Opinion: BC Hydro asking for a loan? Overheard by a fly on the wall
By Dermod Travis
Loans Officer (LO): So you’d like to borrow $10.7 billion?
BC Hydro (BCH): Yes sir. It’s for a hydro-electric dam.
LO: Well that’s a lot of green for green energy. How exactly did you arrive at that cost?
BCH: Happy to report we went to the same team that came up with the $1.5 billion estimate for the Port Mann bridge. They were so close to the mark with that $3.6 billion project we had to go back to them again.
LO: Do you have a business plan at all that I could share with my superiors?
BCH: Not really, still in a state of flux. We keep revising our demand forecasts, then the project’s cost. It goes on and on. The plans are out of date almost as fast as we finish them.
LO: OK. Do you have any customers that have signed up to buy the electricity?
BCH: No.
LO: Hmm. Any ideas who you might sell it to?
BCH: Ideas we’re not short of. In fact, we committed most of it to B.C.’s burgeoning LNG industry a few years back, when we were told it would fully burgeon. Promises, promises. But California might buy some now, Alberta too. Then there’s data centres and server farms.
LO: I thought I read that Site C was going to flood farmland?
BCH: Different kind of farm sir. Let me tell you, with all the phantom customers we’ve identified, it would be really embarrassing if one of those LNG plants did come to fruition because we might not have enough capacity to supply power to it. Funny, no?
LO: Not really. Tell me about California. If memory serves you had a spot of trouble down there already.
BCH: Well, yes, but that was because of the spot price of electricity. After lobbyists, lawyers and $750 million, it’s all behind us now.
LO: So California needs the power?
BCH: No, not at all. They have a glut. At least that’s what the Los Angeles Times calls it, but you know what President Trump says about The Times – L.A. or New York.
LO: So why are they going to buy it from B.C.?
BCH: If you price anything low enough you’ll always find a buyer.
LO: Even if you have to sell it at a loss?
BCH: We like to think of it more as a loss leader to upsell vacations at Whistler. We’re calling it: “Buy the power, come for the powder.”
LO: Let’s talk Alberta. Didn’t I read something in the press recently about some newfangled energy auction they had?
BCH: You did. They signed contracts for 600 MW of capacity.
LO: For how much?
BCH: Not that it’s germane to our discussion, but $37/MWh.
LO: What do you forecast the cost of generation at Site C will be again?
BCH: The last time we pulled those numbers – when the project was still coming in ‘on budget’ at $8.8 billion – about $95/MWh.
LO: So you’re ready to sell to Alberta at a loss too.
BCH: Well, at least until one of those LNG plants materializes.
LO: What were LNG producers going to pay?
BCH: Roughly $55/MWh, but they were also going to create 100,000 new jobs and fund a $100 billion Fantasy Fund – I mean Prosperity – a Prosperity Fund. With that kind of money we could build eight, maybe nine Site Cs.
LO: Perhaps we should look at some broader numbers? What’s the long-term trend for electricity consumption look like?
BCH: To be honest, not good, but soon everyone will be driving electric cars.
LO: Finally, something to take to the bosses. Tell me about its impact on future demand?
BCH: One consultant estimates that 450,000 electric cars in B.C. will need 800 GWhs of power per year. Site C can handle that. In fact, we’d still have about another 4,000 GWhs to sell to California and Alberta at a loss, that is if we don’t need it ourselves to get through B.C.’s cold winters.
LO: Hadn’t thought of that. How energy-efficient are we in B.C.?
BCH: Not very sir and – with all due respect – that’s not really the point. If we were as energy-efficient as, say, Norway or Finland, we wouldn’t need Site C at all.
LO: So you could put the kibosh to Site C for $4 billion max, buy capacity at $37/MWh like Alberta did, sell it for a profit – even after the $4 billion – and you still want to borrow $10.7 billion from us and sell it at a loss?
BCH: Yes, we do.
LO: Have you considered taking this to one of our competitors down the street?
Dermod Travis is the executive director of IntegrityBC. www.integritybc.ca
