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Saturday, March 17, 2007
The Liberal Government
BC’s loss of competitive power
Jenny Kwan, NDP Economic Development Critic: Published on Global Chinese Press
9.3.2007, Dawa Business Press 10.3.2007 and Ming Pao Daily 12.3.2007
In British Columbia, we have the second lowest electricity prices in North America. Our people, businesses, and industries are able to enjoy this benefit because of the advantageous geographical position of the province, the energy policies of the former government, investment in hydroelectric power and the public hydro service.
However, as a result of the energy policy of the Liberal government, B.C. will lose this important competitive edge of cheap electricity.
Canada is rich in oil resources. However, we pay the highest prices in North America at the gas station. The crucial factor that creates this price gap between electricity and gas is the fact that the price of electricity is determined by the cost of publicly owned electricity generation, while gas prices are determined by the commercial market, which involves very complicated market factors and business interests.
The energy policy of the Liberal government in 2002 prohibited BC Hydro from building new, publicly owned electricity plants the way it did before the Liberals took power. The best locations to develop hydro electricity in the province, found by research-funded by taxpayers’ dollars, were given to private electricity companies. The provincial government then entered into agreements lasting 15-40 years with private electricity companies to buy electricity from them at a price double the expected market price.
In 2006 the average price of electricity in the contracts signed by the provincial government through BC Hydro was $87.50/MWh. Since the price in the contract was indexed, it will increase as the price index rises. So by the year 2051, the price could increase to $124/MWh. In view of the present price we pay, at $63/MWh, and $37/MWh for big volume industrial users, future increases in electricity fees are inevitable. When electricity fees increase, the cost of business and our cost of living will rise.
Because of the investments made in hydro-electrical generation in the 60s and 70s, the cost of electricity production is $5.81/MWh today. If BC Hydro built its new plants by itself, the cost would be $42/MWh. Under the old policy, BC Hydro was able to bring hundreds of millions of dollars per year to the public treasury.
What made the Liberal government so eager to sign electricity contracts with private companies lasting 40 years at such high prices? Why are the best locations for power generation given to private companies?
In order to justify its policy, large sums of money were spent last year by BC Hydro to put up ads to create the false impression of a future “energy crisis.” However, it is difficult for the B.C. Liberal Party to hide the real possibility that it is transferring rewards to its supporters.
Posted by Coyote at 8:06 a.m.