You are hereBC Hydro head predicts end to energy self-sufficiency

BC Hydro head predicts end to energy self-sufficiency


By Chad Skelton, Vancouver Sun, August 20, 2011

Significantly reducing reliance on independent power producers would save utility hundreds of millions of dollars

BC Hydro president Dave Cobb has told his staff that he expects Victoria to soon abandon its current energy selfsufficiency policy, a move that would free Hydro from buying hundreds of millions of dollars worth of electricity that it doesn't need from independent power producers.

Cobb made the prediction on a private conference call with Hydro staff on Aug. 12, one day after a government-appointed panel released a report slamming Hydro for its bloated staff and high wages and calling for Hydro to cut its planned rate increases in half. On the call, Cobb argued that the B.C. Liberal government's 2007 energy plan, which requires Hydro to have enough energy on hand by 2016 to be self-sufficient, is enormously costly to the utility.

"If it doesn't change, it would be hundreds of millions of dollars per year that we would be spending of our ratepayers' money with no value in return," said Cobb. "The way the self-sufficiency policy is defined now ... would require us to buy far more long-term power than we need."

However, Cobb told Hydro staff he doesn't expect those restrictions to last, suggesting the government could change how it defines self-sufficiency.

"I think they're going to make a major change there, which will significantly reduce the amount of power we will be buying from independent power producers and anybody else," he said. "Government has to make a change. That's ultimately a policy change that they have to make. We're confident they will make it."

The panel, made up of three senior public servants, highlighted self-sufficiency as a major cause of Hydro's rate increases and Energy and Mines Minister Rich Coleman has said the government will review the policy. However, Coleman has not officially announced any changes.

The Vancouver Sun obtained a recording of Cobb's hour-long call from a Hydro employee. It is legal for any party on a call to record it.

Cobb's tone on the call was less guarded than in a news conference the day before and he frequently acknowledged the anger and frustration Hydro employees were feeling at the report's critical tone.

"I think it's going to be a relatively short story, because the government got the headlines they wanted and the media got some sensational stories."

However, Cobb also urged Hydro employees to do their best to make the utility more efficient, suggesting that if they did so, the government would get off their backs.

"Believe me, I'm having to bite my tongue probably more than anybody," he said. "But we can sit around and pout about it or we can get on with it. ... If we show we can do that, we're going to get a much longer leash from government to do that and we'll be back in control of our own destiny."

While acknowledging changes are needed, Cobb took issue with some of the report's findings, noting the panel, which "have no background in our company or our industry," only had a few months to make sense of "a very complicated company."

As he did at his news conference, Cobb said he didn't think it was necessary to cut the 1,000 positions recommended by the panel, saying 350 was a more reasonable figure.

He also disagreed with the panel's conclusion that Hydro salaries are too high.

"If you read the report, [there are] at least two references to either our 'generous compensation plans' and in one case 'very generous compensation plans,' " he said. "We have a fundamental difference with the panel on who we should be comparing our people against."

Cobb said while the panel compared Hydro to other public-sector employers like universities and hospitals, Hydro believes a fairer comparison is to private-sector utilities like Fortis and Telus.

Cobb said Hydro hoped to make most of its staff reductions through attrition and early retirement, but some layoffs would be required. He said employees should learn their fate by September.

Cobb said Friday some of his stronger comments on the call were meant to help restore the battered morale of Hydro staff.

"Obviously, this was communication with our staff and not for public comment," he said. "All the media's talking about how we have too many employees, they're overpaid and they're inefficient. These people are proud of what they do for BC Hydro. ... And the purpose of the call was to acknowledge that they were taking it personally and that's fine, but we have a job to do."

cskelton@vancouversun.com

© Copyright (c) The Vancouver Sun

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