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

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

  • Dec. 31, 1969 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

Remembering legendary ski builder Fred Bosinger

On Dec. 12 Western Canada lost a man who made a mark in its skiing community.

UPDATED: Body found in burnt-out car

Police report a body was found in the burnt out trunk of a 1999 Honda Civic

New Glade ferry enters testing phase

The Glade II will be able to carry heavier loads and will emit less greenhouse gases.

Kootenay Boundary remains in unusually dangerous avalanche period

Avalanche Canada says it expects snowpack conditions to get better soon

Genelle ‘vehicle incident’ under RCMP investigation

Regional firefighters respond to car fire Sunday night

B.C. cougar kitten rescued after mother struck by vehicle

Conservation Officers find home for young kitten found dehydrated and frostbitten near Williams Lake

Two Canadians, two Americans abducted in Nigeria are freed

Kidnapping for ransom is common in Nigeria, especially on the Kaduna to Abuja highway

Are you ready for some wrestling? WWE’s ‘Raw’ marks 25 years

WWE flagship show is set to mark its 25th anniversary on Monday

B.C. woman who forged husband’s will gets house arrest

Princeton Judge says Odelle Simmons did not benefit from her crime

Women’s movement has come a long way since march on Washington: Activists

Vancouver one of several cities hosting event on anniversary of historic Women’s March on Washington

Liberals’ 2-year infrastructure plan set to take 5: documents

Government says 793 projects totalling $1.8 billion in federal funds have been granted extensions

Workers shouldn’t be used as ‘pawns’ in minimum wage fight: Wynne

Comments from Kathleen Wynne after demonstrators rallied outside Tim Hortons locations across Canada

John ‘Chick’ Webster, believed to be oldest living former NHL player, dies

Webster died Thursday at his home in Mattawa, Ont., where he had resided since 1969

World’s fastest log car made in B.C. sells for $350,000 US

Cedar Rocket auctioned off three times at Barrett-Jackson Co., netting $350,000 US for veterans

Most Read