discussion on accounting changes or future rate increases.
Commentary on certain aspects of the Ontario government's plans regarding electricity pricing and auto insurance regulation.
A committee of the Ontario legislature is holding hearings into how the previous Liberal government attempted to ignore the accounting rules to make the government books appear than was the case. What lessons might the B.C. government learn from this review?
In 2016 BC Studies published my article on how the Liberal government manipulated the finances of BC Hydro to keep the annual profits and dividends high while suppressing the increase in electricity rates: https://ojs.library.ubc.ca/index.php/bcstudies/article/view/187787/186354
The attached paper provides background for two reports on deferral accounts and B.C. Hydro's finances that are expected to be released shortly. The government has promised to fix the finances at our public utilitity, but the details on how this will be accomplished is unclear.
This paper explores the options available to the senior official committee appointed to develop recommendations for a new rates plan for B.C. Hydro. Will the committee adopt the new approach of restoring integrity to financial management, or continue with the old practice of abusing the deferral accounts?
The Ontario government has moved to clean-up certain accounting practices, including the financing of the "Fair Hydro" deferrals. The accounting adjustment of the electricity deferrals increased 2018/19 expenditures by $2,4 billion.
A public inquiry is now underway designed to examin the approval process for the $12.7 billion hydroelectric dam. As Konrad Yakabuski writes: "Whether it involves provincially-owned hydroelectric behemoths in British Columbia, Manitoba or Quebec, or the Crown-owned nuclear-dominated Ontario Power Generation, politically-driven energy policies across Canada have saddled ratepayers and taxpayers with billions of dollars in extra debt."https://www.theglobeandmail.com/opinion/muskrat-falls-inquiry-wont-save-newfoundlanders-from-a-127-billion-sinkhole/article37052291/https://www.theglobeandmail.com/canada/article-inquiry-into-muskrat-falls-megaproject-boondoggle-to-begin-in-2/
Occasional Paper 61 reviews certain aspects of BC Hydro's operations and finances for the last five yers.
This commentary paper explores in more detail some of the issues involved in fixing the accounting policies at B.C. Hydro.