PASCI project

The BC Hydro affair: A powerful con job

november 2003, Vancouver BC
by Johanne Pelletier and Francis Murchison
click here to see all the pictures

On October 6th, 2003, a rally against the policies of Gordon Campbell’s Liberals took place in downtown Vancouver. Under a gray sky and an autumn rain too few people came out despite the discussion of critical issues that took place. Among others was the privatization of the hydroelectric system, which is a central issue for the BC as well as the rest of Canada.

Alberta proceeded with plans to deregulate their energy sector in 2000, followed by Ontario in 2002. As a result electricity fees went up 500% for Alberta and 33% for Ontario. Following the creation of its energy board (Régie de l’Énergie), Quebec has been trying to “value the strong hydroelectric potential of its territory” by using this essential service made in Quebec to make cheap electricity available to the Americans. This diverges from their initial mandate to make low cost energy available to all Quebec residents. British Columbia has been following this same tangent since the election of the Liberals and Premier Gordon Campbell.

BC not for sale!

B.C. Hydro is currently owned entirely by the population of British Columbia and offers the third lowest rates in North America. It also provides the government with annual revenues of 850 million, money that support the health and education systems. The Minister of Energy and Mines, Richard Neufeld, recently announced an increase in the cost of electricity for next year.

In fact, without any consultation of the public and with the adamant disagreement of more than 90 municipalities, the government has been orchestrating the privatization of key sectors of B.C.’s public hydro. Bill 10 and bill 39 transfer one third of operations and workers to a private enterprise called Accenture, whose headquarters are located in Bermuda. Negotiated in secret, the terms of the agreement between B.C. Hydro and Accenture privatize customer services, information systems and services, network computing services, human resources, financial systems, purchasing, disbursement services, property services, and business and office supplies.

Accenture has a past loaded with controversy. Before the year 2000 Accenture was known as Andersen Consulting, the consulting division of Arthur Andersen, a firm involved in the Enron scandal. Initially based in Chicago, the firm changed its name and relocated its head office to Bermuda, a fiscal paradise. Court judgments made in the United States or other countries against them may not be enforced in Bermuda. This same company has been criticized for overcharging. For example, in Ontario, Accenture received the contract to privatize the welfare system. The Auditor General later concluded that it cost the government six times more to pay Accenture than it would have if public servants had performed the service.

manifestation in Vancouver

What’s more, the British Columbia government is being pressured by the Federal Energy Regulatory Commission (FERC), an American organization that promotes deregulation in Canada and the United States in order to encourage the free trade of energy services. The B.C. government has proceeded accordingly by dismantling B.C. Hydro into three sectors: generation, distribution, and transmission. This is a necessary condition, according to FERC, for electricity to be exported into the United States.

Plans are underway so that by the fall of 2004 B.C. will join RTO West, a “Regional Transmission Organization” controlled by American corporations that will run B.C. Hydro’s transmission system. This would give the States an important level of control over B.C. Hydro as the RTO will decide how much to invest in electrical infrastructure, who has access, and how much will be charged to transmit power.

Furthermore, it is quite possible that future production of electricity will cause increasing damage to the environment. The provincial government has banned B.C. Hydro from developing any new power projects, leaving all future power generation to the private sector. This means that more coal-fired, natural gas fired, and wood waste burning sources of electricity will be used in the aim of generating a maximum profit with a minimum investment. These methods of generation have well known environmental consequences on the production of pollution and contribute to global warming.

The transfer of control from B.C. Hydro to Accenture has already cost B.C. taxpayers 60 million. The breaking up of B.C. Hydro into three sectors means more bureaucracy and a decrease in responsibility to citizens. It also lets the public transmission system be used by private companies in order to export electricity. On top of it all, all new production of electricity will be private and will be sold at market price. This will have an especially large effect on the more far-flung regions of the province. Even though the government declared that it would provide consumers with 10 years of low cost electricity on what they call “Heritage Contract”, what will happen after this period?

stop privatizing everything

What follows is that the process of electricity privatization is practically irreversible under the North American Free Trade Agreement (NAFTA). In accordance with chapter 11, private companies producing electricity will be protected in the event that the service is converted back into a public service. The government is then obliged to compensate and provide these companies with potential future “lost profits”.

How can these changes possibly be beneficial to the population of British Columbia and thereby serve the common good? The enormity of the robbery is particularly apparent since 60,000 people have signed a Letter of Intent supporting a class action lawsuit to stop the privatization.

For more information, you can contact BC Citizens for Public Power, an organization that tries to give voice to British Columbians who are demanding the conservation of public electricity production.