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Enron Mail |
Executive Summary
? The likely outcome of the 16 May elections is a victory by the BC Liberal= =20 Party (currently holding polls at 70%), a pro-business, right-of-center par= ty=20 led by Gordon Campbell. =20 ? Major changes in British Columbia energy policy are likely under a Libera= l=20 government. ? A low snow pack, a return to regulation by the BC Utilities Commission an= d=20 public concern about outstanding debts owed by US power consumers could for= ce=20 BC Hydro to stop out-of-province power sales once existing contracts expire ? BC Hydro=01,s additional generation at Williston is likely undeliverable Liberal Party Platform ? Income tax cut that would make BC=01,s income tax the lowest in Canada ? Independent audit of the province=01,s books amid allegations of NDP=20 mismanagement and incompetence ? Review of all Crown corporations (including BC Hydro) to enhance efficien= cy=20 and management quality ? Campbell has also said that he wants to scrap the Corporate Capital Tax,= =20 the Machinery Equipment Tax and the Corporate Income Tax. Energy Agenda According to sources, under the Liberal party's rule, significant changes i= n=20 the BC government's energy policy could include a move toward the=20 privatization of some BC Hydro assets, perhaps including its transmission= =20 assets, as well as increased government support for independent power=20 producers and coal-fired production. At the same time, a rate review and= =20 attempts to establish a broad electricity strategy for the province could= =20 lead to a lack of clarity about the province=01,s overall energy strategy o= ver=20 the next few years. Campbell reportedly is a proponent of deregulation and= =20 of expanding coal-fired production. Campbell calls thermal coal, =01&an as= set=20 that we want to be able to move forward with and to encourage once again in= =20 BC.=018 A high-ranking NDP source believes that Campbell will take the pro= vince=20 back along the path of natural resources extraction rather than promoting n= ew=20 technology. The source expects this to lead to strong protests from=20 environmentalists. =01&These are confrontational moves, and people will be= on=20 the streets.=018=20 Campbell's most likely choice for energy minister is Richard Neufeldt, thou= gh=20 we caution that this decision depends on the make-up of the legislature aft= er=20 the election. Neufeldt is responsible for the Liberal Party=01,s energy, m= ining=20 and northern development portfolio. Sources speculate that if right-wing= =20 Liberals are dissatisfied with the party=01,s performance after the May=20 election, Neufeldt could again defect to the Opposition. However, this giv= es=20 Campbell even greater incentive to name Neufeldt energy minister, a=20 high-profile position. Should the Liberals win the election, Gordon Campbell has indicated that he= =20 would return BC Hydro to regulation by the BC Utilities Commission. The BC= =20 government has derived $5.5 billion in revenue from BC Hydro since 1991=20 (roughly 85 percent of its profit). Critics say this has undermined the=20 utility=01,s ability to pay down approximately $7.5 billion in debt and inv= est=20 in the future. This also has left Hydro without a rate stabilization fund,= =20 something that sources feel may be needed this year. Campbell reportedly= =20 intends to address these issues, and one can expect this to lead to calls f= or=20 change. =20 Electricity Export Policy Currently the BC Utilities Commission is demanding more information about B= C=20 Hydro=01,s out-of-province sales. The Commission has warned that, given th= e low=20 snow pack, the utility could be a net importer of power this year. Supporti= ng=20 this view, the Northwest Power Planning Council, representing BC Hydro=01,s= key=20 trading partners in the US, has said that it would not be able to rely upon= =20 British Columbia or Alberta during peak consumption periods over the next f= ew=20 years, and that its customers face a 25 percent chance of not making it=20 through the winter without power losses. The combination of a low snow pac= k,=20 a return to regulation by the BC Utilities Commission and public concern=20 about outstanding debts owed to BC Hydro by US consumers may force BC Hydro= =20 to stop out-of-province power sales once existing contracts expire. BC Hydro Privatization A key campaign energy issue for the Liberal party is the privatization of B= C=20 Hydro. Campbell has urged greater electricity competition, saying, =01&We = need=20 to ensure the transmission infrastructure is available to all, producers an= d=20 consumers, on an equal and non-discriminatory basis.=018 He stated that=20 independent power producers have been discouraged at every turn. =01&I want= to=20 change that big time,=018 he told the Canadian Institute of Energy. Campbe= ll=20 also urged more natural gas development, including pipelines and=20 co-generation plants. Campbell backtracked on this stance last week after being challenged by NDP= =20 leader Ujjal Dosanjh. Campbell stated on 25 April, =01&We have no intentio= n of=20 selling BC Hydro; we have no intentions of selling their transmission lines= ,=20 no intention of selling their dams, we have no intention of selling their= =20 reservoirs.=018 Liberal Party spokesman Mike Morton also reiterated on 29 = April=20 that BC Hydro would not be for sale. A high-level NDP source commented tha= t=20 Campbell has been extremely careful in his choice of words regarding BC=20 Hydro, essentially saying that he would not privatize the dams, transmissio= n=20 lines or generating stations, but that he is in favor of opening the sector= =20 up to competition. However, local sources believe that some parts of BC Hydro might be sold as= =20 part of an overall review of BC Crown Corporations to enhance efficiency. = =20 Likely sale prospects include BC Hydro=01,s distribution channels and its e= nergy=20 trading subsidiary, Powerex. In addition, Gary Farrell-Collins, the Libera= l=20 finance spokesperson and possible second choice for energy minister (after= =20 Neufeldt), has stated that public ownership of BC Hydro=01,s non-core=20 businesses, such as Westech, its systems division, and customer billing,=20 could come under review. BC Hydro Williston Generation Current reservoirs levels at BC Hydro=01,s Williston hydro-generation facil= ity=20 are at 2,150ft, which allows BC Hydro to drop levels another 35 ft (170=20 Gwhs/ft) under their current permit. The one drawback to this plan=01,s=20 additional generation involves the Mackenzie pulp mill that would have to= =20 cease operation if water levels were to fall below 2,140ft. Sources close = to=20 the Minister of Mines & Energy - elect, Richard Neufeldt, indicate that=20 levels at Williston probably will not be drawn down below Mackenzie=01,s=20 operational limits due to concern over political backlash.=20
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