Why is it that BC Hydro customers are facing an almost never-ending series of rate increases when electric power is in ample supply, market prices for electric power are very low, the efficiency of producing electric power from natural gas is continuing to improve, and oil and gas markets are at the lowest level in years? Well, contracts are contracts. Remember the Gordon Campbell years when BC was to become a “renewable energy powerhouse?” With all the enthusiasm to develop renewable power, the Clean Energy Act was implemented in 2010 requiring Burrard Thermal to be shut down, 93% of the power produced by BC Hydro must be renewable, and BC was to be self sufficient. In order to achieve these objectives, BC Hydro proceeded on a renewable energy buying spree. So, as a result fiscal year 2015 purchases of electric power under those expensive long term contracts with IPP’s has increased by 2300 gigawatt hours (about half the annual production expected from Site C) at a total cost exceeding market value of at least $230 million per year or approximately 5% of BC Hydro’s revenue from sales to domestic customers. And there are more IPP projects coming on line in future years.
More details about electric power markets and their importance to BC electric power consumers in future blogs.