Green power turns red

From Bonavista to Vancouver Island, from the Arctic Circle to the Great Lake waters, this land really belongs to electricpower monopolies and politicians who routinely bulldoze property rights, ratepayers, taxpayers and the regulators that have become puppets of governing political string-pullers.

They promised green and clean. What they deliver to Canadians instead is expensive and in the red. From coast to coast, provincial governments continue to plow ahead with powergenerating mega-projects and green-power schemes whose only certain output is massive debts and soaring costs to deliver electricity that may never be needed.

Out Bonavista way, Newfoundlanders are saddled with Muskrat Falls, a giant dam project under construction in Labrador. Nalcor Energy, the provincial power monopoly in cahoots with provincial and federal politicians, started with a cost estimate of $7.4 billion to ship electricity from Labrador to Newfoundland and Nova Scotia. The latest estimated cost is $12.7 billion.

The original rationale for the project: Green and clean electric power. There is no way the project can return its costs, which means electricity consumers will be paying higher than market prices for electricity and/or taxpayers will be picking up most of the debt. DBRS recently gave $8 billion of Muskrat Falls’ debt a triple-A rating, but only because the bonds carry a “flow-through” rating from the federal government. As a result, that debt carries “an irrevocable, unconditional, absolute and continuing obligation” of the government of Canada. Translation: Investors are rock-solid and federal taxpayers are screwed.

Around the Great Lakes, Ontario’s electricity regime is a giant house of fiscal smoke and dirty mirrors to fund the green and clean power the province has mandated, including billion-dollar wind and solar projects that produce expensive electricity the province does not need.

The result is a fiscal scam known as the Fair Hydro Plan, in which ratepayers see a fake 25-per-cent reduction in electricity rates. To pay for the rate cut, the province will have to either increase its debt or raise taxes, or both. A report Monday from the province’s Fiscal Accountability Office said Ontario will run up $14.1 billion in debt over the next five years to finance below-cost prices for clean and green energy. Out Vancouver way, the same smoke and mirror structures are under construction around BC Hydro.

On Monday, B.C. Premier John Horgan announced that his New Democratic government will continue to back BC Hydro’s Site C hydro-generating project, an $11-billion dam expansion along the Peace River, 1,200 kilometres north of Vancouver. At that distance, 14 per cent of the generated power is lost in transmission.

Stepping over the bodies of his Green Party coalition partners who wanted the project stopped — as Horgan had suggested he might do during last June’s election —the premier produced a series of partial numbers and a lot of leftist cant. He claimed the decision to proceed with the project and avoid the costs of stopping the project in mid-course will save his government’s $10-a-day daycare program and allow it to continue to fund hospitals and schools.

Using estimates from the provincial regulator’s review of the project, Horgan said that stopping Site C would cost the province $4 billion, including $2.1 billion already spent and another $1.8 billion to remediate the site. If the province had to absorb that loss, other programs would have to be cut. Or electricity rates would have to increase 12 per cent for the next decade if all $4 billion of the costs were loaded onto BC Hydro’s already substantial debt.

Horgan did not clearly spell out how much it will cost B.C. ratepayers to pay for Site C electricity. Nor could he guarantee the cost of the project, already heading for a 30-per-cent overrun, will avoid rising another 20 per cent to $12.5 billion as the province’s utilities regulator has warned it could.

Most commentators gave Horgan a pat on the back for the decision, praising him for being pragmatic in the face of a fractious political situation. Blaming the Site C project on the previous Liberal government is appropriate. But Horgan’s strategy is to pile aboard the governance regime that mars all electricity systems across Canada. Washing over Horgan’s decision as politically necessary and expedient ignores the fiscal risks building around BC Hydro. Recent Moody’s credit reviews of the province and BC Hydro suggest a company that’s building up a shaky balance sheet filled with nooks and crannies of debt that ratepayers will have to fund.

Taxpayers are already paying. In January, Moody’s noted that BC Hydro will soon no longer be paying a dividend to the province, which means a loss of almost $300 million in annual revenue. The company is also sitting on $5.5 billion in deferred rate increases that will eventually have to be covered by ratepayers. “BC Hydro posts some metrics that are among the weakest of Canadian provincial utilities,” said Moody’s.

The impact of Site C means more debt to be covered by rate increases. “Should BC Hydro’s financial position deteriorate, the possibility that it would require some support from the province will increase. We will continue to monitor BC Hydro’s financial strength over the coming years through the construction and initial operations of Site C.”

This is what happens when provincial politicians maintain giant electric-utility monopolies — BC Hydro, Ontario’s hydro companies and Nalcor in Newfoundland — that continue to bamboozle voters and ratepayers.

The long-term outcome of these still-growing provincial power regimes is that the green objectives of reducing carbon and moving to clean hydro power will never be met. If carbon taxes are imposed to move consumers off fossil fuels, then consumers will be looking at overpriced and monopolistic electricity. The cost of charging e-cars in the future is set to soar, from coast to coast, where power monopolies reign.