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 5:00 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

VIDEO: G-Men seek revenge Saturday night in rematch at Langley Events Centre

Portland’s Winterhawks downed the Vancouver Giants 5-3 during a road trip down south.

Tommy Chong says cannabis legalization makes him proud to be a Canadian

Legendary marijuana advocate and comedian celebrates cultural milestone at Kelowna event

UPDATE: Abbotsford murder victim was brother of slain gang leader

Mandeep Grewal gunned down Thursday, brother Gavin killed in North Van in 2017

Children’s author shares her story with West Langley Elementary students

Gabrielle Prendergast toured Fraser Valley schools and libraries from Oct. 15-19.

Nominations wanted for Langley moms in need

The Mama Coach launched the 2nd annual Christmas for Mamas Giveback campaign.

Singer k.d. lang receives Alberta’s highest honour

Celebrated singer-songwriter k.d. lang received the Alberta Order of Excellence in Edmonton

B.C. tickets win big in Lotto Max draw

Jackpot carried over; B.C. tickets share Max Millions prizes

‘Mom, I’m in trouble:’ Canadian faces 10 years for alleged graffiti

Brittney Schneider, another tourist caught spraying message on walls of Tha Pae Gate in Thailand

Feds consulting on national anti-racism strategy behind closed doors

Heritage Minister Pablo Rodriguez says people still face systemic racism in some communities

Enbridge aims for mid-November to finish B.C. pipeline repair after blast

A natural gas pipeline that ruptured and burned near Prince George caused an explosion and fireball

How to get government cheques if Canada Post staff go on strike

The Canadian Union of Postal Workers said members could go on rotating strikes as early as Monday

Man who sexually assaulted teen is declared dangerous offender

Anton Foulds has more than 30 convictions, dating back to 1991

Anti-SOGI school trustee files defamation lawsuit against BCTF president

Barry Neufeld says Glen Hansman’s words caused him “indignity,” “personal harassment,” and “anxiety”

Most Read