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. 18, 2013 2:00 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.

 

Just Posted

Kootenay Lake ferry to shut down Saturday afternoon

Service to resume Sunday morning at 6:30 a.m.

PHOTOS: Nelson climate strike packs downtown to demand action

An inter-generational crowd staged a ‘die-in’ as part of the global strike Friday

PLACE NAMES: Warfield neighbourhoods

Beaver Bend took its name from a CBC Radio series

Woman stabbed in downtown Nelson

Victim is in hospital, suspect is in police custody

Kootenay-Columbia incumbent MP responds to Trudeau brownface scandal

Stetski proud of NDP leader Singh’s reaction, which focused on people not power

VIDEO: Grizzly bears fight along northern B.C. highway in rare footage

Cari McGillivray posted the head-turning video, shot near Stewart, B.C., to social media

B.C. VIEWS: School officials join fact-free ‘climate strike’

Students, public get distorted picture of greenhouse gases

VIDEO: A moment to remember during the World Lacrosse Men’s Indoor World Championship in B.C.

Diego Hernandez Valenzuela’s team lost, but he felt like a winner Saturday

Handgun crackdown, health spending and transit plans latest campaign promises

Friday was the end of a busy week on the campaign trail

B.C. woman photographs massive ant swarm on Abbotsford driveway

She asked what the ants were doing? The answer: war

Iconic 90s TV show ‘Friends’ celebrates 25th anniversary

The iconic, decade-long television show aired its first episode 25 years ago today

Police arrest B.C. phone scammer linked to illegal call centres in India

Person arrested in Burnaby here on a work visa, says police

Air Canada forced girl, 12, to remove hijab: civil rights group

The San Francisco Bay Area office of the Council on American-Islamic Relations calling for change

Most Read