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 a.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

‘Beauty amongst such tragedy:’ B.C. photographer captures nature’s trifecta

David Luggi’s photo from a beach in Fraser Lake shows Shovel Lake wildfire, Big Dipper and an aurora

Bullhead derby returns to Port Alberni with new date, location

Lions Club partners with Maritime Discovery Centre

Vancouver Island woman to attempt historic swim across Juan de Fuca Strait today

Ultra-marathon swimmer Susan Simmons to attempt to swim from Victoria to Port Angeles and back

Port Alberni RCMP honour fallen officers from New Brunswick

Moment of silence, prayers held for Fredericton officers killed last week

‘We will not forget:’ Thousands attend funeral fallen Fredericton officers

Hundreds of officials marched in the parade, which included massed band, several police motorcycles

BREAKING: Evacuation order issued in Island village due to “risk of falling debris”

Several homes in Zeballos are under an evacuation order as wildfires continue… Continue reading

Lions give up late TD in 24-23 loss to Argos

B.C. falls to 3-5, fumbling away last-minute chance in Toronto

Eagle tree cut down legally a 1st for B.C. city

Planned eagle preserve ‘a first for City of Surrey’

Smoky skies like a disappearing act for sights, monuments around B.C.

Haze expected to last the next several days, Environment Canada said

Canadians react to death of former UN secretary-general Kofi Annan at age 80

Nobel Peace Prize-winning former UN leader died early Saturday following a short illness

44 drownings so far this year in B.C.

Lifesaving Society urging caution to prevent deaths while on lakes, oceans and in pools

Some of B.C.’s air quality levels worse than Jodhpur, India

Okanagan, northern B.C. seeing some of the worst air quality globally

VIDEO: Ground crews keep a close eye on largest B.C. wildfire

Originally estimated to be 79,192 hectares, officials said more accurate mapping shows smaller size

Most Read