Questions to be asked of BCUC

[lasnomadas]

BC Hydro used to be OUR crown corporation. Now it has become a cash cow for the BC Liberal government. This theft of B.C. citizens' tax dollars in order to make it look like their budget is balanced has to stop. If the NDP/Greens don't stop it, then perhaps BC Hydro should experience a complete make-over. Fire CEO Jessica McDonald and all her cronies, and also get rid of Christy's BFF Brad Bennett and the rest of 'the Board'. Put somebody in charge who isn't a BCLiberal sympathizer, or even worse, an employee.

[GordonH]

BC Hydro used to be OUR crown corporation. Now it has become a cash cow for the BC Liberal government. This theft of B.C. citizens' tax dollars in order to make it look like their budget is balanced has to stop. If the NDP/Greens don't stop it, then perhaps BC Hydro should experience a complete make-over. Fire CEO Jessica McDonald and all her cronies, and also get rid of Christy's BFF Brad Bennett and the rest of 'the Board'. Put somebody in charge who isn't a BCLiberal sympathizer, or even worse, an employee.

Curious how long has BC Hydro & ICBC been a Governments cash cows, 10, 20, 30+ years

[mr.bandaid]

exactly smurf. bchydro doesnt need to make a profit. it just needs to break even until in near future we wont need a bc hydro

That it silly thinking. Of course they need to make a profit. Infrastructure will age and need to be replaced or upgraded. Profits would be a great way of insuring the money is there for this inevitability. Just keep the governments mitts out of it.

[Urban Cowboy]

BC Hydro used to be OUR crown corporation. Now it has become a cash cow for the BC Liberal government. This theft of B.C. citizens' tax dollars in order to make it look like their budget is balanced has to stop. If the NDP/Greens don't stop it, then perhaps BC Hydro should experience a complete make-over. Fire CEO Jessica McDonald and all her cronies, and also get rid of Christy's BFF Brad Bennett and the rest of 'the Board'. Put somebody in charge who isn't a BCLiberal sympathizer, or even worse, an employee.

Curious how long has BC Hydro & ICBC been a Governments cash cows, 10, 20, 30+ years

Though you wouldn't know it by the rant from the confused one, those entities have been cash cows ever since the NDP dreamed up the plan.

If any party deserves criticism for that it's them.

[lasnomadas]

@Gordon H:
That's not entirely true. Only the BC Liberals have taken this 'dividend' thing to a whole new level. They saw all that money laying around in the crown corporations' contingency funds and thought, "Hey, why don't we use that money to balance our ailing budget?" Then, when they became really incompetent at managing the taxpayers' money, they decided, "What the heck, why not make the crown corporations borrow money to cover all the funds we're stealing from them?"

Over to you, Gord.

[GordonH]

@Gordon H:
That's not entirely true. Only the BC Liberals have taken this 'dividend' thing to a whole new level. They saw all that money laying around in the crown corporations' contingency funds and thought, "Hey, why don't we use that money to balance our ailing budget?" Then, when they became really incompetent at managing the taxpayers' money, they decided, "What the heck, why not make the crown corporations borrow money to cover all the funds we're stealing from them?"

Over to you, Gord.

Only way to really know how far back this actually goes, is to have access to BC Hydro & ICBC books (the real books, not the fudged ones). That will never happen.
1 thing is certain all politicians lie and bs there way out of a lie.

[lasnomadas]

There was a very interesting article in the Kelowna Courier the other day by David Bond, retired bank economist. The headline reads, 'Liberals leave financial mess for new government to clean up'. The Castanet readers should try reading other publications once in awhile if they want to read something other than BC Liberal propaganda.

[flamingfingers]

^^Seems like Horgan will set up a forensic audit of BC Hydro, ICBC and BC Ferries...

[erinmore3775]

http://www.kelownadailycourier.ca/opinion/columnists/article_bcfe4f38-4ad9-11e7-9267-efbdfbaf956c.html

I have read David Bonds article and I agree with his premise that the past and current government has made some pretty poor financial decisions and have left the province in poor financial shape. I just disagree with some of his reasoning and his suggestions regarding Site C.

"Hydro has paid almost $6 billion in dividends between 1992 and this year, of which $3.8 billion was borrowed, according to figures from the Energy Ministry.

“There were years over the last 20 years where the dividend was paid with cash on hand, both during NDP years and our years as well,” said Bennett.

“But it just so happens that it has to be borrowed right now because all the cash is being used for capital.”
http://vancouversun.com/news/local-news/bc-hydro-borrows-millions-more-to-pay-government-dividend

If the province was required to payback these dividends then BC Hydro would not have the cash flow and debt load problems described by Mr Bond. BC Hydro did not create this problem, numerous provincial governments did. It does not matter whether the government was NDP or Liberal. They syphoned funds from BC Hydro to create illusions of balanced budgets.

The job of BC Hydro is to provide reliable electrical energy to the citizens of BC at the lowest rate possible. Its job is also to ensure that an adequate supply of electrical energy is produced in BC to ensure that there was energy for commercial and industrial growth and future residential growth. BC Hydro should not be a provincial government cash cow.

Mr Bond's conclusions about the BC Hydro pension fund seem to be accurate. However, the rule changes were made by the government of the time, not BC Hydro. The changes were made to facilitate the Crown Corporations annual payments to the government. An honest and respectful government will ensure that Standard Canadian Accounting Rules apply into the future.

I believe that Mr Bond's conclusions that shutting down Site C and stopping the upgrades of existing facilities will solve the problems clearly demonstrate the refined attitudes of an accountant. It does not represent sound economic or engineering foresight or principles. His suggestion that the debt incurred by BC Hydro, largely to pay for the funds syphoned off by provincials governments, should be assumed by the provincial government is based on sound accounting principles, but there is not a politician in Victoria that would accept that advice.

I believe that the decisions that must be made around Site C need to be determined based on facts, not ideology or opinion. All too often politicians, newspaper editors, and contributors to this form provide opinion but are not willing to provide evidence, facts, or links to the information that supports their position in this debate. The argument that the information is out there, somewhere, you find it, demonstrates that their ideas are based more on mere opinion, not on facts.

[GordonH]

^^Seems like Horgan will set up a forensic audit of BC Hydro, ICBC and BC Ferries...

Would like to see him go back at leat 30 years, just to see actually how long this has been happening.
Doubt that will happen

[flamingfingers]

^^It really would be interesting though, wouldn't it??

[Smurf]

The only good part is the money is still being used by the taxpayers/rate payers of BC. Just think if site C is canceled and it starts to go to IPP's, subsidies etc, the huge majority of people in BC will pay large increases for no benefits. The only ones benefitting will be those selling to BC Hydro and the rich collecting the subsidies. Is that what people really want?

[erinmore3775]

Smurf wrote: "Just think if site C is canceled and it starts to go to IPP's, subsidies etc, the huge majority of people in BC will pay large increases for no benefits."

Those who oppose Site C wish to replace it with green solar and wind electrical generation. They ignore that the water cycle (powered by the sun) and gravitational energy that create hydro electrical energy are renewable and constant. Hydroelectric power generation does not need subsidies or rebates to make it economic. Yes, it is true that money must be borrowed to pay for the dams and the transmission lines, yet that is no different than the money that must be borrowed to develop residential or commercial/industrial solar or wind generation.

For the last two weeks, I have been researching the cost of solar and wind generation in California, Australia, Germany, and The Netherlands. In each of those jurisdictions wind and solar has been developed at a premium or greater cost than the form of electrical generation that was in place before. Basic power costs in these jurisdictions range from $0.18 to $0.44 (CDN). If BC was to replace Site C with the equivalent solar and/or wind generation basic electrical rates would rise and if Germany is to be used as an example additional taxes would be tagged onto electrical rates to pay for subsidies.

I would like any of the proponents for the elimination of Site C and its replacement with solar and wind generation to demonstrate that their solution will be greener to the earth's environment and cost less. While solar and wind has become cheaper, they are not a cheap as hydroelectric generation. Likewise, those that suggest that our future electrical energy demand problems can be solved by cancelling the Columbia River Treaty had better realize that cancellation is not possible until 2024 and that it would have more implications than those just related to energy generation (flood control, fish stocks, ability to control interior lake levels, etc.).

[lasnomadas]

@erinmore:
I read the Kelowna Courier story, just as you did, and I don't appreciate your insinuation that because I expect others to read it without me actually taking them by the hand and leading them to the story as you do, that I am somehow incapable of doing research.

Mr. Bond's opinion deserves more respect than you are prepared to give it. There is nothing in his opinion piece that's untrue. Furthermore, the most important part of his article, IMHO, the fact that BC Hydro and ICBC need professional, non-political directors and senior management, and they need it now was completely ignored by you. As long as our crown corporations are being controlled by the government of the day and their friends (Brad Bennett is just one example of this), these corporations are doomed to fail, and we taxpayers and ratepayers will be left holding the bag.

And as to the triple-A credit rating, I agree with Mr.Bond's prediction that the agencies will wait until the NDP are installed before lowering our rating, even though the financial damage was done by the BC Liberals. This is why Christy Clark is playing her hand as she is. She will make the NDP the scapegoat and live to spend her ill-gotten gains in the next election campaign, which she's counting on being sooner rather than later.

One more thing you neglect to include in your alternative renewable energy research is geothermal which, unlike wind and solar, is NOT intermittent. Could this be why every Site C supporter refuses to acknowledge it as a viable alternative in B.C.?

[hobbyguy]

As I have posted elsewhere, the auditor general's report puts David Bond on the wrong side of the argument regarding debt. http://www.bcauditor.com/sites/default/files/publications/reports/FINAL_Budget_Assurance_II.pdf

It is standard and accepted for corporations to pay dividends to their shareholders while at the same time borrowing funds for capital projects. In the case of BC Hydro the shareholders are the people of BC as represented by the government of BC. Both NDP and Liberal governments have chosen to follow that standard practice, and take dividends from BC Hydro.

The issue only becomes of concern in terms of the impact on customer rates paid. We are on firm ground in saying that the Citizens of BC experience electricity rates that are among the lowest in North America, and are extremely low by OECD standards.

BC Hydro generates some of its profitability in other jurisdictions through the process of buy low, sell high. They are able to this because the preponderance of BC Hydro's generation is synchronous, storable large scale hydro. So they purchase off peak low price power on the spot market to supply demands of BC residents, and then are able to sell on peak power at higher prices and profit from the differential. Should the citizens of BC not benefit from that profitability?

Then comes the issue of do you benefit the shareholders, us, by sharing that profit as lower rates, or do you maintain low, but in the ballpark rates and share the profits as supporting government finances and lower taxes? We could argue that one all day long, however we need to consider the potential impacts in trade disputes with our NAFTA partners. Exceptionally low rates could easily be considered subsidies in any trade dispute. So that tilts the argument toward distributing that benefit to the shareholders in the form of taxation reductions - not covered by NAFTA, WTO etc. - hence the dividends to the government, which after all is us.

Of course, a concern within that set practices is if the corporation (BC Hydro) is becoming over burdened with debt.

So, lets look at the financial statements: https://www.bchydro.com/content/dam/BCHydro/customer-portal/documents/corporate/accountability-reports/financial-reports/annual-reports/bc-hydro-annual-report-2015.pdf

Page 21 we see that dividends paid to the government were less than half of net income. BC Hydro retained net income that gives them a bottom line of 5.5% of sales, which is fairly decent.

Page 30, you will notice that dividends to the shareholders, the government, us - are automatically reduced when the BC Hydro debt:equity ratio climbs toward the high end of the optimum range. Thus from a long term perspective there is a disincentive for the government to overburden BC Hydro with debt for political purposes.

Page 73, David Bond is correct that employee defined benefit pension plan has a deficit. It is accounted for as debt, and included in the debt:equity ratio and in part resulted in a decrease of payments to the government. The pension plan has roughly $3.3 billion in assets and an actuarial calculated obligation of roughly $4.4 billion for a shortfall of roughly $1.1 billion.

That is, I believe, subject to management actual practice, corrected by the Page 30 reduction in dividends paid to the government, but does represent approximately 2.9 years of retained net income based on current levels of net income and dividends. It would be reasonable to expect BC Hydro to correct that deficit in roughly 5-6 years.

I agree with David that the pension shortfall is an area of concern, but would hardly characterize it as a financial mess.

I also find it puzzling that David expresses concern about the gross debt value when the asset value increase over the same period has climbed from less that $10 billion to $26.6 billion. So yes, debt has grown by $14 billion (including the pension liability) but asset values have grown by more that amount.

I also find puzzlement in David's comments about BC Hydro not having revenues that cover their costs. The audited statements simply do NOT back up that statement. BC Hydro consistently generates a net income, and you can not do that if your revenues do not exceed your costs.

So either David is looking at a different set of books, I missed something, or one of us needs new glasses.

Perhaps another forum participant can explain the discrepancy.