Tuesday, November 26, 2002

Plans for Hydro a cautious compromise
By Paul Willcocks
VICTORIA - The world hasn't been turned upside down by the Liberals new energy policy.
Electricity is going to cost you more, probably four or five per cent a year based on extremely rough calculations. That's after a nine-year freeze on rates.
But one way or another, energy was going to cost more.
We're in a happy situation in B.C., with about two-thirds of Hydro's needs produced by dams. It's a clean energy source, and the dams have mostly been paid for long ago. Keeping them running is cheap, so they can produce energy at around two cents a kilowatt hour.
The dams can't produce enough energy. Thermal plants, that burn gas or oil, cost more to build and run, and are subject to spikes in energy prices. Power from them costs about five cents a kilowatt hour.
That means that as our energy needs increase, we'll need more of the expensive stuff and the average price will go up.
That's just reality, and it doesn't matter whether BC Hydro or Paul's Discount Power Company builds the new plants. Both will need to get paid enough for the electricity to cover the costs.
The Liberals have made a political decision. They want private companies, not BC Hydro, to build and operate all future power plants. It's also likely that they will press Hydro to sell off existing thermal plants, leaving the Crown corporation to run the Hydro plants, arrange the contracts to buy power from the private companies and deal with the end user - you and I.
The Liberals have also promised a separate Crown corporation will manage the 18,000 kilometres of transmission lines around the province. The new company will make money by charging power producers for access. Someone who builds a power plant can count on being able to transmit power, either to BC Hydro, or directly to a large industry, or to customers in the U.S.
And here is where things get interesting on the pricing front.
Opponents, like renegade MLA Paul Nettleton, argue that allowing open access to transmission guarantees both privatization and soaring prices.
The reasoning goes like this. Only private companies will be allowed to build new plants under the Liberals' policy. That means BC Hydro will have to pay a high enough rate for the power to attract them. And the companies will be looking for the kind of prices they can hope to capture in the hottest markets in North America.
And that will cost consumers more.
It is a problem, especially if we keep seeing wild swings in energy markets. Given time, and consistency, energy markets will likely stabilize. But consistency is in short supply. The Ontario government's decision to leap into market pricing, and then go back to fixed rates in a panic, sends investors a clear message that governments can't be trusted.
But in return for the risks, we get real competition. Clever people competing to figure out the best way to meet our needs. And without that, we won't really know if BC Hydro is operating as efficiently as possible.
Why not get the best of both worlds by allowing Hydro to compete with private companies, with the utilities commission picking the winning bid? Several reasons, but the biggest is likely the perception - among Liberals and independent power producers - that BC Hydro wouldn't play fair. Put the province's second largest corporation, with a captive market, up against a small independent at the utilities commission and see who wins.
What's really changed?
The Liberals have accepted the idea of market-based pricing for new power, while preserving the hydro system's cheap power for the public benefit. They've started down a path that will lead, in about 35 years, to more than half the province's power being produced by private companies.
And they've given consumers the first steps towards real competition.

Paul Willcocks can be reached at willcocks@ultranet.ca

Random notes from the halls of power
By Paul Willcocks
VICTORIA - Mostly what I felt, slogging through the 90 pages of the Glen Clark conflict of interest report, was embarrassment and relief.
H.A.D. Oliver's finding that Clark did violate the conflict of interest rules seems remarkably anticlimactic, the last tuneless note in an inept soundtrack. Clark, through his lawyer, said the findings exonerated him.
It didn't seem that clear. Consider the house renovations: "Clark must have been aware that Mr. Pilarinos' gift of free construction work was connected directly or indirectly with Mr. Clark's duties as premier and that he should not have accepted it," said conflict commissioner H.A.D. Oliver.
Or the role of Mike Farnworth, the gaming minister: "There is no doubt in my mind that Mr. Clark should have refrained from engaging in any discussion with minister Farnworth relevant to the outcome of Mr. Pilarinos' proposal," Oliver found. "I am particularly troubled by his conduct in light of the evidence that Mr. Clark recognized at the outset the need for him to remain uninvolved."
Clark takes a lie detector test. Adrian Dix, his closest political advisor, fakes up a memo to file that would clear the boss, rolling the office date stamp back to hide when it was typed.
It's pathetic, but at least it's over.

George Abbott has always seemed a conscientious MLA. So it's painful to award him the prize for worst answer to a legitimate question this week. New Democrat Jenny Kwan asked about layoff notices at the Cridge Child Care Centre in Victoria, one of about 40 centres affected by funding cuts. It was a question that deserved a real answer. Instead, it was ranting about the fast ferries and a lot of rubbish and rhetoric, and not one word about the issue.
It's disappointing.

As it's disappointing to learn the Canadian Centre for Policy Alternatives took a $200,000 gift from the NDP government in the last days before the election. The CCPA is a leftish counterpart to the Fraser Institute.
The bias is clear for most such groups, and their financial supporters expect a certain perspective. But taking money from a political party - especially in such dubious circumstances - is a terrible mistake, one that fatally compromises the CCPA's independence. Gordon Campbell and the Fraser Institute would be pilloried for such a deal. The NDP and the centre deserve the same.

Is there anything more ludicrous than U.S. drug czar John Walters' visit to warn against the perils of marijuana and safe injection sites? The Americans have been waging a stupid, costly and ineffective war on drugs for decades. The result has been more addiction, deaths, crime and prisoners. Twenty years ago there were about 80,000 drug offenders in U.S. jails; now there are 400,000, at a cost of $16 billion a year.
U.S. policies have been a colossal failure. Having Walters come here to lecture Canada on drug policies makes as much sense as having Saddam Hussein give a seminar on effective international relations.

Paul, readers have cried out to me, in that over-familiar way they have, why do you not quote Premier Gordon Campbell more often?
It's not my fault. Past premiers submitted themselves to questions from people like me three times each day when the legislature is sitting. Scrums, they're called, with reporters getting a few minutes in the halls to question the premier.
But unlike past premiers, Campbell won't do scrums. So now, toward late afternoon, if he's available, there's what reporters call the secret scrum in his office reception area. The premier stands before two flags, under specially installed lights. You pay for a government sound guy to keep watch. Instead of looking engaged, and quick-thinking, Campbell looks stiff.
Sadly, I and several others are writing then, on tight deadlines. So I can't even tell you what he says.

Paul Willcocks can be reached at willcocks@ultranet.ca