What’s Good for B.C. Liberals May Not be Good for BC Hydro
by Dermod Travis,
One of the last things anyone would ever imagine the B.C. government doing is adopting an old NDP program, but that’s exactly what Energy and Mines minister Bill Bennett did this month when he announced a five-year, $300 million hydro bill deferment plan for 13 mines owned by six companies.
There’s a price to pay when B.C. Hydro becomes a political tool: the interests of ratepayers can take a backseat to political interests.
Three of the six companies in Bennett’s deal were highlighted in a December Financial Post article, “Debt risks mount as Canada’s base metal miners sink deep in the hole.”
One could argue that the headline alone justifies Bennett’s move, except there’s no guarantee that B.C. Hydro will ever be repaid.
Last year, Deutsche Bank analyst Jorge Beristain said one of the six companies – Colorado-based Thompson Creek Metals – is “quickly approaching an end-game” with debts of $832 million US.
According to the Financial Post, Teck Resources “has more than US$3.5 billion of debt coming due between 2017 and 2023 and lost its investment-grade credit rating last year.”
Taseko Mines, “has more than $260 million of senior notes coming due in 2019, while a US$30-million secured loan matures this May.”
Imperial Metals owns three of the 13 mines, including Mount Polley. Its controlling shareholder – Murray Edwards – has a net worth of $2.69 billion.
The B.C. Liberal party has done well from them. From 2005 to 2014, the six companies donated $2.8 million to the party.
B.C. Hydro’s contractual obligations with private power producers have ballooned to $56.2 billion.
It’s the gift that keeps on giving for everyone involved, except ratepayers.
In a 2008 call for independent power projects, 75 proponents registered with B.C. Hydro. They signed agreements with 18 of the proponents in 2010.
From July 1, 2008 to September 30, 2010 – when B.C. Hydro was making its decisions – 14 proponents donated $268,461 to the Liberals. One donated $1,000 to the NDP. Ten of the 14 were successful.
Their before and after donations are interesting.
For the 10 successful proponents, their donations doubled from $112,801 (January 2005 to June 2008) to $229,471.
After the deals were done, they settled back again. Seven donated $112,345 to the Liberals (2010 to 2014).
In 2008, the B.C. Mining Association received a $295,188 grant from the Northern Development Initiative Trust (NDIT) to start making the business case for the Northwest Transmission Line.
NDIT’s Highway 37 Power Line Coalition has 22 private sector partners.
Excluding companies in Bennett’s deferral program, independent power producers and those identified by B.C. Hydro as “potential future mines,” 13 of the 22 donated $962,220 to the Liberals.
There are the nine potential future mines that one day may connect to the line.
Excluding donations from Imperial Metals and Teck who have interests in three of them, the most generous companies were Goldcorp at $795,700, the Lundin Group ($112,145) and Copper Fox Metals ($93,130).
One of the founding directors of Copper Fox Metals is Hector Mackay-Dunn, who co-chaired the B.C. Liberal’s 2009 election preparation efforts.
MacKay-Dunn is affectionately known in some party circles as Hector the Collector for his prowess at political fundraising.
In all, nine of the companies have donated $1 million to the Liberals and $18,050 to the NDP.
And at the same time the government was imposing hydro rate increases on schools and hospitals in 2014, Bennett announced a $100 million B.C. Hydro initiative for pulp and paper producers to “support investments in more energy efficient equipment.”
The forest industry has donated more than $4.2 million to the Liberals.
Add all the donations of the interested parties up and it totals more than $9.8 million for the Liberals ($417,185 for the NDP).
Guess who gets saddled with the bill?
B.C. Hydro’s contractual obligations stand at $59.7 billion, not including their debt which has grown from $6.8 billion in 2004 to $16.7 billion last year.
They’ve had to borrow $3.2 billion just to turn around and give it to the B.C. government as dividends.
In 2014, Hydro-Quebec cut a dividend cheque of $2.5 billion for the Quebec government. They didn’t have to borrow money to cover the cheque.
Hydro-Quebec’s rates are the second lowest in Canada. From 2007 to 2015, its cumulative rate increase was 17.1. In B.C., it was 63.2 per cent.
Dermod Travis is the executive director of IntegrityBC.
Comments
So if the Liberals adopted an old NDP policy does that mean their corporate donations will go down and their union donations will go up?
So a better choice is to let all the mines shut down?
That would seem to be the inevitable alternative. And then the power saved would be surplus, and so, if we are to believe those who hold steadfastly to the so-called “law of supply and demand”, it’s price should fall. And all of us as consumers would be better off. Only we all know that’s not the way it works. And even if it did, where then would all those unemployed from the mining sector and its associated suppliers get the money to pay their ‘reduced’ power bills?
Once again we attempt to eliminate the visible symptoms of a much larger disease rather than diagnosing and curing the disease itself. Kind of like putting a Band-Aid over a sore that’s really skin cancer. Underneath it’s still untreated and on its way to killing the patient.
The question is, since hydro electricity isn’t a commodity that can be stored, is there someone else willing to pay for it if we just let the mines shutdown. If so, then that’s the cost of the subsidy to the mines. If that lost revenue exceeds the taxes paid by mine employees, and spinoff industry, we should let the mine die. I highly doubt it does.
So it’s likely costing us nothing to let them have it, and the province and feds still get income tax from employees, and the spin off effects of the mine operating. And it’s not a gift, it’s a loan, so if commodity prices recover, we get the money back with interest, and the Liberals would appear brilliant.
It seems to be a little known fact, primary industry drives the economy. If all mines, mills, natural gas, oil shuts down, all those pencil necks in Vancouver shuffling paper, and all those government employees, health workers etc., don’t produce any real goods. Unless you think tourism can support the needs and wants of B.C., we’re stuck having to lend a hand to primary industry when it needs it, and then we can tax them later, when they get back on their feet.
Travis:-“Imperial Metals owns three of the 13 mines, including Mount Polley. Its controlling shareholder – Murray Edwards – has a net worth of $2.69 billion.”
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Notice how the inference is that Mr. Edwards has a piggy bank somewhere with $ 2.68 billion in it. In cash. Why not tell the public the truth, that his ‘net worth’ is simply an accounting figure denominated in ‘money’, and not necessarily ‘money’ itself? Why not explain to them that his net worth is the remainder of the ESTIMATED value of his Assets minus the ACTUAL value of his Liabilities? Why not tell them that this ‘estimated’ value can change widely, and is largely determined on the continued ability of his Assets to be able to generate a price for the products they provide IN EXCESS OF THEIR COSTS? As such, if the metals his mines produce are in high demand and command an ever rising price, his estimated net worth will escalate. But if they’re not, if the mines can’t even recover their costs from continuing operations, what are they, and he, worth then?
Pretty hard to have unemployed from **future potential mines**. Red Chris Copper is one mine using the Northwest Power Line at this time. There may be more but I haven’t heard of them.
In addition Endako Mines closed over a year ago, and Huckleberry Mine will probably be fully closed by the end of August.
So not as many mines operating as on may think, and if you can believe the article those that are operating are in financial difficulties.
LNG is in the tank so even the small amount of electricity a LNG plant would purchase from BC Hydro is stalled.
So, why build Site C.???
It time for a huge shift in the thinking in BC. We need to keep operating some mines, however its time to be looking at other types of industry to keep this Province going. Financing private business with tax dollars is hardly the way to go.
You would think that a forward thinking private business would be ashamed to accept tax dollars from Governments. To me this is an admission of failure for both the business and those CEO’s who run it.
As Lee Iacocca said. Most CEO’s in America are idiots.
As Lee Iacocca said. Most CEO’s in America are idiots . That maybe true but the facts are that the Canadian electorate is an even bigger idiot . I don’t think you could find much better evidence than this article . Payola at its finest .
Once you get into grade 2 or 3 and start learning economics, pretty sure you will have a better out look on life.
Like I have been saying all along our rates are going up because of the costs forced onto Hydro by the very corrupt liberals. The IPP generation may have started out as a good idea but soon morphed into a nefarious money grab.
None of you commented on that.
Actually the IPP thing was never a good idea as those generation costs would always be higher than Hydro. Ipp generation was always meant to be a money grab for us to pay. Hydro is so far in debt because of its use as a piggy bank.
we build site C, because it take 8 years before we have the need for power. That is why we build when the economy tanks, to keep the guys working and money moving. Than when the need is there, than we have it.
No different when the Hoover dam was built in the depression, they wanted the guys working, taking advantage of the cheap labor pool to build public facilities. Would you like to build when all the trades people are busy, or when they are in need of work. Not a rocket scientist, but I can put 2 and 2 together.
Why build site c, well lead time. If we wait until commodities go up it won’t be available. Natural gas generation is more expensive that hydro. Also who knows how expensive natural gas will be in one, five, fifty years.
Load is increasing, population is increasing.
I think what should be said is the BS load is increasing on the population.
Seamutt/He Spoke. Your comments make sense as long as you don’t really think about them. Once you think then out the window it goes.
1. There is no shortage of power, and no indication that there will be in the next 10/20 years. So building for a future need that does not exist is foolish.
2. We can spend money on infrastructure projects all over the Province that would create more jobs than Site C, and benefit all people of the Province rather than just North East BC.
3. Site C is about making money for big contractors, and business as well as creating a few jobs. Jobs are what is discussed because that is an easy sell. No one talks about the huge profits that contractors and business will make on this project.
4. We own all the natural gas in this Province, and if we chose to we can control the price of natural gas that is sold to generate electricity.
5. If we can sell natural gas to Korea, Japan, China, etc; so that they can generate electricity then of course we generate electricity from natural gas in BC.
6. Flooding good agricultural land to send gas to China is about the dumbest idea that we have ever come up with. We need this gas in BC to generate jobs in BC.
Time to change course and not listen to those who would rape and pillage this Province for short term profits.
Palopu – your comments make sense unless you think about them.
1. The future need is all the Asian people moving to Vancouver buying up property with the money we gave them for Ipads and Iphones. They have to power their hottub somehow.
2. You mean like twinning highways. Dumb. That just saves lives and adds more population demanding power.
3. Yes, but we get to tax those corporations – well, if they are resident in B.C. But we get to tax the workers, well, if they are resident in B.C.
4. Actually, Her Majesty Queen Elizabeth the Second owns everything – then again, according to the Supreme Court – probably the F.N.’s own everything, so, you and I own F. all.
5. But we have lots of electricity. Gas is surplus – unless you wanted to do something stupid like set up massive greenhouse complexes and instead of burning carbon to haul fresh vegetables here, you could just burn carbon to grow them here.
6. This is probably your silliest argument. If we don’t send China gas, they won’t send me a $300.00 big screen TV – and I need that TV.
Dripping sarcasm throughout if not self evident. In other words, good points.
Palopu – your comments make sense unless you think about them.
1. That argument was used for every major power project in the province. So you are saying those projects are not needed and can be torn down?
2. So with the building of site c no other infrastructure will get built?
So only the people living in the north east will work on the project?
3 Say what, contractors are and will, have been building projects large and small all over the province, see generally to make money, what a concept.
4. In a perfect world but ever hear of trade agreements. Hydro is cheaper than gas.
5. Ya but that generation is still more costly than our hydro, Though the liberals are screwing that up with their IPP friends.
6. Actually not that much flooded and the most productive land is getting covered in free standing houses, lower mainland.
Oh my an idealistic world you live in.
oil ha been discover near the UK’s Gatwick airport that could dwarf the north sea field.
Also Meeting in Doha, Russian, Venezuelan, Qatari and Saudi Arabian oil ministers reached a deal to not exceed production from their January levels, but only if it was followed suit by other producers such as Iran and Iraq. Looks like the low prices will continue. Bad new for other producers.
Great news for consumers . Even greater news for those that want to buy more real estate .
Seamutt. If we look at the greenhouse gas emissions for the natural gas that is going (supposedly) to be shipped to China. What do we see.
1. Pollution from the building of Site C.
2. Loss of Agricultural Land from Site C flooding.
3. Methane pollution from fracking for the gas.
4. Pollution in building the pipelines.
5. Methane pollution from building the LNG plants at Kitimat or Prince Rupert, and the running of the generators to freeze the gas.
6. Pollution from shipping and unloading the LNG destination.
7. Pollution for shipping from dock to LNG plant in China,.
8. Pollution from the Chinese LNG plant once its up and running.
In addition there are all the attendant costs for the above. Plus we will be taken to the cleaners from the LNG proponents.
So. If we built one or two natural gas plants in BC. we would only have to be concerned with. 3, and 8, and perhaps to some degree 4. We would have the same amount of power, less cost and pollution, and just as many full time jobs after the plants are built.
You need to get the Site C idea out of your head, so that it can clear. Only then will you be able to see that the large corporations, hydro, and the Government of the day have led you down the garden path.
Ho, my, funny. GHG?
Seamutt. Large dams create methane gas from rotting vegetation; Fracking is the major contributor of methane into the atmosphere.
LNG Plants used to freeze and thaw LNG emit methane and other gases into the atmosphere.
On and on it goes. Where do you spend your time?? Are you related to Rip Van Winkle??
seems like most of today’s articles written by the new crew of socialists end up being closed to comments…
Palopu,why are you concerned about methane gas? If you are thinking GHG it is irrelevant as a GHG, any radiation that might be absorbed by CH4 is already absorbed by H20. The effects of CH4 is completely masked by H20.
Where do I spend my time, well I didn’t sleep through chemistry in school and reading Rolling Stone Magazine with Ataloss. To borrow a phrase, I crack myself up.
If there is any effect of GHG it turns there was a modeling error. The correction of this modeling error reduces climate sensitivity by a factor of ten. This Co2 thing of which billions have been made, turns out was a simple modeling error recently found out.
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