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Are B.C. Liberals And B.C. Hydro In Opposition?

Make no mistake, there's a price to pay when B.C. Hydro becomes a political arm of government. The intertwining of self-interests gets complicated, while the interests of ratepayers can take a backseat to political interests.
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One of the last things anyone would ever imagine the B.C. government doing is adopting an old NDP program, but that's exactly what Energy and Mines Minister Bill Bennett did this month when he announced a five-year, $300 million hydro bill deferment plan for 13 mines owned by six companies.

Make no mistake, there's a price to pay when B.C. Hydro becomes a political arm of government. The intertwining of self-interests gets complicated, while the interests of ratepayers can take a backseat to political interests.

Three of the six companies in Bennett's deal were highlighted in a December Financial Post article, "Debt risks mount as Canada's base metal miners sink deep in the hole."

One could argue that the headline alone justifies Bennett's move, except there's no guarantee - other than a hope and a prayer - that B.C. Hydro will be repaid.

Consider the "dire financial position" of one of the companies: Colorado-based Thompson Creek Metals.

Last year, Deutsche Bank analyst Jorge Beristain said the company is "quickly approaching an end-game" with debts of $832 million US.

According to the Financial Post, Teck Resources "has more than US$3.5 billion of debt coming due between 2017 and 2023 and lost its investment-grade credit rating last year."

Taseko Mines, "has more than $260 million of senior notes coming due in 2019, while a US$30-million secured loan matures this May."

Imperial Metals owns three of the 13 mines in Bennett's deal, including Mount Polley, Red Chris and Huckleberry. In 2004, the government quietly forgave $3 million in liabilities owed it by Huckleberry Mine.

Imperial Metals's controlling shareholder - Murray Edwards - has a net worth of $2.69 billion.

The B.C. Liberal party has done well from them. From 2005 to 2014, the six companies donated $2.8 million to the party. Key executives kicked-in another $380,000.

B.C. Hydro's contractual obligations with private power producers have ballooned to $56.2 billion for "2016 and beyond."

It's the gift that keeps on giving for everyone involved, except ratepayers.

In a 2008 call for independent power projects, 75 proponents registered with B.C. Hydro.

Forty-three submitted proposals and, in 2010, B.C. Hydro signed purchase agreements with 18 of the proponents.

From July 1, 2008 to September 30, 2010 - when B.C. Hydro was making its decisions -- 14 proponents donated $268,461 to the Liberals. One donated $1,000 to the NDP.

Ten of the 14 signed purchase agreements with B.C. Hydro. One of the 14 who didn't, never donated again.

Their before and after donations are interesting too.

For the 10 successful proponents, their donations more than doubled from $112,801 (January 2005 to June 2008) to $229,471.

After the deals were done, they settled back again. Seven donated $112,345 to the Liberals and five gave $16,225 to the NDP (2010 to 2014).

In 2008, the Mining Association of B.C. received a $295,188 grant from the Northern Development Initiative Trust (NDIT) to make the business case for the Northwest Transmission Line.

NDIT's Highway 37 Power Line Coalition has 22 private sector partners.

Excluding the six companies in Bennett's deferral program, independent power producers and those identified by B.C. Hydro as "potential future mines" for the transmission line, three trade associations and ten of the companies donated $962,220 to the Liberals and $10,320 to the NDP.

The $404 million transmission line overshot its budget by more than $300 million, with a final price tag of $716 million.

There are the nine "potential future mines" that B.C. Hydro hopes will one day connect to the line.

Excluding donations from Imperial Metals and Teck, who have interests in three of the mines, the most generous companies were Goldcorp at $795,700, the Lundin Group of Companies ($112,145) and Copper Fox Metals ($93,130).

One of the founding directors of Copper Fox Metals is Hector MacKay-Dunn, who co-chaired the B.C. Liberal's 2009 election preparation efforts.

MacKay-Dunn is affectionately known in some party circles as Hector the Collector for his prowess at political fundraising.

The nine companies behind the potential mines have donated $1 million to the Liberals and $18,050 to the NDP.

And at the same time the government was imposing hydro rate increases on schools and hospitals in 2014, Bennett announced a $100 million B.C. Hydro initiative for pulp and paper producers to "support investments in more energy efficient equipment."

The forest industry has donated more than $4.2 million to the Liberals and $294,905 to the NDP.

Tidy haul. Add it all up: more than $9.8 million in donations from interested parties to the Liberals and $417,185 to the NDP, not including their 2015 donations.

Guess who gets saddled with the bill?

Including operating and capital development agreements that have tripled to $3.3 billion since 2010, B.C. Hydro's contractual obligations now stand at $59.7 billion, not including their debt which has grown from $6.8 billion in 2004 to $16.7 billion last year.

They've had to borrow $3.2 billion just to turn around and give it to the B.C. government as so-called dividends.

Meanwhile, Hydro-Quebec cut a dividend cheque of $2.5 billion for the Quebec government in 2014. They didn't have to borrow money to cover the cheque and still had $700 million in profits left over.

In 2014, it's rates were nearly two cents per kWh lower than B.C. From 2007 to 2015, its cumulative rate increase was 17.1 per cent. In B.C., it was 63.2 per cent.

Note: All donation data is sourced from Elections BC's Financial Reports and Political Contributions System

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