B.C.’s Powerex to pay Californians $750 million

Minister says Hydro deal to settle overcharge claims avoids risk of potential $3.2b penalty

  • Aug. 20, 2013 4:00 p.m.

B.C. Energy and Mines Minister Bill Bennett.

BC Hydro’s electricity export arm has agreed to pay Californians $750 million to settle accusations it overcharged during the state’s energy crisis of 2000-01 and avoid the risk of a much higher court-ordered penalty.

Energy Minister Bill Bennett said Friday the settlement by Powerex won’t drive up electricity rates in B.C., although part of the payment will be recouped from a five per cent rate rider that already applies to Hydro customers.

“This was an extremely difficult decision to come to but a very necessary decision to protect British Columbia taxpayers from an unpredictable result in the U.S. court system,” Bennett said.

He maintains BC Hydro did nothing wrong in the years when other power sellers did manipulate energy prices to California amid rolling blackouts, triggering lawsuits for refunds from dozens of sellers, including Powerex.

But he says fighting on could have been much more expensive, because U.S. regulators already partly ruled against the targeted utilities in a blanket judgment.

Powerex faced a possible $3.2-billion penalty if it lost, he said, and that would have come after years of fighting in U.S. courts, stacking up $125 million a year in interest and a projected legal bill of $50 million.

Bennett said he’s “not happy” but noted the payout works out to 12 cents on the dollar of what Hydro may have paid out.

“We could duke this out,” he said, adding it would be a “lifetime’s work” for the lawyers involved and a huge risk to B.C. taxpayers.

“It’s actually irresponsible to not settle this with the opportunity we’ve got.”

Most of the cost of the payout consists of wiping out a $475-million debt California owes Powerex, plus interest, or else has already been carved out of Powerex profits.

A remaining $100 million that must be found will come via the rate rider and will be overseen by the B.C. Utilities Commission, Bennett said.

NDP energy critic John Horgan called it a “complete capitulation” when B.C. had a “strong hand” as a result of a string of U.S. Federal Energy Regulatory Commission (FERC) rulings that had largely absolved Powerex of unfairly exploiting the energy crisis.

And he said it’s “absolute lunacy” for Bennett to claim the large payout won’t contribute to higher BC Hydro rates in the coming years and possibly cut into government dividends from Hydro at taxpayers’ expense.

“The only place that can come from is ratepayers,” Horgan said.

The NDP critic backed former energy minister Rich Coleman in February when the province was determined to fight on.

Horgan said a reasonable settlement would have been to erase the amounts owed by California but not pay the $275 million in additional cash.

He also dismissed suggestions from Powerex CEO Teresa Conway that the deal was important to preserve BC Hydro’s business relationship with the California market, which has generated $3.5 billion in revenue over the years.

Bennett likened the decision to the choice made in past years by Canadian forest companies to settle the softwood lumber dispute rather than gamble on a U.S. court outcome.

Most other power sellers accused of overcharging have settled.

The decision by Powerex to follow suit must still be approved by FERC.

Most of the refunds will go to customers of California’s biggest utilities.

 

// <![CDATA[

!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?’http’:’https’;if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+”://platform.twitter.com/widgets.js”;fjs.parentNode.insertBefore(js,fjs);}}(document,”script”,”twitter-wjs”);

//

Just Posted

Documentary reveals Fernie’s role in WWI internment operations

That Never Happened to screen on 100th anniversary of Morrissey internment camp closure

Environmental monitoring meeting in Elkford tonight

Meeting to focus on environmental monitoring programs at Teck coal mines in the Elk Valley

VIDEO: This is what buying legal pot in B.C. looks like

Take a look inside B.C.’s first and only legal pot shop located in Kamloops

Elkford councillor Joe Zarowny remembered

The District of Elkford today announced the passing of long time councillor,… Continue reading

‘Police are ready’ for legal pot, say Canadian chiefs

But Canadians won’t see major policing changes as pot becomes legal

Mellow opening to B.C.’s only legal pot shop

About five people lined up early for the opening of the BC Cannabis Store in Kamloops.

Meet the City of Fernie candidates

Voters in Fernie will vote for one Mayor, six Councillors and one School Board Trustee on October 20

Meet the District of Sparwood candidates

Voters in Sparwood will vote for one Mayor and six Councillors on October 20

Meet the District of Elkford candidates

The Elkford Chamber of Commerce will host an All Candidates Forum on October 4

Jagmeet Singh says marijuana pardons are not enough

Trudeau government will streamline pardon process for Canadians convicted of simple possession of marijuana in the past

BC Ferries begins taking debit in two-month pilot project

Company is giving customers option to use Interac on two-month trial on select vessels

Caregivers banned from smoking, growing cannabis around children-in-care: MCFD

Ministry has limited cannabis use for caregivers, stating it may “pose a risk to children and youth.”

Cheaper strains sell out within minutes on online BC Cannabis Store

Province says new strains will become available in the coming months

Only 40% of B.C. car dealerships have electric cars available: report

Researchers found buyers frustrated at the lack of options

Most Read