Now a critical time for BC Hydro, new CEO says
Capital expenditures, rate increases and Site C dam are high on McDonald’s agenda
CEO Jessica McDonald’s corner office at BC Hydro’s Cathedral Place headquarters opens up to a luxurious floor-to-ceiling view of downtown Vancouver and the North Shore mountains.
Looking back inside, however, the space is more practically adorned — a pitcher of water on a blond wood conference table, artwork on the walls that extends to a map of B.C., which traces the outline of Hydro’s footprint on the province and serves as a standing reminder of what drew her to the job.
McDonald assumed the mantle of CEO in July facing some seemingly forbidding tasks — proceeding with an ambitious multibillion-dollar rejuvenation of Hydro facilities that is driving a series of unpopular rate increases, for one, and advancing the cause of Hydro’s $9-billion Site C dam on the Peace River.
McDonald heralded Site C as “essential to keeping the lights on while maintaining low rates” at the province’s announcement Dec. 16 approving the project, although there are considerable hurdles, including First Nations and environmental opposition, in the journey toward the start of construction.
BC Hydro’s critics have argued that McDonald, once top deputy minister to former premier Gordon Campbell, is too close to some of his government’s policies that have limited BC Hydro’s options, such as the Clean Energy Act, which locked the utility into buying electricity from independent power producers instead of developing its own sources (except for Site C).
McDonald was also the deputy minister credited with helping craft Campbell’s New Relationship with First Nations, one of his bigger policy successes. Such a skill set was an asset for the utility, Energy and Mines Minister Bill Bennett said, considering the dynamics of Site C.
BC Hydro is pushing Site C against the fierce opposition of the West Moberly First Nation, the aboriginal community directly affected by the dam’s development. The West Moberly, along with Treaty 8 Tribal Association First Nations Doig River, Prophet River and McLeod Lake, have launched a Federal Court action seeking to quash Ottawa’s environmental approval of the project.
As for seeking such a hotseat job, McDonald speaks admiringly of BC Hydro’s historic place in the province and of wanting to be part of its rejuvenation.
“It’s a critical time in terms of the path of the company,” she said, “and there’s no more important time in my mind in terms of BC Hydro and no more important company in B.C. than BC Hydro.”
Four months into her tenure, The Vancouver Sun caught up with McDonald to see how she is doing.
Q What makes you the right person for the job right now?
A I have a deep, long background in issues relating to the management of land and natural resources in the province. That’s what the backbone of my career has been about. I’m familiar with the provincial land base from that perspective. I’m very familiar with the drivers of our economy from the perspective of land and natural resource use. I’m quite familiar with BC Hydro over many years of working in different capacities within the provincial government about what the nature and mandate of BC Hydro is. And (I have), I think, a very good understanding of the shareholder, the government, and how a Crown corporation can work successfully with the government. And I have spent a long period of time, longer than anyone yet in the history of the position, managing the largest employer in the province: 36,000 people and a very significant budget.
Q When your appointment was announced, some of the utility’s critics argued that what BC Hydro needs right now is a top executive from within the utility sector. How do you respond to that?
A I think I’m the right person for the position. If you want to go further than that, I’ll add that I don’t believe, at least in my memory, the CEO of BC Hydro has come from a utility background. Fundamentally, for all the reasons I’ve just listed for you, I believe very strongly that I’m the right person to lead BC Hydro at this time. I’m very proud to have the opportunity to do so.
Q You are due to file a new rate application in June of next year. What can you say now about what that is going to look like?
A We’re in a period of consultation for the rate-design application so I think it’s too early to say what the application will look like.
Q Can you say much about a ballpark magnitude, beyond (five years and 28 per cent)?
A Well, the 10-year rates plan has been very carefully built to reflect the capital plan. The 28 per cent rate increase over the next five years has been designed to be able to support the capital plan. We’re in a period now where we’re spending $1.7 billion a year — that’s for refurbishment of the system as well as planned growth of the system. I would like to see that rate increases beyond that don’t exceed the rate of inflation, but that remains to be seen.
Q Are there things that BC Hydro needs to do next to repair its relationship with First Nations in the Northeast over Site C?
A I think that there’s been seven or eight years of consultation with the communities. Understanding what the issues, impacts, concerns and interests are of each community has been a longterm effort for BC Hydro. It’s not something that starts at the time of a decision. I am personally interested in talking with those communities and understanding if there is anything that we haven’t discussed or any conversation that could lead to an agreement, in addition to the consultation that has occurred. It would be my desire to see agreements with the First Nations.
Q At the Clean Energy B.C. conference, they unveiled the London Economics proposal. Has there been more work done considering whether to make that a request for proposals to supply BC Hydro with more power?
A Fundamentally, (independent power projects) are important partners of ours. It’s only been in the very recent past, but they now account for 25 per cent of our portfolio. That’s a permanent partnership now, and a very important one for us. At the end of the day, it doesn’t change our own analysis, which is that Site C is the option that provides the lowest cost, (and is the) most reliable option to provide this next major part of supply into the system. There will continue to be opportunities for IPPs in the future. We do have the standing-offer program, there will be renewals of some IPPs going forward and it’s possible that we’ll have greater demand than we’re currently projecting.
Q What do you do to try to wind down from work?
A I’m an addict on New York Times crossword puzzles, and I have this to offer to anybody who has trouble getting the wheels to stop turning after work: you just buckle down. If it’s been a really hard day, start with a Wednesday-ish one and if you’ve had an easier day maybe a Saturday or Sunday. But it totally stops your brain from turning, just for a little while anyway. Honestly, that’s what I do, because it is tough when you’ve got crazy days and many different issues to battle. The most important thing is to have tiny bit of a break once in a while and my big answer is New York Times crossword puzzles.
Q What’s your record for Sunday? Or do you time it?
A That’s a good question. I pride myself on being able to be finish in about 20 minutes, Monday to Wednesday. After that, it depends on whether (Times crossword editor) Will Shortz is throwing some kind of scheme into his puzzles. It’s random, by the time you get to Saturday or Sunday, if you’re going to have to spend half a day on it. But I always finish them.