...Why Does The IPP Industry Still Need 'Security'?
The NDP government of British Columbia appears to be taking tentative steps to dismantle GordCo, Inc's IPP protection racket.
Doug Penner of the Vancouver Sun has the story. Here is his lede:
The NDP government is moving to scrap the province’s legislated requirement that B.C. remain self-sufficient in electricity supply, a centrepiece of the previous government’s green-energy policy.
Government, in its legislative agenda for this session, tabled amendments to the Clean Energy Act, which include stripping out the legislation’s definition of energy self-sufficiency.
Energy and Mines Minister Bruce Ralston characterized it as a public-policy shift away from a measure that the NDP disagreed with when put in place in 2010, which simply gives B.C. Hydro some leeway in preparing its next major demand estimate.
“Eliminating it will enable Hydro, give it a bit more flexibility to purchase clean energy at the most affordable prices from within and without the province,” Ralston said...
As you might imagine the fine folks behind years and years and years (and future mandated/contracted years and years and years) of inflated fixed prices are not happy with this because of 'good faith', 'rules' and 'security' and all that:
...“It just doesn’t make sense to us to take this action now,” said Laureen Whyte, executive director of Clean Energy B.C., the industry group that represents independent power producers. “Essentially, what (the province) is doing is looking to import electricity instead of creating it here, along with the jobs and economic development and taxes that go with that.”
Independent power producers (IPPs) now supply B.C. Hydro with about a quarter of all its electricity under more than 120 long-term contracts with the utility after a decade-and-a-half of growth under the previous government.
“What this means for investors is that they have invested in this jurisdiction, in good faith, by the rules, understanding that there is a future for IPP technology,” Whyte said. “(The amendment has) kind of sent a message back to the investment community that, you know, maybe it’s not a secure place to be investing in as they thought.”...
So.
How much has all that fixed price 'security' for investors from the time of GordCo Inc. cost us (i.e. British Columbians who actually do the paying)?
Well, back in 2010 it was 'only' a couple of hundred million dollars:
...In fiscal 2010, B.C. Hydro spent $568 million to buy 8.9 million gigawatt hours worth of electricity from independent producers at an average price of $63.85 per megawatt hour, according to its annual report. In the same year, the utility spent $311 million to generate some 42.1 million gigawatt hours from its own power dams at an average price of $7.19 per megawatt hour...
But last year, 2019, it had ballooned to almost a billion with a 'B':
...The amount of private power B.C. Hydro buys, by fiscal 2019, ballooned to $1.2 billion for 14.2 million gigawatt hours at an average price of $87.52 per megawatt hour, according to last year’s annual report. In the same year, it spent $332 million to generate 42.2 million gigawatt hours from its own facilities at an average price of $7.87 per megawatt hour...
And, as Norm Farrell has pointed out many, many times, the fix is in for tens of billions down the road:
...Since (Gordon) Campbell’s friend Larry Bell promised to assist private producers, BC Hydro has purchased almost $14 billion in power from IPPs—most at 2x to 4x market price—and is contracted to buy more than $40 billion worth of additional electricity....
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But, returning to that solid story from the VSun's Mr. Penner, according to the IPP flackhackery we should all stop worrying about all that securitized price gouging in perpetuity because...
Prices are coming down!
...Costs for all renewable power producers have come down considerably since, Laureen Whyte (of Clean Energy BC) said, so new B.C.-based IPP developments would be equally competitive.
Whyte said the industry has seen new wind-farm developments capable of delivering electricity at $28 per megawatt hour, versus an average cost of $101 per megawatt hour in 2009. She is familiar with solar-power developments with electricity as cheap as $32, versus $323 per megawatt hour a decade ago.
Whyte said her group believes “a lot more work should be done collaboratively” between B.C. Hydro and independent producers as the utility works on its next integrated resource plan.
“We see independent power production as complementary to the energy that B.C. Hydro provides,” she said...
The pretzel logic, above, is truly breathtaking.
Sheesh.
.
8 comments:
I wonder why the “independent” producers don’t just up and sell their power elsewhere?
A most excellent question Lew.
The sad thing is that there seems to have been nothing done to rectify the imbalance of this scam since the change of government in 2017. I also suspect that someone's cheek is sore from the protruding tongue over the suggestion that IPPs might sell their wares elsewhere.
IPP`s were big donors to the BC Liberals.
Fortis contribution to the BC Liberals
https://contributions.electionsbc.gov.bc.ca/pcs/SA1ASearchResults.aspx?Contributor=fortis&PartySK=0&Party=(ALL)&ClassSK=0&ClassificationName=(ALL)&DateTo=&DateFrom=
$297,164.00
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FortisBC Energy at work
Independent Power Producers
If you want to generate electricity and sell it to us at wholesale prices, you can talk to us about becoming an Independent Power Producer (IPP).
However:
IPP electricity rate
In most cases, the power produced by a small IPP is intermittent because it relies on sun, wind or stream flow, and it often enters our system when it’s least needed. As a result, this power is not highly valued and we pay the same rate that we’d pay for the lowest-cost alternate source. However, each IPP will be looked at on an individual basis and priced accordingly.
https://www.fortisbc.com/services/electricity-services/generating-your-own-electricity/independent-power-producers
Why have British Columbians been paying for a product that is not needed?
Oh, so it was done solely as a fund-raising scheme by the bc liberals premiers gordon campbell and christy clark
Adam Smith, 18th century author of The Wealth of Nations in which was coined the “invisible hand of the market”, and which became the manual-cum-Bible for market fundamentalists even unto this very day, less famously concluded therein that the sovereign must intervene in the market for its own sake and against the potential excesses of unfettered capitalism upon subject peoples. Already long ignored by neoliberals, the “Greed-is-good” licence granted by fictitious Hollywood movie character Gordon Gecko fain tore those last pages of Smith’s seminal work clean out of the back. Friedman, Rand and others certainly pretended the sage conclusion never existed when insisting that capitalism fettered in any way was an anathema—even sinful—and, being historical, Fukuyama made it indiscernibly prehistorical by proclaiming “The End of History,” stateless capital investors protected evermore at two minutes to Dooms Day. That is, he tried.
Even marxists would have to admit some of Smith’s conclusion, in particular that armouring private profit against public policy is contrary to his conclusion and deleterious to the sovereign state.
I’m not sure any of these citations would necessarily be admissible as evidence in a court of law, but pretty sure the exorbitant cost of IPP electricity to the public enterprise, the method the BC Liberals used to award ruin-of-river licences, ecologic and economic factors affecting the environment (per-kilowatt-dense, geographically diffuse, and high-development/-maintenance environmental impacts compared to traditional hydro dams—and certainly to wind and photovoltaics), and to the best public interest would be admissible to the court.
Whatever claims IPP operators and holders of as-yet-undeveloped permits might wish to make as the public interest is ascertained may be presented to the judge in court. In the matter of honouring the spirit of the law, investors who cherish “The Capitalists’ Bible” should have studied it more carefully instead of taking Geckoid advice—that is, they should have known better than to make greed good forever. “Forever” can only be a sovereign claim.
In the end, however, existing IPPs which comply with all environmental regulations, should continue to produce electricity if they feel it can be sold on the open market—that is, with no guarantee BC Hydro will pay several times the rate it can make electricity for itself—which always seemed a devious way to bankrupt the public enterprise (presumably to facilitate privatization, typically to BC Liberal crony insiders, as were IPP licences awarded)— and recent receipts appear to verify the prognosis critics made at the outset. Anyway, a judge would probably award IPPs some sort of compensation for development costs, if not for obscenely exorbitant expectations of locked-down riches—which, BTW, would offend Adam Smith’s conclusion.
Finally, it will be interesting to see how the wily JoHo plays this card from the Site-C hand he was dealt. If his government’s case is made partly from perfidies revealed forensically from the BC Liberal record armoured against such revelation, then it becomes a handy club with which to pummel the former crony-club cabinet of the former regime, now contending Loyal Opposition, as we approach the next election just a year away.
IPPs have to go, yes, but the perfidious, corrupt BC Liberals must never be allowed to govern our province again. This hand should never be invisible.
First, make wild forecasts about hugely increased power demand in BC in the future. Meaning a lot more power is needed (didn't happen).
Then, forbid BC Hydro from generating that new power. Because, you know, BC Hydro isn't good at generating electricity. Doh!
That means lots of new power needs to be generated by IPPs.
There you have the recipe for a $multi-billion long-term swindle.
Right now we have the situation where BC Hydro reservoirs are full, so I'd assume a lot of IPP power is not needed.
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