Subject: western update 5 / 7 / 01
executive summary
? the likely outcome of the 16 may elections is a victory by the bc liberal party ( currently holding polls at 70 % ) , a pro - business , right - of - center party led by gordon campbell .
? major changes in british columbia energy policy are likely under a liberal government .
? a low snow pack , a return to regulation by the bc utilities commission and public concern about outstanding debts owed by us power consumers could force bc hydro to stop out - of - province power sales once existing contracts expire
? bc hydro ' s additional generation at williston is likely undeliverable
liberal party platform
? income tax cut that would make bc ' s income tax the lowest in canada
? independent audit of the province ' s books amid allegations of ndp mismanagement and incompetence
? review of all crown corporations ( including bc hydro ) to enhance efficiency and management quality
? campbell has also said that he wants to scrap the corporate capital tax , the machinery equipment tax and the corporate income tax .
energy agenda
according to sources , under the liberal party ' s rule , significant changes in the bc government ' s energy policy could include a move toward the privatization of some bc hydro assets , perhaps including its transmission assets , as well as increased government support for independent power producers and coal - fired production . at the same time , a rate review and attempts to establish a broad electricity strategy for the province could lead to a lack of clarity about the province ' s overall energy strategy over the next few years . campbell reportedly is a proponent of deregulation and of expanding coal - fired production . campbell calls thermal coal , " an asset that we want to be able to move forward with and to encourage once again in bc . " a high - ranking ndp source believes that campbell will take the province back along the path of natural resources extraction rather than promoting new technology . the source expects this to lead to strong protests from environmentalists . " these are confrontational moves , and people will be on the streets . "
campbell ' s most likely choice for energy minister is richard neufeldt , though we caution that this decision depends on the make - up of the legislature after the election . neufeldt is responsible for the liberal party ' s energy , mining and northern development portfolio . sources speculate that if right - wing liberals are dissatisfied with the party ' s performance after the may election , neufeldt could again defect to the opposition . however , this gives campbell even greater incentive to name neufeldt energy minister , a high - profile position .
should the liberals win the election , gordon campbell has indicated that he would return bc hydro to regulation by the bc utilities commission . the bc government has derived $ 5 . 5 billion in revenue from bc hydro since 1991 ( roughly 85 percent of its profit ) . critics say this has undermined the utility ' s ability to pay down approximately $ 7 . 5 billion in debt and invest in the future . this also has left hydro without a rate stabilization fund , something that sources feel may be needed this year . campbell reportedly intends to address these issues , and one can expect this to lead to calls for change .
electricity export policy
currently the bc utilities commission is demanding more information about bc hydro ' s out - of - province sales . the commission has warned that , given the low snow pack , the utility could be a net importer of power this year . supporting this view , the northwest power planning council , representing bc hydro ' s key trading partners in the us , has said that it would not be able to rely upon british columbia or alberta during peak consumption periods over the next few years , and that its customers face a 25 percent chance of not making it through the winter without power losses . the combination of a low snow pack , a return to regulation by the bc utilities commission and public concern about outstanding debts owed to bc hydro by us consumers may force bc hydro 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 bc hydro . campbell has urged greater electricity competition , saying , " we need to ensure the transmission infrastructure is available to all , producers and consumers , on an equal and non - discriminatory basis . " he stated that independent power producers have been discouraged at every turn . " i want to change that big time , " he told the canadian institute of energy . campbell also urged more natural gas development , including pipelines and co - generation plants .
campbell backtracked on this stance last week after being challenged by ndp leader ujjal dosanjh . campbell stated on 25 april , " we have no intention of selling bc hydro ; we have no intentions of selling their transmission lines , no intention of selling their dams , we have no intention of selling their reservoirs . " liberal party spokesman mike morton also reiterated on 29 april that bc hydro would not be for sale . a high - level ndp source commented that campbell has been extremely careful in his choice of words regarding bc hydro , essentially saying that he would not privatize the dams , transmission lines or generating stations , but that he is in favor of opening the sector up to competition .
however , local sources believe that some parts of bc hydro might be sold as part of an overall review of bc crown corporations to enhance efficiency . likely sale prospects include bc hydro ' s distribution channels and its energy trading subsidiary , powerex . in addition , gary farrell - collins , the liberal finance spokesperson and possible second choice for energy minister ( after neufeldt ) , has stated that public ownership of bc hydro ' s non - core businesses , such as westech , its systems division , and customer billing , could come under review .
bc hydro williston generation
current reservoirs levels at bc hydro ' s williston hydro - generation facility are at 2 , 150 ft , which allows bc hydro to drop levels another 35 ft ( 170 gwhs / ft ) under their current permit . the one drawback to this plan ' s additional generation involves the mackenzie pulp mill that would have to cease operation if water levels were to fall below 2 , 140 ft . sources close to the minister of mines & energy - elect , richard neufeldt , indicate that levels at williston probably will not be drawn down below mackenzie ' s operational limits due to concern over political backlash .