ALL IS WELL AT HYDRO, OR SO THE MINISTER SAYS

Mungall has changed her tune about utility’s finances since January

When the New Democrats launched a top-to-bottom review of B.C. Hydro earlier this spring, the tone they adopted was a far cry from the one for the makeover of the Insurance Corporation of B.C.

ICBC was a “dumpster fire” left blazing by the B.C. Liberals, as cabinet minister David Eby has said many times. He’s used that line to justify rate increases and caps on payouts for minor injuries and legal services.

Contrast that with what Energy Minister Michelle Mungall told the legislature recently, in discussing the Hydro review, the in-house phase of which got underway in March.

“B.C. Hydro has done a fantastic job for British Columbians in its delivery of services, its delivery of electricity, building up its assets over the 20th century.”

What about her comment back in January when the B.C. Utilities Commission turned down the NDP application for a one-year freeze on Hydro rates? Didn’t she say then that the giant utility was a financial mess?

“Iknowthatournew chief operating officer Chris O’Riley comes with a fantastically large broom to clean up any mess,” Mungall replied when asked about the “mess” comment during debate on her ministry budget. “He’s been doing a fantastic job.”

“Fantastic” is not a word New Democrats applied to Hydro during their days in opposition — with the possible exception of John Horgan’s characterizations of Hydro load forecasts and Adrian Dix’s responses to Site C budget estimates.

Still, Mungall couldn’t say enough good things about the team now in place at Hydro: “I am very confident that the people that we have leading Hydro right now, which is a new leadership team, are able to take on the challenges that are before them.”

Not an all-new team. The New Democrats ousted B.C. Liberal-appointed CEO Jessica McDonald and brought in Ken Peterson as executive chair. But others, including O’Riley, are holdovers.

Nor was that the end of Mungall’s all-is-well assurances during debate in the house.

Hydro on budget for revenues, growth rate and net income? “Yes.”

Load projections? “All on track.”

Promise to reduce multibillion-dollar deferral accounts? “We’re not only on track, we’re doing better than we hoped.” (By on track, she means the deferred spending nevertheless tallies

$5.4 billion.)

Site C? In the six months since the New Democrats green-lighted completion of the hydroelectric dam on the Peace River, there has been more of the kind of news that pushed the project over budget under the Liberals.

The river diversion has been postponed from 2019 to 2020. The contract for the generating station and spillways came in $610 million over budget. The necessary relocation of Highway 29 out of the path of the flood waters remains stalled in negotiations with First Nations over the route.

Nevertheless, Mungall was full of assurances on that front as well.

The delay in diverting the Peace was mainly because of the tension cracks that opened up on the north bank last year.

“Since then there have been no further tension cracks.” Plus “both of those (earlier ones) have been resolved with very modest cost.”

The highway relocation is “a very challenging task.” But she is hoping to “have some certainty of where things are going as of August.”

As for the overrun on the generating station and spillways, “what that showed us is that the original estimation for this contract was not accurate. It was underestimated, unfortunately.” Meaning, it jumped from a preliminary estimate of $1 billion to $1.6 billion.

Plus, Hydro agreed to delay the procurement process for the contract.

“The bidders asked to delay their bids because they were dealing with price increases in concrete, steel and labour. There have been price increases and they wanted to see those commodity prices settle before they were able to complete their bids and so requested some delays.”

The lead contractor on the generating station, Calgarybased Aecon, was in the headlines recently after the federal government blocked a takeover bid by a Chinese company. But not to worry, says Mungall: “They will still be able to execute and fulfil their obligations under the contract.”

Bottom line to date on Site C, according to the minister: “The total cost commitments are $6 billion. What’s been spent as of March 31 is $2.4 billion, and we are on track under the new budget of $10.7 billion.”

She paused to explain to the house why hers is more of a take-it-to-the-bank budget than the one the New Democrats inherited from the B.C. Liberals. Seems the previous government budgeted to a 50 per cent probability of being right.

“I thought that that was not fiscally conservative enough and that ratepayers should have something that’s a bit more concrete,” said Mungall. “We went with the more conservative type of modelling, so the budget has a 90 per cent chance of meeting its actual total of $10.7 billion.”

But with six years still to go on the construction schedule, readers will be forgiven for suspecting that they may not have heard the last budget figure for Site C.

With Site C supposedly on track, Hydro’s leadership team in fantastic shape, and corporate finances in good order — leastways according to the minister in charge — what remains to be done in the review?

“The fastest way to sum it up is we’re looking at everything,” says Mungall.

But that is a topic for another day.

I am very confident that the people that we have leading Hydro right now ... are able to take on the challenges.

MICHELLE MUNGALL, energy minister