BC Hydro lied to regulator, NDP says

Utility boss, energy minister say they are taking allegations seriously

VICTORIA — BC Hydro lied to the province’s independent regulator about a massive internal computer project, which has run millions over budget and into years of delays, the Opposition NDP claims.

Hundreds of pages of internal Hydro documents obtained by NDP critic Adrian Dix paint a picture of a $400-million information technology project — to upgrade financial, human resources and project management software — that changed substantially during a review by the BC Utilities Commission, without the regulator’s knowledge. Instead, Hydro at one point misled the BCUC commissioners about the software it planned to use when, behind the scenes, management documents show the corporation had already purchased different, more expensive software and begun implementing it without the BCUC’s knowledge, Dix said.

“BC Hydro knowingly deceived the (BCUC), and the evidence for this is overwhelming,” Dix said.

Hydro CEO Jessica McDonald and Energy Minister Bill Bennett both said Thursday that they take Dix’s allegations seriously.

“It’s a priority for me to understand very specifically all the material Mr. Dix has submitted,” McDonald said.

“He has made some very serious allegations against BC Hydro and BC Hydro staff and I think it’s very important for us to take the time to read through the material he’s provided.”

“We will of course participate fully in any process the B.C. Utilities Commission sets up to review the matter, but also make sure we make public our responses to the issues.”

Dix sent the documents, and a letter, Thursday to McDonald, Bennett and the BCUC, demanding “accountability” for those who misled the commission. He also wants an independent review of the IT project.

“You want to know how bad decisions are made? This is how bad decisions are made,” Dix said of bungled IT projects.

Hydro’s broad IT plan — which encompasses more than six systems — had been budgeted in 2010 at $400 million and five years to complete. Instead, it has cost ratepayers $492 million so far and isn’t finished.

Planning started in 2008, when Hydro said it would spend $7.2 million to upgrade financial software using the PeopleSoft Financials system, according to a rate submission to the BCUC.

At the time, it said PeopleSoft was better than a rival SAP software program, because SAP would have cost between $30 million and $40 million more and was “not considered appropriate for BC Hydro,” said the corporation’s submission.

But three months later, in May 2008, Hydro’s executive changed its mind and endorsed the SAP software as the “default solution,” the leaked documents show. By August and September, Hydro had spent more than $1 million on the first of many SAP software licences, expense forms show.

When Hydro officials testified to the BCUC in October, and were asked about the IT project, a transcript of their comments show they continued to point to PeopleSoft as the likely choice, Dix said. When a commissioner asked Hydro to provide IT documents from its May executive meeting — which would have shown Hydro’s change to SAP — Hydro instead provided a 2007 document that described only a high-level IT strategy, Dix said.

Bennett admitted in the legislature earlier this year that Hydro made mistakes on its IT projects, and fired its chief information officer. But he said Hydro has spent within its IT budget in the past three years.

Dix said the documents also show BC Hydro split up its IT project into smaller projects to get around a BCUC requirement it disclose projects worth more than $20 million.

“You want to know how bad decisions are made? This is how bad decisions are made.

ADRIAN DIX NDP ENERGY CRITIC