BC Hydro $120-million failure demands an inquiry

VICTORIA - The collapse of BC Hydro’s plans for a Vancouver Island power plant - and the loss of more than $120 million of your money - deserves a way closer look than it’s likely to get.
It may be that the loss of all that money, and the 11-year trail of broken relationships and misleading public statements, was just one of those management missteps. No obvious errors along the way, just a collective stumbling into disaster.
But it also may be that big mistakes were made.
This all turns into a bit of a snarl, with the necks of both NDP and Liberal governments tangled in the loops.
Flash back to 1994. Forrest Gump was the big movie, and the Harcourt government told BC Hydro to look for new power sources on Vancouver Island. Hydro started negotiations on two projects, for Port Alberni and Campbell River. After four years of talks, a gas-fired plant plant for Campbell River got the green light.
It took two more years of shuffling before Hydro pulled out of talks with Atco on an Alberni project . (That’s six years, and a tonne of money, on a project that never got built. Meanwhile, Port Alberni got caught up in a kind of Music Man dream of an aluminum smelter.)
Undaunted, BC Hydro pressed on in 2000 with a new partner, Calpine. But then Port Alberni wouldn’t deliver needed rezoning, and the dream died.
We’re up to 2002, eight years after government started the process. Hydro and Calpine look to Duke Point, south of Nanaimo. A proposal for a new undersea natural gas pipeline to supply the plant, with another private partner, is working its through approvals.
Vancouver Island’s power security is threatened, warned Hydro, unless the plant is in operation by the end of 2004. "We are on a tight time line, we have to move," said a spokesman. Otherwise, brownouts may hit and Islanders will be shivering in the dark.
Those kind of warnings start coming more frequently. Urgent need, power supply at risk, got to start taking shortcuts.
Meawhile, BC Hydro dumps Calpine - with no explanation - and says it’s going to build the plant on its own.
Enter the Liberals’ 2002 energy policy, which rightly requires the BC Utilities’ Commission to review the Duke Point plant to make sure it’s needed, and the best deal for Hydro customers.
That takes 10 months, and the commission - after hearing opposition from the big industrial power users and environmentalists - rules Hydro’s plan doesn’t serve customers well.
So, closing in on the tenth anniversary of the whole effort, Hydro abandons the gas pipeline project, gives up on building its own power plant, and calls for proposals from private companies.
The accountants do their work, and BC Hydro writes off $120 million spent on the two projects, a loss that will be tacked on to customers’ bills.
Now it’s 2005. The lights aren’t flickering, and BC Hydro has selected Pristine Power as the preferred builder-manager. The utilities commission says yes.
But then, this month, the big industrial users file one more appeal. And BC Hydro kills the project.The private partner feels betrayed. Nanaimo Mayor Gary Korpan is furious that all the work the city did is wasted.
And Hydro now says it can do without the plant - previously essential - by improving transmission cables from the mainland.
It’s not the fast ferries, but it’s in the ball park. More than 10 years of work for nothing, three private partners burned, $120 million wasted, alarmist talk about power shortages.
It is a hopelessly bad record.
Premier Gordon Campbell seems relaxed about the whole debacle. Lessons to be learned, maybe, he says, but no need for an independent inquiry.
But really, is that what he would have said in opposition?
The auditor-general needs to be on this one. Because otherwise, this could all happen again.
Footnote: The NDP started this, but the Liberals paid little attention through their first year while Hydro sank deeper into the goo on Duke Point. Consumers - giant industry and individual - pick up the costs when BC Hydro spends too much. The Liberals deserve full credit for restoring BC Utilities Commission oversight of Hydro.